The City of Detroit and the Police and Fire Retirement System of the City of Detroit have settled a legal dispute involving the $2.8 billion pension plan’s amortization city payments for unfunded liabilities and the city’s yearly schedule for making payments to the pension fund.
The settlement was announced Oct. 31 in a document filed with Judge Thomas J. Tucker for the U.S. Bankruptcy Court in Detroit.
The terms call for the pension fund to amortize city payments over a 30-year period instead of the 20-year period originally proposed by the PFRS Investment Committee and PFRS board.
The city sued over the 20-year strategy, and the bankruptcy court supported the city in June 2023. The pension fund appealed in December 2023 to the U.S. District Court in Detroit. The appeal is pending, but both sides decided to settle.
“The argument was that 20-year amortization would increase and accelerate the amount paid into the pension system,” said an Oct. 31 news release issued by the pension fund.
“The goal for both the PFRS and the city is to put as much money into the retirement system as quickly as possible for the benefit of our members,” PFRS Chairman Jeffrey Pegg said in the news release.
The settlement also calls for the city to make quarterly payments to the pension fund — instead of an annual payment at the end of each fiscal year — for the 2025 fiscal year through the 2029 fiscal year. The pension fund's fiscal years end on June 30.
For the 2030 fiscal year through the 2034 fiscal year, the city will make payments every six months — on the last day of the second quarter and the last day of the fourth quarter. After that, the city will make payments annually.
