AFSCME fights for underfunded pension benefits

Jim Lynch
The Detroit News

Detroit – — The city's largest union fought with Detroit bankruptcy lawyers Friday over more than $8.7 billion owed to members for pension, health care and bonus check payments.

Attorneys for the City of Detroit and the American Federation of State, County and Municipal Employees Council 25 claimed its members are owed the money for underfunded pension and retiree benefits — including so-called 13th checks — stemming from caps the city placed on its interest payments to savings funds in 2011.

Heather Lennox, an attorney representing the city of Detroit, argued that the claims are already being addressed under the city's debt-cutting plan. If the plan is rejected, Lennox argued Detroit will not be liable to pay the claims since certain actions taken by the union were illegal, including the 13th checks.

Detroit's bankruptcy lawyers have said the bonus checks depleted the city's pension funds of $1.9 billion in investment value over two decades and contributed to an estimated $3.5 billion in unfunded liability.

AFSCME Attorney Richard Mack argued for a full hearing on the complaint and the issues of standing, but U.S. Bankruptcy Judge Steven Rhodes said he would issue a decision Monday.

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