Detroit retirees see pension cut plan as divisive

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Retiree group leaders said they can’t discuss talks on the plan because they are in mediation with Orr’s team.

Retired social worker Oletha Stanfield said some in her class believe former police and firefighters will vote for the plan.

“They don’t have too much to worry about,” said Stanfield, 80. “I know it will hurt us.”

Not so, says retired police detective John Day. The deal offered by Orr also cuts future cost of living allowances, he said. Those cuts over time, will be “in the neighborhood of 25, 30 percent,” he said.

“If we have an inflationary period it would be as if we worked and lost our entire pension,” he said.

Retired police and firefighters also don’t get Social Security. That and the COLA eliminations put a heavier financial burden on them, said Bruce Babiarz, a spokesman for the retired police and firefighters.

About $12 billion of Detroit’s $18 billion in debt is not supported by a current revenue stream. Unfunded retiree health care obligations are $5.7 billion and the pension systems are unfunded by $3.5 billion, Orr has said.

Unsecured creditors like banks and bondholders would get about 20 cents on the dollar from the issuance of new bonds. The least severe cuts to pensions would rely on $815 million in fundraising efforts designed to keep city-owned art from being sold to satisfy creditors.

Of that money, foundations have pledged $365 million. The Detroit Institute of Arts says it will come up with another $100 million, while Gov. Rick Snyder wants the state to chip in $350 million.

If that money comes through, cuts to the police and fire system would only be 6 percent, while 26 percent would be cut from general retirees.

“To get that cut, and not a bigger one, the retirees would have to agree to a negotiated settlement as proposed,” said Bill Nowling, Orr’s spokesman.

Wallington, 73, who retired in 2000 after 30 years working for the city, said his pension is about $2,900 a month.

“I would have to get with the (6) percent,” he said.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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