June 5, 2014 at 1:00 am

Detroit retirees split on plan to cut pensions

Detroit— A divided crowd filed out of Fellowship Chapel Thursday, some vowing a fight, others saying they will likely concede to pension cuts as part of Detroit’s historic bankruptcy.

Anger and questions remained for many following a two-hour informational meeting, the first in a series sponsored by the General Retirement System as its members prepare to cast ballots on the city’s debt-cutting plan. The plan would reduce their pensions, eliminate cost-of-living adjustments and — for some — recoup excess interest earnings paid to workers through a separate annuity savings fund.

The non-uniform general city retirees face a base cut of 4.5 percent if they approve Emergency Manager Kevyn Orr’s Plan of Adjustment and a 27 percent reduction if they reject it.

“I had my life plan,” said Daniel Lopez, 66, who put in 31 years for the city’s building department. “They’ve taken that away.”

Lopez added the ballot sat on his kitchen table for four days before he voted no and sent it in.

“I’ll fight the fight,” he said. “I don’t want to cut my throat. I’ll roll the dice.”

But Dinesh Vyas, 69, who stands to lose $11,000 a year under the plan, says he plans to support it.

“It’s better having some money in your pocket than no money at all,” said Vyas, a former Detroit Water and Sewerage Department worker.

GRS Trustee, the Rev. Wendell Anthony, told the crowd that the board knows the stakes.

“We know that people’s lives are on the line relative to their pensions and their financial well-being,” Anthony said. “A lot of work has been done on this, trust me.”

The meeting’s moderator, radio talk show host Mildred Gaddis, told attendees it’s critical that they understand the facts and cast their votes.

“You must be informed and committed to taking some kind of action,” she said. “The plan is out, the ballot is in your hands and it’s time to vote.”

Thursday’s session, the first of four being offered by the GRS Board of Trustees on Detroit’s east and west sides through next week, follows a separate meeting offered Wednesday by the city’s Police and Fire Retirement System. That meeting drew hundreds of participants and scores of questions and spanned four hours.

Detroit’s police officers and firefighters are not expected to endure a pension cut under the city’s plan, but their annual inflationary raise will be reduced from 2.25 percent to 1 percent.

Gov. Rick Snyder has urged Detroit’s 32,000 vested pensioners and its active workers to approve the plan to limit cuts to benefits and settle the city’s bankruptcy. The deadline to vote on the proposed reductions in pensions and health care benefits is July 11.

The informational pension sessions and Snyder’s remarks come after the state Legislature approved $195 million in aid for Detroit pensioners and long-term oversight for its finances.

Snyder says if either of two classes of pensioners reject the deal then “basically the grand bargain goes away.”

Both pension boards have approved resolutions in support of the preliminary economic terms of the city’s plan, but have not yet fully endorsed the plan. Each is expected to take that vote as early as next week.

In an effort to keep overall pension cuts low, the city’s debt-cutting plan seeks to recoup up to $239 million from GRS retirees who had active annuity savings fund accounts between July 2003 and June 2013.

Orr and city consultants contend the retirees were improperly paid out interest earnings that exceeded actual investment returns — even in years when the pension fund lost money.

GRS attorney Michael VanOverbeke on Thursday noted the pension systems have worked hard “to get the best deal on the table.”

“Make this decision very carefully,” he told retirees, noting advisers and attorneys for the funds have weighed the risks and believe members should vote yes.

(313) 222-2069
Staff Writers Robert Snell and Chad Livengood contributed.