Under the city’s plan, general municipal retirees could expect 4.5 percent cuts to their pension payments, as well as an end to cost-of-living raises. Retired firefighters and police officers would see no cuts in their monthly pensions checks, but could expect smaller than expected cost-of-living raises.Two major bond insurers plan to fight the deal, saying the retirees getting to keep their modest pensions would be unfair to big-time finance companies. Because being a janitor or clerical worker providing decades of service to a city with part of your pay deferred to provide a pension for your retirement and being a giant bond insurer making a calculated risk are exactly the same thing, right? Alan Pyke offers some of the background that led Detroit's retirees to this point:
Among retired and active firefighters and police who chose to cast votes, 82 percent voted in favor of the plan, officials said late Monday. And among general workers and retirees, 73 percent voted in favor. About 15,600 workers and retirees opted to vote from among about 32,000 who could have.
Questions remain about the broader bankruptcy process. There is significant evidence that top officials including emergency manager Kevyn Orr were always planning to push the city into bankruptcy court. Workers, pension fund representatives, and even the judge in the case say they were railroaded at various points by Orr, who managed to preserve the narrative that pension cuts were both inevitable and just despite the fact that it was Wall Street and mayoral corruption, not workers, that blew up Detroit’s accounting books. Orr’s numbers on pension shortfalls appeared to be so exaggerated that one municipal financing expert accused him of “pension voodoo” last summer. And Orr’s old lawfirm, Jones Day, is charging the city tens of millions of dollars for work on the bankruptcy case.In that context, getting away with "only" a 4.5 percent reduction and the elimination of cost of living adjustments to the pensions around which they planned their retirements actually does look like a win for Detroit retirees. A twisted, awful, unjust one, but worlds better than the total destruction it looked like they might be facing.