Plan could plunge retirees into poverty
In Detroit last Friday, Emergency Manager Kevyn Orr said proposed cuts to retiree pensions are fair, considering the city’s financial situation.
Orr, appointed by the state to take over Detroit government last year, said if U.S. Bankruptcy Judge Steven Rhodes were to approve the proposed debt adjustment plan as it stands, and if up to $820 million in foundation and state aid come to fruition, it would leave retirees with more than 70 percent of their pensions. That’s more than 90 percent for police and fire retirees, Orr said.
But huge obstacles remain and chances are good people who worked for the city and are now retired could face cuts up to 40% which will plunge many retired Detroit workers into poverty.
Another problem is that for the city to get the foundation money that’s been pledged there needs to be universal agreement among all the creditors on a final plan, something many people feel is highly unlikely. And funds coming from the state will require an overhaul of the pension system. In addition, money targeted toward helping retirees in danger of falling below the poverty level also depends on legislative approval – another huge hurdle.
Ryan Plecha an attorney representing retirees in the bankruptcy case, said that cuts are deep and painful and that the foundation money may never make it into a final plan.
“It proposes drastic cuts to retiree benefits racing upwards to 40 percent, if not more, to various retiree pensions,” he said. “We’re hoping that it can be modified and improved though the mediation process.”
But Emergency Manager Orr is optimistic.
“When you’re talking about a city that’s in as dire situation as it is here and we’re in the 90 percentile rank, I’d have to think that reasonable people would look at that and say ‘Gee, that’s pretty modest, if not imminently acceptable,’ so I’d like to think that at some point, the people in uniformed services will take a look at this and say ‘You know what? We did Ok,'” Orr said in a conference call after the long-awaited filing.
Some of the comments posted on the Mlive.com website were hyper critical of Orr’s take on the situation.
“Kevyn Orr: Pension cuts in bankruptcy plan ‘very, very, fair.’
Well then that makes the deal for bankers and their insurers very, very, very, very, very fair.”
“How about Kevyn Orr working the next 25 to 30 years for 1/3 of his wages and no health care. Shoes on the other foot now, right?”
“The word “entitlements” has been framed by the right as something that’s given to you. They are not. Pensions and social security are programs that people work for and pay for, throughout decades of hard work and loyal service. I wonder is Orr would think that it’s “very, very fair” if he lost 1/3 of his six-figure pension?”