Detroit Retirees Wonder How Bankruptcy Will Affect Benefits

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, HOST:

And I'm Melissa Block. We begin this hour in Detroit, where colossal decisions about the city's future will now be made in a federal bankruptcy court. In a few minutes, we'll talk with the city's emergency manager, Kevyn Orr. He's the one who made the decision to file for bankruptcy. First, to one of the key issues: whether retirees will see their benefits cut. It's something Kevyn Orr says is now a question of necessity. Here's Sarah Hulett, of Michigan Radio.

SARAH HULETT, BYLINE: Peggy Dankerd(ph) lives on the far west side of Detroit. She retired from the city's EMS department about four years ago after more than 26 years. Dankerd says she's not happy her pension could be on the chopping block in bankruptcy court right alongside bond holders investments.

PEGGY DANKERD: I can't buy insurance on my pension benefits like the bond holders buy insurance on their bonds, so I don't think they should be treated the same.

HULETT: Dankerd's monthly pension check is about $3,400 a month. That's almost double the average pension for someone who's not a police or fire retiree. Retired cops and firefighters have even better pension deals because they're ineligible for Social Security.

JOHN MILNARSIK: So I don't really have that buffer, should pensions get cut or anything like that. My only option is find employment.

HULETT: John Milnarsik(ph) retired in 2006 as a police commander. He says at 62, finding new work won't be an easy proposition and Milnarsik says it's not just the potential bite out of his pension check that hurts.

MILNARSIK: Couple the distress of cutting pension benefits with eliminating health care benefits and getting taxed by the state of Michigan last year by our honorable governor who saw fit to balance the budget on the backs of the retirees, it's a big hit to a lot of us.

HULETT: But Michigan's governor and emergency manager, Kevyn Orr, say at more than $9 billion in unfunded retiree benefits, the city is just out of options. Ronald King, an attorney for the pensioners, disagrees and is arguing in state court that Michigan's constitution protects those benefits.

RONALD KING: Maybe the courts will disagree with us but there is a constitutional protection in place that guarantees or protects accrued pension benefits and, you know, we have an obligation to at least play that out.

SHEILA COCKRELL: This question of public sector pensions, it's not a Detroit issue. It is a issue throughout the United States of America.

HULETT: Sheila Cockrell(ph) is a former pension board member and a former Detroit city council member. She says she hopes provisions are made for the most vulnerable of retirees, but she says she doesn't see a way out of the cuts.

COCKRELL: Is it fair? No. Is it right? No. But it is what it is. And if we want this city to take the huge potential that does exist here, there's going to be huge sacrifice.

HULETT: There are about 21,000 retirees collecting pensions from Detroit. They've been told that for the next six months, those payments will remain untouched. After that, it should be a lot clearer just how much sacrifice for pensioners there will be. For NPR News, I'm Sarah Hulett in Detroit. Transcript provided by NPR, Copyright NPR.