Voting officially began yesterday on the latest version of Detroit’s Plan of Adjustment, with the final deadline set for July 11. The restructuring plan, which has been drawn up from the office of Emergency Manager Kevyn Orr and has been backed by the trade union bureaucracy and union-affiliated retiree committees, contains deep cuts to the pensions and benefits of more than 30,000 active and retired city workers.
The plan includes provisions for the transformation of defined benefit pensions into “hybrid” pensions, which require contributions from employees of 10 percent or more to fund their retirement benefits, allowing the city to cut its contribution to the funds in half.
In a blatant blackmail against its employees, the city has threatened to end the firefighters’ cost-of-living adjustments (COLA) altogether should they vote to reject the plan. If they vote to approve the plan, COLA will still be cut by 55 percent. All general (non-uniformed) retirees will lose their COLA regardless of the outcome of the vote.
General retirees face an even more vicious threat, with the proposed 4.5 percent cut rising to at least 34 percent if they should vote to reject the plan. The city also plans to “claw back” $230 million worth of payments made to general retirees between 2003 and 2013 and will proceed whether the retirees vote to ratify or not.
The World Socialist Web Site spoke with a representative from the Detroit Fire Fighters Association Monday, who described the impact of the cuts in detail, characterizing their effect on firefighters’ income as “nothing short of devastating.”
“Taking into account elimination of retiree health care and cuts to COLA for active members,” he continued, “the cuts to pensions are closer to 30 percent. For currently retired firefighters, taking into account the high costs of health care and the loss of COLA, it could vary, averaging around a 15 percent cut.
“So, the reports in the media are quite deceptive as they are not taking into account the cost of retiree health care. That’s a huge cut they will have to carry into retirement. At the same time, they are ramming down our throats a maximum 10 percent contribution of base pay to pay for our pensions,” the DFFA representative said.
Even if the Plan is 100 percent funded, firefighters will still have to pay at least 5 percent of their salary to fund their own retirement benefits. “If the plan is underfunded, they will increase the ‘employee contribution’ by 10 percent or more,” he said. “Active firefighters with decades of experience are making $47,000 annually. You subtract that additional $4,700, plus costs for health care, this is going to leave many veteran firefighters below the poverty line.”
“Under the ‘defined benefit’ plan, the city was paying an average of 23 percent of the normal cost of the payroll. Now with the ‘defined contribution’ plan this is being cut down to 11.25 percent with workers making up the difference. It’s basically a way of the city saving money, paying for our pensions by cutting our salary.
“Now they are also telling us there may not be any wage increases in the coming years. Starting pay for a firefighter is $29,352. That is barely more than it was when I started back in 1996,” the DFFA representative said.
“The loss of health benefits is a central issue. Current actives are effectively being stripped of all their health coverage once they retire. They have offered us a pathetic $20-30 monthly stipend for a period of five years. In other words, we will be paying for health care out of our pensions. Hence the effective 30 percent cut to active fire fighters,” he said.
On Saturday, the World Socialist Web Site also spoke with fire fighters at stations around the city. A veteran firefighter, Kevin, told the WSWS, “The rich write their own rules. We need a revolution. There is no longer any doubt in my mind: they are going to keep on taking and taking until everything we have is gone. It’s like one of those science fiction movies where the wealthy live in ivory towers and everybody else is fighting for scraps.
“I can’t even retire at this point. They’ve changed all the rules. Now it is going to cost a retiree $1,000 to $1,400 a month for medical coverage. The emergency manager is trying to blackmail us, saying this is the ‘last, best offer’ and if you reject it you’ll get even deeper pension cuts.”
Kevin also spoke more broadly about the social catastrophe developing in the US and the drive towards a global war. “When I was young a college education used to be your ticket. Not anymore. I have a son paying $800 a month for student loans and my other college graduate is working at a bar.
“People are tired of all the wars. But the media is getting us ready for war with China. Who runs the media? The big corporations do,” Kevin said.
“They have a plan of attack against working people. The real war is going on right here, against the workers,” he concluded.
Another veteran, Curtis, told the WSWS, “There is nothing to vote for in either of the city’s offers. If you vote for one you lose any legal right to go to court to fight the emergency manager law or the unconstitutional pension cuts. If you don’t vote for it, the judge can still ‘cram-down’ even deeper cuts.
“The city is trying to play off the older firefighters against the younger ones. It’s strictly divisive.
“The unions are not working for us. They should never have agreed to any of this. At the last minute, the city changed its ‘last, best offer,’ and demanded a change in our promotional system,” Curtis said.
“They try to brainwash us into thinking we all have the same opportunity under this system. Capitalism pushes this idea that anyone can make it if they try hard, and if you’re not rich there must be something wrong with you.”