Robert Snell of the Detroit News reports Detroit pension trustees weakened the city’s retirement fund by using hundreds of millions of dollars on savings plans for active workers and doling out annual bonus checks, according to a restructuring expert hired by the city.
"The practice — in effect since at least the mid-1980s — was “effectively robbing” the city’s pension funds and contributed to a “significant underfunding” of the city’s pension funds, according to a report from restructuring firm Conway MacKenzie.
"The report — written by Charles Moore, a consultant with Conway MacKenzie — said the General pension fund distributed more than $532 million in annuity savings plan payments in the last five years, an income stream for workers that flowed during good and bad years.
In 2009, Snell writes, when the pension fund lost 24 percent of its value, workers earned 7.5 percent on their savings plans — a payout the consultant called “egregious” and “an abuse of discretion.”
