“If I were a retired public-sector pensioner, I’d be worried today.” Olivia S. Mitchell, Professor of Insurance/Risk Management and Applied Economics/Policy, and Executive Director of the Wharton’s Pension Research Council at the University of Pennsylvania, was quoted as saying in the Los Angeles Times.
U.S. Bankruptcy Judge Steven Rhodes recently ruled that federal bankruptcy law preempts provisions in the state of Michigan which once were thought to protect public-sector pensions. Speaking about the ruling in Detroit, Mitchell said: “This is really the first time that there’s been a clear decision by a judge that, yes, pension promises are on the cutting board too.” This ruling could also pave the way for states with troubled pensions to avoid covering their pension promises. This ruling comes on the heels of a vote by Illinois legislators to cut back retiree cost-of-living adjustments to reduce pension costs.
Read the full Los Angeles Times article here.