Thursday, February 26, 2015

Detroit Pension Judge: Pension plans too costly for cities

The Detroit News reports:
The bankruptcy judge who green-lighted reductions in pensions and health insurance for more than 32,000 Detroit retirees said Wednesday he's "deeply concerned" about the unfunded liabilities other cities are saddled with.

Retired U.S. Bankruptcy Judge Steven Rhodes said Detroit and other cities need to consider moving away from costly pension plans and transition employees on to 401(k)-style defined contribution retirement plans.

Rhodes cited publicized estimates that American municipalities have unfunded pension liabilities ranging between $1 trillion and $4 trillion.

"It flies largely under the radar and it doesn't get a lot of attention and it doesn't get a lot of management and I'm deeply concerned about that," Rhodes said. "Because that's money cities don't have that they have promised to their retirees and I think that solution across the country, and including in Detroit, has to be at some point defined contribution (plans)."
You'll be hearing a lot of this kind of talk in the near future.