Tuesday, March 30, 2010

Detroit City Council Opposes Plan to Dissolve Pension Systems

Council opposes plan to dissolve pension systems


The Detroit City Council unanimously voted to oppose state legislation that would dissolve the city’s pension systems.

The council and Mayor Dave Bing's administration butted heads earlier today over the legislation that would turn the city's pension systems over to a Lansing-based nonprofit.

Today’s activity began with council resolutions opposing the legislation with dozens of firefighters, city workers and former mayoral candidate Tom Barrow speaking against the legislation.

Council members blasted the administration for taking the plan to Lansing before bringing it to the council.

"You shouldn't put the cart before the horse," Council President Charles Pugh said.

Councilwoman JoAnn Watson called the plan "very flawed."

"It's not a takeover; it's a giveaway," Councilman Kwame Kenyatta said, calling the legislation "unfortunate" and "disrespectful."

"What you're saying and what you're representing here is two different things," he said to Bing group executives Saul Green and Norm White.

Today’s council vote came on a resolution proposed by Pugh, but the vote alone won’t prevent the bills from making their way through the Legislature. The legislation does not require City Council approval.

Under the proposed legislation, the general pension fund and the police and fire pension fund would be managed by the Municipal Employees’ Retirement. In the first year of MERS managing the city's retirement systems, city officials have said, the city could see a $20-million reduction in its contribution to the pension boards. Green said earlier this week that the transition to MERS would not adversely affect retirees’ pension.

The city's general pension board and its police and fire pension board — with assets of about $5 billion — for years have made questionable investments, allowed lavish travel and lacked ethics policies, all chronicled all in a yearlong investigation by the Free Press.

Councilman Ken Cockrel Jr. today pointed out that pension board members are elected by city workers.

"If this gets transferred to MERS where is the accountability," Cockrel said.

Green said the administration thought state legislation was the best approach to reforming the city's pension system.

"If we don't get the costs under control, our ability to pay them is in dire, dire jeopardy," he said.

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