Courtesy of Mish.
Just as Detroit is coming out of bankruptcy, the entire county is about to go under.
This will be especially aggravating because Detroit pensioners are already extremely upset with the pension haircuts they received.
In the “too late to complain now” category, Wayne County now seeks to overturn the Detroit bankruptcy settlement. Lawyers will have a field day with this setup.
Cries of Betrayal
Crain’s Detroit Business reports Pension Cuts, Interest Paybacks from Bankruptcy Prompt Cries of Betrayal.
Pension checks will shrink 6.7 percent for 12,000 Detroit retirees beginning in March. Making matters worse, many also must pay back thousands of dollars of excess interest they received.
It’s a bitter outcome of Detroit’s record $18 billion municipal bankruptcy for David Espie, 58, who will repay the city $75,000 in a lump sum while his $3,226 monthly pension is cut by $216.
As retirement costs swallow larger portions of U.S. city budgets, Detroit’s bankruptcy plan resolved a pension crisis with creative strokes, though at a cost to retirees who thought their benefits were untouchable.
“I feel betrayed,” said Espie, who may abandon plans to move to Alabama.
In addition to absorbing pension cuts, almost 11,000 retirees and current employees must repay an estimated $212 million in excess interest they accrued in a city-run savings plan, which is separate from the pension fund. The annuity plan guaranteed a 7.9 percent annual return even when the pension lost money, and employees also received bonus interest in some years.
They can either pay the money back in a lump sum or have it deducted gradually from their monthly pension check with 6.75 percent interest.
Henry Gaffney, 61, a retired bus driver, said he’ll pay back $56,000 of the $300,000 he saved by deducting $428 from his monthly $3,100 pension check for 19 years. He said he pays $375 more for health insurance each month….
