Oct 27, 2014
On October 1, in California, a federal judge ruled that City of Stockton’s obligations to its workers is contractual, and that the contract can be “impaired” in bankruptcy.
Stockton declared bankruptcy in 2012. During the ruling, the judge said, “I've concluded that pensions could be adjusted.” This decision may cause the City’s current and future retirees to lose their pensions big-time.
City workers have already lost their income in a big way. They were hit by involuntary furloughs between 2008 and 2012, gave up cost-of-living increases for several years, and began paying a retirement contribution of up to 9% in 2011. Benefits for the new employees were already gutted.
For the current 2,400 retirees, the average pension is $24,000 a year. And retirees receive NO Social Security benefits for their service to the City. The health claims of the retirees were already reduced from 545 million dollars to 5.1 million dollars. The 5.1 million dollars does not even cover health insurance costs for a year.
On top of all these drastic cuts, if the court ruling goes through, the pensions would be cut by 60%, leaving the average retiree with a pension of $9,600 a year.
All these cuts are imposed on the workers only to funnel the money to the banks and investment firms. In Stockton’s case, a Wall Street firm, Franklin Templeton, holds more than 36 million dollars in the City’s debt and wants this debt to be paid. The federal court is simply paving the legal ground for this payment.
As Stockton’s bankruptcy proceedings show, the federal government is colluding with big business in robbing the workers to satisfy the greed of the rich.