Detroit plans to cut retirees pensions

The US city of Detroit plans to cut the pensions it pays to its retirees as the cash-strapped city is facing a pension shortfall of about $3.5 billion.
The city’s emergency manager, Kevyn D. Orr, has called for “significant cuts” to the pensions of current retirees, according to The New York Times.
Last week, Detroit became the largest American city to file for bankruptcy over its debt of about $18 billion. Half of that amount is owed to the pension funds and retiree healthcare benefits.
Bankruptcy would allow Orr to liquidate the city’s assets in order to meet the demands of creditors and pensioners.
Retired workers, police officers and 911 operators have said it was the pledge of reliable retirement income that drew them to work for Detroit in the first place. They believe the plan is a betrayal.
Gloria Killebrew, 73, now receiving about $1,900 a month, cares for her husband J.D., who has had three heart attacks and multiple kidney operations. Her husband needs dialysis three times a week at the Henry Ford Medical Center in Dearborn, Mich, according to the Times.
She told the Times that there would be no one to take care of her husband, if the city cuts their pensions and forces her to work. “You don’t sleep well. You think about whether you’re going to be able to make it. Right now, you don’t really know.”
Unions are asserting that pensions are protected by Michigan’s constitution, which calls them a contractual obligation which “shall not be diminished or impaired.”
Gov. Rick Snyder of Michigan, who has defended the bankruptcy bid as a necessary step to resolve Detroit’s debt crisis, said he is worried about the city’s municipal retirees of about 21,000.
“These are hard-working people that are in retirement now – they’re on fixed incomes, most of them – and you look at this and say, ‘This is a very difficult situation.’”
Officials who oversee the city’s finances have called for reducing pension payments but they never asked that the pensions be eliminated. However, they did not say how big these reductions might be.