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Post-bankruptcy, many Detroit retirees face a year of hard adjustments

Sarah Cwiek
Michigan Radio

Detroit retirees face some big cuts in 2015—and hundreds of them packed two area churches to hear more about it Wednesday.

Detroit’s non-uniform retirees will take 4.5% direct pension cuts as a result of the city’s bankruptcy restructuring plan, which took effect Dec. 10.

But for many retirees, the real blow comes with other, less-known cuts--the loss of city-sponsored health care benefits, and the so-called “clawback”to recapture excess interest paid to some retiree annuity savings accounts after 2003.

Many younger city retirees feel the clawback is particularly unjust. Some now have to pay the city back tens of thousands of dollars for an accounting decision they played no role in.

“I saved money for my retirement like I was supposed to,” said retiree Michael Wells. “Well now, they’re taking this money away. I wish they never had the program. It’s very hurtful, and I just don’t think they should be punishing savers.”

Attendees also learned more about the state-run income stabilization fund for some lower-income retirees. The fund will provide $20 million for pensioners pushed within 140% of the federal poverty line by the bankruptcy.

Tina Bassett, spokesperson for the Detroit General Retirement System, said applications for help must be submitted to the Michigan Department of Treasury by Dec. 31.

For retirees who miss the deadline, “even if you qualify, you will not get it,” Bassett said. “So I really urge the people who even think they may qualify…please apply.”

Eligibility for income stabilization fund help is determined solely by 2013 income levels—something retirement system officials decried, but said they were resigned to. Bassett said more details about that program and other vital information for retirees can be found on the system’s website.

Charles Harmon said a lot of pensioners will really suffer as a result of the city’s bankruptcy. He retired in 2013 after 31 years with the city—but he’s been forced back in the job market.

“It’s a lot harder than it used to be,” Harmon said. “Who’s going to hire me, at my age now?”

Sarah Cwiek joined Michigan Radio in October 2009. As our Detroit reporter, she is helping us expand our coverage of the economy, politics, and culture in and around the city of Detroit.
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