City of Detroit Reaches Historic Bankruptcy Agreement

After state and local entities pledged hundreds of millions of dollars in cutbacks to support the city’s re-worked pension plan, U.S. Bankruptcy Judge Steven Rhodes called the agreement a miracle.  While retired workers will accept a reduction in income and benefits, the plan guarantees the checks will continue to come for the rest of their lives.  This is in spite of the fact that the annual income of the fund is less than half of the payout.  An independent fiscal expert named by Judge Rhodes did, however, find the plan feasible but only in light of actuarial practices such as “rolling amortization”.  A debate among those in the risk management industry has ensued.  Bankruptcy Attorney David Chenelle forwarded a link with the full article: