The future of Detroit's retirees is hanging in the balance after the city filed for bankruptcy on Thursday, even though groups representing them managed to secure a court order to freeze the process before the city begins paying off its creditors.
According to The Washington Post,
retirees reliant on city pensions worry their payments will stop, leaving them without the income they rely on.
"It's been a nightmare for us all," Shirley Lightsey, president of the Detroit Retired City Employees Association, told the Post. "We don't have that many people with pensions big enough for anything to be taken away from them."
Of Detroit's total debt, about half, or $9.2 billion, represents pension and health benefits for retirees. Most of the rest of the remaining debt is to bondholders.
The question for administrators will be about how to carve up the remaining funds. The argument in favor of bondholders is strong, given the city will need to rely on them in the future for funding, the Post reported.
Detroit emergency manager Kevyn Orr has promised that retired city workers, police officers, and firefighters will not see pensions or health benefits reduced for at least six months, but that retirement benefits ultimately will need to be cut.
"There are going to be some adjustments . . . We don't have a choice . . . This is a question of necessity," Orr said on Fox News Sunday.
Smaller cities that have filed for bankruptcy protection in recent years have significantly cut retirees' benefits.
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