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I feel sorry for the retirees and those close to retirement.
They worked for the city for 30+ years with the promise of a pension.
It will surely be gutted like what happened to GM retirees.
Private or public sector..stuff like this shouldn't be allowed against normal Joe who puts in 30 years only to end up with peanuts because his boss didn't keep the pension plan funded.
Judge: Detroit can use bankruptcy to confront debt
The decision set the stage for officials to confront $18 billion in debt with a plan that might pay creditors just pennies on the dollar and is sure to include touchy negotiations over the pensions of about 23,000 retirees and 9,000 workers. Orr says pension funds are short by $3.5 billion.
He also acknowledged that pensions would be a sensitive issue because they represent a "human dimension" to the crisis, with some retirees getting by on less than $20,000 a year.
It does suck and something will probably happen to make sure they get it in the end with no lesson learned.
This is why I was happy when the company I work for changed their plan from a pension to a personally owned 401k. Now I just have to concern myself with the government taking it one way or the other to keep Wall Street rolling in money.
I feel sorry for them too, but the city was warned years ago if they didn't change policies etc, this would be the outcome.
I can pull up documentation to support this, but anyone informed knows this already. I BLAME the politicians who took no
action years ago.
Obviously the city was warned, but that has nothing to do with hurting the people that worked for and paid into their pension system with the expectation that they'd have a certain fixed income to live on.
The state of Michigan apparently has in their constitution that pensions are protected.....but apparently the federal bankruptcy overrides that.
But...given that the stat constitution forbids it, couldnt the retirees then sue the state that appointed someone to file federal bankruptcy? I suspect this will be a long story.
The other human dimension is that a lot of city workers are exempt from social security-because of the pensions they get. So if they lose the pensions, some of them will be reduced from a income of 60K/yr for example.....to $710 a month. Yeah thats the worst case scenario....but...lets be honest. These people had a deal that their state constitution guaranteed them wouldn't be modified. Then the state went and asked the feds to modify it. To me...thats not right.
On the other hand you read what the pension plan did...and it blows your mind.
Any year in which the pensions income outdid the target, the overage was paid to people invested in the 401a plan....problem with that, the targets an average....yeah they didn't get anything when it was below target....but the pension balance sheet dropped...and during the overages...the pension balance sheet didn't improve.....thats a problem.
So definitely some mismanagement there. And some pensioners truly benefited from it. But...it was part of the deal-that was constitutionally guaranteed by the state.
I feel sorry for them too, but the city was warned years ago if they didn't change policies etc, this would be the outcome.
I can pull up documentation to support this, but anyone informed knows this already. I BLAME the politicians who took no
action years ago.
A good friend of mine I hung out with NEVER missed a chance to tell everyone how he was going to retire early with 100% of his pay. How we were going to still be workin for the man and he was going to be fishing every day. This went on for years until it started to hit the fan. Now he's shifted to "Give me back my pension". I told him time and again if it sounds to good to be true........
He could have bailed out at any time but he was positive he had it figured out.
People need to look at the Detroit accounting, all of it. This is the same thing they did to pensioners in the 80's and 90's in the so-called "private" sector. Govt employees everywhere counting on those cushy retirement pensions would do well to pay attention.
I'm not being heartless as I'm a blue collar guy, i feel for those folks. It's the politicians who are to blame for this mess..
How does the politicians being warned with stat's and not taking action have nothing to do with this. They have everything to do with this...I feel for the common worker, I'm one myself...
At this point, it is what it is..Maybe Obama will step up and make things right, IDT so! ...
It does suck and something will probably happen to make sure they get it in the end with no lesson learned.
This is why I was happy when the company I work for changed their plan from a pension to a personally owned 401k. Now I just have to concern myself with the government taking it one way or the other to keep Wall Street rolling in money.
LOL...you were HAPPY to lose your pension in lieu of a 401k?
That's a first. I'd prefer to have both, not to mention that this was the intent of the 401k anyway...to be no more than a part of your retirement.
I have a 401k myself, but I sure as hell wouldn't be buying a set of pompoms with tears of joy if I'd had my pension replaced with one. That doesn't make sense.
The state of Michigan apparently has in their constitution that pensions are protected.....but apparently the federal bankruptcy overrides that.
But...given that the stat constitution forbids it, couldnt the retirees then sue the state that appointed someone to file federal bankruptcy? I suspect this will be a long story.
The other human dimension is that a lot of city workers are exempt from social security-because of the pensions they get. So if they lose the pensions, some of them will be reduced from a income of 60K/yr for example.....to $710 a month. Yeah thats the worst case scenario....but...lets be honest. These people had a deal that their state constitution guaranteed them wouldn't be modified. Then the state went and asked the feds to modify it. To me...thats not right.
On the other hand you read what the pension plan did...and it blows your mind.
Any year in which the pensions income outdid the target, the overage was paid to people invested in the 401a plan....problem with that, the targets an average....yeah they didn't get anything when it was below target....but the pension balance sheet dropped...and during the overages...the pension balance sheet didn't improve.....thats a problem.
So definitely some mismanagement there. And some pensioners truly benefited from it. But...it was part of the deal-that was constitutionally guaranteed by the state.
Should be interesting to watch.
People really need to go study the creative accounting of govt and seriously follow that money, fully documented.
Detroit: The Latest BankruptcyLie
quote:
Detroit is not bankrupt. It has created the illusion of bankruptcy by such common financial trickery as pension pre-funding – where future debt payments must be paid in advance so that government can invest that taxpayer money instead of using it to fix up the broken City.
I have every sympathy for those suffering, but...
quote:
So the City Of Detroit is covering up more than $8 billion dollars in CURRENT assets by its creative accounting of future assets due more than a year away that will be paid for by future assets that are creatively not reported in its own audited CAFR. If I was a resident of Detroit, I’d say it was time to hold certain lying councilmen and the mayor accountable to the people.
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