Detroit workers not already vested in a city pension would be excluded, and many retirees would be moved to federal health-care programs under cost cuts emergency manager Kevyn Orr outlined for union leaders Thursday.
For those covered by a plan, benefits would be frozen and some would be switched to a defined contribution plan, under the proposal. Mr. Orr hasn't determined how much to take from future or current retirees, pending an actuarial analysis. Automatic cost-of-living raises would be eliminated, and worker contributions into the system would rise.
The proposal, laid out at two sessions led by Mr. Orr's advisers on municipal restructuring, provoked angry responses from some union leaders who said the emergency manager was dictating unpalatable benefit cuts for workers to help erase deficits and avoid filing the largest U.S. municipal bankruptcy. Mr. Orr's plan would pay pennies on the dollar to some debtholders; others might get more.
Officials representing police officers and firefighters said they would study and respond to Mr. Orr's proposal, which would affect about 30,000 current and former city workers.
Mr. Orr might keep non-vested police officers and firefighters on their current pension plans, said Bill Nowling, a spokesman.
Michigan law gives Mr. Orr, a bankruptcy lawyer from Washington appointed by Republican Gov. Rick Snyder, the authority to rewrite city contracts. Mr. Orr has called Detroit's $5.7 billion in health and pension liabilities an unsustainable burden for a city that has lost a quarter of its residents since 2000.
Detroit's two municipal pension plans — the $3.4 billion Detroit Police and Fire Retirement System and $2.77 billion Detroit General Retirement System — have set aside a combined $5 million to fight in court any changes sought by Mr. Orr.