Yes vote is best choice for retirees
There’s little mystery in the choice facing Detroit city retirees. If they vote to accept the pension restructuring deal offered by Emergency Manager Kevyn Orr as part of the city’s bankruptcy plan, they know exactly what will happen.
For general service retirees, pensions will be cut 4.5 percent, and, even with other possible reductions in benefits, the total loss will be no more than 20 percent of their monthly check.
If they vote no, their pensions will be cut at least 27 percent, and when other reductions are factored, their entire monthly pension could disappear, at least for a while.
Either outcome is painful, particularly for older retirees with no other source of income. And it’s not as if the pensioners did anything to deserve any reduction.
But a no vote brings far more pain than a yes vote. That should be the persuasive fact as retirees fill out their ballots, which are due back to the bankruptcy court by July 11.
For retired police and firefighters, who face no trimming of their base pensions but will lose half of their annual step increase, the choice is even more clear. If they reject the plan, they face the possibility that other creditors will convince the court retirees are getting too much, and everything will go back on the table.
Orr has warned that rejection of his plan will take negotiations with retirees even further back than to square one.
It will put at risk most if not all of the $816 million committed by the state and private foundations, corporations and individuals to mitigate pension loss and save the collections of the Detroit Institute of Arts.
If the foundation funding disappears, pension cuts might yet live up to the Draconian projections made when the bankruptcy process began.
A no vote would also delay settlement of the bankruptcy case, setting back Detroit’s efforts to become a growing, viable city.
Even retirees who no longer live in Detroit should care about the health of the city. If Detroit thrives and its coffers are replenished, most of the benefit reductions will be restored.
Some retirees may believe that a fire sale of DIA assets would reap more than the $816 million raised by the so-called grand bargain.
And it might. But it is highly unlikely that the bankruptcy judge will order a sale of the art. And even if he did, the money raised would be split among all of the creditors, including the financial institutions. In that case, retirees may end up with far less than the $816 million that is promised solely for the protection of pensions and art.
A very favorable deal has been crafted on behalf of the retirees, thanks to chief federal Judge Gerald R. Rosen, Gov. Rick Snyder and the Legislature, and concerned citizens and institutions.
It is extraordinary that so much outside money has been pledged to ease the sacrifice of pensioners.
Several groups are lobbying retirees to reject the plan. Some unions believe they can leverage a no vote to get a better labor contract. Some financial institutions hope defeat of the plan will open the doors of the DIA.
They do not have the best interests of retirees at heart.
Pensioners should protect themselves. The best way to do that is to vote yes and mail back their ballot.
– The Detroit News