Cutting Detroit Retirees' Pensions Violates State Constitution


Last month, we heard the news about the City of Detroit filing for Chapter 9 bankruptcy protection in federal court, becoming the largest city to ever do so.  The city's financial crisis threatens the retirement security of more than 30,000 active and retired employees, and almost immediately, lawsuits were filed in state court to protect Detroit's two pension funds during the city's restructuring.

Michigan Attorney General Bill Schulte has said that, under the state constitution, pension obligations to state and municipal employees and retirees in Michigan may not be "diminished or impaired."

  Cutting the pension benefits of Detroit's public employees, who have paid into the system over a lifetime of hard work, violates the constitution and the state's contract with its retirees.

 In a statement, AARP Michigan State Director Jacqueline Morrison said, in part:

"The firefighters and police of Detroit have dedicated their careers to protecting the city's citizens.  These first-responders - and other hard-working Detroit public employees - made their pension payments.  They count on their health benefits.  We can't change the rules at the end of the game for these public employees."

  • Many retired public employees live on fixed incomes.
  • Unlike most Americans, Detroit's firefighters and police do not get Social Security, and instead rely more heavily during retirement on the pension benefits they earned.
  • The average firefighter in Detroit survives on a pension of only $30,000 a year.

"Raiding the pensions of hard-working Michiganders to make bondholders whole is not the way to right Detroit's fiscal house," AARP's Morrison emphasized.

"Detroit's public employees - all of us - deserve open, thoughtful discussion about the role we can all play in moving Detroit forward," she added.  "And, Detroit's retirees must have effective representation throughout the process of addressing the city's challenges.  Their participation will be crucial."

AARP fought to protect the retirement income of Michiganders from a substantial tax increase.  We will continue to be a watchdog for our members and all older Michiganders, and will hold the politicians accountable for finding responsible solutions that protect retirees' pensions and health benefits.

Follow me on Twitter @RoamTheDomes for updates.  Also stay tuned to @AARPMichigan for news on the ground.  For more information on our multistate pensions campaign, sign up for the AARP Advocates e-newsletter, or visit your state Web page.

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