DETROIT (AP) — The city of Detroit reached tentative agreements to preserve pensions for retired police office and firefighters but cut monthly payments for other former employees, key deals that could accelerate the largest public bankruptcy in U.S. history, officials said Tuesday.
Negotiators for the general pension fund, which pays benefits to retirees who didn't work in public safety, agreed to a 4.5 percent cut and the elimination of cost-of-living payments, fund spokeswoman Tina Bassett said.
Despite the cuts, it's a vast improvement over the drastic 26 percent reduction that had been proposed by Detroit emergency manager Kevyn Orr, who is guiding the city through the bankruptcy process.
"This was the best possible agreement we could make," Bassett told The Associated Press.
Hours earlier, a group representing retired police and firefighters said it had reached its own deal to preserve pension benefits but slightly trim cost-of-living payments.
Together, the agreements would cover more than 20,000 Detroit retired workers. Those retirees, as well as thousands of active employees who qualify for a future pension, will get an opportunity to vote as creditors in the bankruptcy in the weeks ahead. Judge Steven Rhodes also needs to review the deal as part of Detroit's broader plan to emerge from bankruptcy by fall.
Orr's spokesman, Bill Nowling, declined to comment on the announced deal with the general pension fund.
Earlier Tuesday, Nowling said Detroit believes it can afford the deal with retired police and firefighters partly because their pension fund's financial performance has improved along with Wall Street markets.
"Sooner or later reality sinks in," Don Taylor, president of the Retired Detroit Police and Fire Fighters Association, told The Detroit News. "The city's in bankruptcy so you have to do the best you can for the majority of your members."