Pension Cuts Kick In For Detroit Retirees


As part of Detroit’s bankruptcy proceedings, the city’s pensioners agreed to stomach some benefit cuts in order to ward off potentially steeper cuts.

Those cuts kicked in on Sunday, March 1st.

General retirees were hit with 4.5 percent cuts to benefits and will no longer receive a COLA; meanwhile, public safety workers won’t have their benefit checks cut directly but are seeing reduced COLAs — from 2.25 percent annually to 1 percent.

As OpenRetirement covered in December, some retirees are eligible for supplemental pension payments to help cover the cuts. From Detroit News:

To soften the blow for some, the state Treasury Department accepted one-time applications in December that will provide qualified retirees supplemental pension payments.

The Income Stabilization Fund was created to prevent retirees from falling below the poverty line as a result of the cuts. The program allocates $20 million over 14 years for retirees from either of the city’s two pension funds.

To be considered, pensioners must be 60 or older and have an income that is at 140 percent of the 2013 federal poverty level.

For police and fire, 268 retirees or beneficiaries were deemed eligible for the monthly supplement of up to $58.

The General Retirement System had about 1,550 applicants who qualified. Of those, about 1,450 will begin receiving monthly payments of $1 to $180 this year, said Tina Bassett, a spokeswoman for the fund.

Bassett said the additional 100 or so eligible pensioners who do not qualify this year may be deemed eligible in future years based on changes in the federal poverty index.

In all, 32,000 retirees are expected to be affected by the cuts.


Photo by  Mike Boening Photography via Flickr CC License

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