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Are Pensions Guaranteed by State Constitutions Even in Bankruptcy Court?

Is there any constitutional right, state or federal, that is absolute? This issue was considered last week by a bankruptcy judge in Michigan who is hearing arguments in the Detroit Chapter 9 filing. Union workers and municipal pensioners argued that the Michigan state constitution guarantees their rights to receive retirement benefits that cannot be usurped even by federal bankruptcy law.

But even freedom of the press is limited under the U.S. Constitution, the bankruptcy judge argued, implying that if the state constitution guarantees pension rights, perhaps they should be the guarantor. Meanwhile, a group of California mayors has formed a coalition to create a statewide ballot initiative to amend the state’s constitution to allow all local entities to amend pensions rights going forward.

This issue is not going away any time soon.

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