Settlements were reached this week regarding Detroit’s pensions that would significantly roll back previously proposed cuts. Under the terms of the proposals, there would be no cuts in benefits for pensioners in the two funds representing current and retired firefighters; for police there could be a 1% COLA. Previous proposals had called for a 6% cut with no COLAs.
Meanwhile, the city’s $2.8 billion General Retirement System agreed to a 4.5% cut and elimination of pensioners’ COLA. Previously, a 26% cut had been suggested. All of the proposed deals must be approved by Steven W. Rhodes, the federal bankruptcy judge presiding over Detroit’s bankruptcy.
At the same time, Judge Rhodes approved a settlement with credit swap holders UBS and Bank of America for $85 million. A previous deal reached last December and subsequently rejected by Rhodes had been set at $320 million (and reduced to $165 million in January). These deals come on the heels of a previously announced $388 million settlement with bond holders, who took a 26% haircut.
