Detroit Spent Billions Extra on Pensions

Mary Williams Walsh, New York Times, September 25, 2013

Detroit’s municipal pension fund made payments for decades to retirees, active workers and others above and beyond normal benefits, costing the struggling city billions of dollars and helping push it into bankruptcy, according to people who have reviewed the payments.

The payments, which were not publicly disclosed, included bonuses to retirees, supplements to workers not yet retired and cash to the families of workers who died before becoming eligible to collect a pension, according to reports by an outside actuary and other people with knowledge of the matter.

How much each person received is not known. But available records suggest that the trustees approving the payments did not discriminate; nearly everybody in the plan received them. Most of the trustees on Detroit’s two pension boards represent organized labor, and for years they could outvote anyone who challenged the payments.

Since June, Detroit’s auditor general and inspector general have been examining the pension system for possible fraud or misfeasance, and their report is expected to be released on Thursday. Among the findings is likely to be how much damage was done by the extra payments.

“It was like dandelions,” said Joseph Harris, who served as Detroit’s independent auditor general from 1995 to 2005. “You just accept them. They were there, something you’ve seen all your life.”

When asked on what legal authority the trustees made the payments, Mr. Harris said, “My understanding was, it had to be approved by City Council, and council was under the belief that the money was there—that the pension funds were earning the money—with the consideration that in bad times the city would be making up the difference. I hate to say that. Ultimately the fund has to be funded by the taxpayers.”

A spokeswoman for Detroit’s pension trustees, Tina Bassett, said she thought the outside actuary’s analysis, which concluded that the extra payments had cost the city nearly $2 billion over 23 years, was “not being fully straight with what happened.”

She said that the trustees were administering benefits that had been negotiated by the city and its various unions and that they had established an internal account to set aside “excess earnings” that would cover the cost. She said it was appropriate for retirees to benefit from market upturns because they had paid into the pension fund, so their own contributions had generated part of the investment gains.

“People were having a hard time, living hand-to-mouth, and we thought we would give them some extra,” Ms. Bassett said.

Of all the nonpension payments, she said, 54 percent went to active workers, 14 percent went to retirees and 32 percent went to the city, which used its share to lower its annual contributions to the fund. {snip}

{snip}

Topics:

Share This

We welcome comments that add information or perspective, and we encourage polite debate. If you log in with a social media account, your comment should appear immediately. If you prefer to remain anonymous, you may comment as a guest, using a name and an e-mail address of convenience. Your comment will be moderated.
  • Erasmus

    Detroit: A corrupt, black-run city. But, is that phrase redundant?

    • Alexandra1973

      That’s the definition of Detroit nowadays.

  • Luca

    Black politicians and city unions sitting at the same table bargaining for more money and re-election. Neither had any incentive to refuse whatever the other wanted, it was simply one hand washing the other continuously and leaving the taxpayers to pick up the tab.

    You will find the same thing in every liberal run city, but much worse where blacks are present. They are very creative with other peoples’ money.

  • WmarkW

    Public sector unions… the third rail of urban decay.

  • White Mom in WDC

    Why the hell should any city employee from Detroit get a pension? They are the reason why Detroit fell apart

    • Erasmus

      Detroit should not be getting a dime of federal taxpayer money. They made their bed. Let them lie in it.

      • White Mom in WDC

        That won’t happen unless whites unite in an effort to boycott taxes

    • Xerxes22

      No, Blacks are the reason Detroit fell apart, not public sector unions. I bet this extra money went to the friends and relatives of the politicians. The average worker never saw a penney of this money.

  • Pension benefits to active workers ….. PARTY TIME!

  • Puggg

    When asked on what legal authority the trustees made the payments

    Black skin privilege.

  • Spartacus

    • Bon, From the Land of Babble

      How about Detroit Sim City for Socialists?

  • Bon, From the Land of Babble

    Well, if YOU were a sewer worker in Detroit, you’d want your well-deserved pension too!!

    Skin and Fatty Body Parts Found by Maintenance Workers in Detroit Sewer for Third Time in a Year.

    *Police say human remains were likely ‘flushed down the toilet’

    The discovery was made in the same area where several body parts were found in August last year, which police said at the time belonged to a ‘caucasian female with a large build’ who is yet to be identified.

    At the time police released photos of six pieces of flesh bearing the markings of a tattoo in the hope they would be recognized.

    Anyone here recognize these tats?

    I hear the reward is a free house in Detroit — or a sheep farm!!

    A Detroit City Council committee thinks it’s time to consider allowing urban animal farming, which could lead to sheep mowing parts of the city.

    http://www // dailymail // co // uk/news/article-2434120/Body-parts-suburban-Detroit-sewer // html#ixzz2gW8VvDrA

    And, FIRES have returned as a spectator sport.

    Bon

    • Alexandra1973

      Caucasian female with large build.

      Somehow I’m thinking this is possibly another member of the Nicole Simpson Sisterhood.

  • Of course. The city government was just a black run cornucopia for the benefit of blacks.

    The end result? $18 billion in the hole.

    Yet, Rand Paul still thinks he can sell even a kiddie pool version of libertarianism to the kind of people who run Detroit, or rather, ran it into the ground.

    • Let’s call it a “corupticopia”.

  • IKantunderstand

    Detroit is nothing more than Papa Doc Duvalier, Idi Amin, Robert Mugabe, and Zuma whatever from South Africa. There is NO difference between Detroit and all these failed African run countries. Well, I guess there is one difference: African run Detroit is unfortunately located in Los Estados Unidos. The FORMER Los Estados Unidos. Oh, and by the way? If I have misspelled the Spanish rendition of our country? I don’t want to be corrected. Seriously, I have been accidentally learning Spanish by doing nothing more than reading ads. Who else out there in the world is constantly bombarded by a language other than their own, by the media, and companies promoting their goods? Yo! Mexicanos! You getting ads and coupons and signs in stores written in English? Are you being subjected to this crap? Hey, Mexicanos, are you being asked to press dos for Ingles? Tres for Chinese? No? IS ANYBODY????? Oh man, if diversity is a strength, then there is no doubt that the Estados Unidos is, without a doubt, the STRONGEST nation on the face of the Earth!!! Seriously, man. You don’t need no stinkin military, yo, you got diversity!

  • 1stworlder

    Atlas Shrugs now non fiction

  • The hunter-gatherer breed is designed to live hand-to-mouth.

    • CoweringCoward

      Oh and they do. Problem is that part where their hands are in my pockets before getting to their mouths.

  • DailyKenn

    These people are obviously clueless.
    Managing a major city, corporation, or household requires a certain level of intelligence.
    There is no economic disparity. There is an intelligence disparity.

  • Joe Mack

    This is just a nice way of saying they looted the pension system.

  • Pearl

    Blacks take a gleaming American city designed and built by white people, chase the white people out and then reduce it to ashes.
    Thousands of houses have been stripped bare until they resemble African huts. No electricity, no windows, no appliances, no doors, just a hut. They want to bring in animals to keep the weeds down because they are incapable of maintaining a landscape, again like an African village.

    Blacks now want the people of America to finance the rebuilding of what they have destroyed.

    It has taken them about 50 years to ravage an entire city.

    They should all be thrown into prison for slow-motion terrorism.