Detroit — The General Retirement System board voted to endorse Detroit’s bankruptcy plan of adjustment Wednesday and urged its retirees to affirm the plan to prevent much steeper cuts to pensions.
General city retirees face a base pension cut of 4.5 percent if they approve Emergency Manager Kevyn Orr’s debt-cutting plan and a 27 percent reduction if they reject it.
The potential for deeper cuts was too risky for board members, who voted 5-2 to endorse the plan. Individual retiree ballots are due by July 11. Trustees June Nickleberry and Tasha Cowan voted no.
Board trustee the Rev. Wendell Anthony, who was out of the state and voted via telephone, voiced his affirmative vote by saying: “I don’t like it, but in the best interests of the constituency, I vote yes.”
Gov. Rick Snyder has urged Detroit’s 32,000 vested pensioners and its active workers to approve the plan. The deadline to vote on the proposed reductions in pensions and health care benefits is July 11.
If either of the two classes of pensioners rejects the deal, the grand bargain — a pool of private money and state aid — will be off the table. The deal combines $195 million in state tax dollars with $466 million in private funds to prevent pensioners from facing double-digit percentage reductions in their monthly lifetime benefits.
To keep overall pension cuts low, the plan seeks to recoup up to $239 million in what are considered excessive interest from GRS retirees who had active annuity savings fund accounts between July 2003 and June 2013.
Trustee Lori Cetlinski called bankruptcy “very painful” and called the vote “not an easy one.”
“If this was just impacting myself and my family, I might want to take the risk and pursue litigation,” Cetlinski said. “(But) I cannot risk the pensions of thousands of current and future employees and retirees, especially those who have not come to us voicing an opinion.”