Jan 6 Detroit Emergency Manager Kevyn Orr has
frozen the pension fund for some of the city's workers,
replacing it with a 401k-type plan, according to an executive
order obtained by Reuters on Monday.
The pension freeze, which took effect on Dec. 31, only
affects Detroit's General Retirement System, which covers
non-public safety workers. The action closes the pension fund to
any new or rehired employees and freezes benefit accruals for
current workers. It also stops worker contributions to the
pension and annuity savings funds and ends cost-of-living
adjustments for pension payments made to retirees.
As of Jan. 1, the order created a defined contribution plan
for affected workers.
Orr issued the order on Dec. 30, but it was not posted on a
web page listing his other orders since taking over Michigan's
biggest city in March.
Detroit's pension systems, made up of the general retirement
and police and fire funds, are a major factor in the more than
$18 billion in debt and other obligations that led to the city's
historic municipal bankruptcy filing on July 18.
Tina Bassett, a spokeswoman for the General Retirement
System, questioned Orr's action in light of ongoing U.S.
Bankruptcy Court-ordered mediation between the city and its
pension funds and other creditors.
"This is an outrageous and over-zealous action from the EM's
office," Bassett said in a statement. "Again the EM's office
demonstrates a lack of integrity and willingness to make a good
faith effort when negotiating with our pension system."
Orr's spokesman was not immediately available for comment.
Detroit's new mayor, Mike Duggan, had no initial comment,
according to his spokesman.
The Detroit retirement systems have filed an appeal with the
U.S. Court of Appeals for the Sixth Circuit, hoping to overturn
Judge Steven Rhodes' Dec. 3 ruling that the city was eligible
for Chapter 9 municipal bankruptcy.