Jan 19, 2015
Many Detroit city retirees are facing the harsh reality of the huge theft from their pension checks as part of the city’s “grand bargain” bankruptcy agreement. Those workers who had money deducted from their paychecks to put into an annuity while they worked are having to decide how they want the city to “clawback” some of the interest they received on their annuity savings.
That’s right, the city is taking back money already given to retirees. Now they say the interest rate of 7.9 per cent was “exorbitant, and the interest payment was “excessive”.
What nonsense! The transfer of money from the pension funds to the annuity to guarantee the 7.9% rate was something workers agreed to through collective bargaining – in exchange for lower pensions. This is money that was promised. This is money the retirees have depended on.
After months of threats of cuts of as much as 35 per cent to retiree pensions, the proponents of the “grand bargain” trumpeted its “reduction” of the cuts to 4.5 per cent. They barely mentioned the additional elimination of 2.25 per cent in COLA increases, nor the biggest cut – the near elimination of retiree health care, which was replaced with a tiny subsidy of $125 per month for workers to spend through the federal health care exchange.
The media practically never said that as many as 9,900 city retirees who invested in the annuity would see their pensions cut up to 20 per cent, in addition to the loss of COLA and health care.
Now that city workers, under threat of even greater extortion, have voted to accept emergency manager Kevyn Orr’s “grand larceny,” workers who are still on the job already started seeing the “clawback” automatically being taken out of their paychecks.
Those who have retired or left their jobs with the city now are facing two rotten choices: Pay the “clawback” in one lump sum, or have money taken from the monthly checks and pay 6.75 per cent interest! Somehow this usurious interest rate was not considered “excessive” by Orr’s “grand bargainers.”