Detroit's filing for bankruptcy protection will prompt institutional investors and state and local officials to more closely consider the cost of providing pension benefits and the way in which they are paid for, according to a P&I Online poll conducted last week.
Nearly 16% of respondents said the Detroit bankruptcy will prompt closer examination of pension contributions as a share of public budgets; while nearly 14% said the move will result in more public plans moving to defined contribution plans from defined benefit plans. Another 7.6% said public employees would be asked to contribute more to their retirement plans.
Those figures were dwarfed by the 56.5% of responses that selected “All of the above” indicating all those changes are likely to follow the filing.
Only 5.3% of those responding to the poll said “None of the above” would result from the city's bankruptcy.
Detroit filed for bankruptcy July 18 under Chapter 9 of the U.S. Bankruptcy code, citing $18 billion in debts and more than 100,000 creditors. Chapter 9 is for municipalities and differs from the rules used by bankrupt companies in Chapter 11.
