Headline News

Hoffa: Detroit Bankruptcy Doesn’t Change Pension Obligations


By Teamsters General President James P. Hoffa
Published in the Detroit News, December 11, 2013

A federal judge’s ruling last week allowing Detroit to declare bankruptcy is depressing news for more than 21,000 city government retirees. The court’s decision means those who worked for years in public service and in some cases were injured on the job face uncertainty and very possibly a reduction in benefits. Many are in no position to seek other employment opportunities.

Unions are appealing the ruling and should do so. The effects of the judgment are dire for Detroit municipal government retirees, and the precedent that such a decision sets cannot be overlooked.  A spokesman for the Detroit Police and Fire Retirement System told The New York Times that if it could happen in Michigan, it could happen anywhere. “If this ruling is upheld, this is the canary in a coal mine for protected pension benefits across the country,” he said.  “They’re gone.”

Across the nation, other communities are teetering on the financial edge. What kind of example will this ruling set for them? Retirees shouldn’t be paying for bad policies implemented by bad politicians. And what kind of message does that send to the private sector? If local governments are allowed to renege on their pension obligations, more and more companies won’t feel any requirement to stick with their retirement plans either.

That cannot be allowed to happen. Americans deserve to receive the benefits they earned through years of sweat equity. We also can’t set the precedent of allowing pensions to fail if we want current workers to continue to contribute to them and be the beneficiaries of them in their golden years.  In an era when government seems to bend over backward to ensure that corporations receive millions, if not billions, in special benefits, something must be done to ensure the security of workers.

But in the interim, it is essential that Detroit retirees are made whole. Mayor-elect Mike Duggan and the City Council, elected by Detroit residents, should be put in charge of crafting a plan that will protect pensioners and give them both security and certainty going forward. To do so, it may require lawmakers to look to some unusual partners.

Elected officials can’t be too proud to beg, not when the lives of tens of thousands of its city workers are on the line. If that means looking to some of Michigan’s successful foundations for assistance, so be it. But ultimately it has to be done right.

No one can be let off the hook for this debacle. Gov. Rick Snyder has a state constitutional responsibility to make sure that city retirees are protected as well. While Michigan is appealing parts of last week’s order saying it shouldn’t be responsible for covering any pension losses, it is pretty clear the law says otherwise.

Serving in government can be hard. No one knows that better than the workers whose retirements are now on the line. It’s now up to local and state officials to get it done. The livelihoods of many are counting on it.

The Detroit crisis should serve as a warning to government at all levels about the looming retirement crisis facing the American middle class. Government, corporations and policy experts need to heed that alarm now and take immediate action to protect retirement benefits earned by both public- and private-sector workers.