Bankruptcy Implementation Pension Benefit Adjustments
Prior to the City’s bankruptcy, the Retirement Plan provided for an annual cost of living
adjustment (“COLA”). This payment was annually applied to the July benefit payment which is paid on
the first of August (i.e., benefit payments are paid monthly in arrears on the first of the month for the
The POA eliminates all future COLA benefits effective July 1, 2014. While the bankruptcy was pending,
the Retirement System paid COLA, up to 2.25%, commencing with your August 1, 2014 benefit payment.
This COLA will be eliminated starting with the March 1, 2015 benefit payment.
There will be NO
recovery of the COLA payments that were paid from August, 2014 through February, 2015; nor will
COLA benefits granted prior to July 1, 2014 be eliminated.
Accordingly, your March 1, 2015 retirement benefit payment will be reduced by the applicable monthly
COLA benefit paid since August, 2014.
4.5% Benefit Reduction.
The POA also requires that after reduction of the above noted COLA amount,
your base retirement benefit be further reduced by a 4.5% Benefit Reduction. The 4.5% Benefit
Reduction applies only to the pension benefit amount, not to any annuity payments made as a result of
a retiree’s election at the time of retirement to annuitize all or a portion of their ASF Account balance.
Your March 1, 2015 retirement benefit payment will reflect this 4.5% Benefit Reduction.
If you are subject to the Annuity Savings Fund (“ASF”) Recoupment of “excess
earnings” under the POA; and you did not have sufficient ASF balance to cover the Recoupment; and
you DID NOT elect the lump sum Cash Option, your March 1, 2015 pension benefit payment will be
reduced by the monthly deduction amount previously provided to you.
The combined 4.5% Benefit Reduction and ASF Recoupment monthly reduction shall not exceed 20% of
your current accrued pension (excluding the COLA deduction noted above). If you elected the ASF
Recoupment Cash Option, you should have already received your payment notification and instructions.
For those retirees that timely elected the Cash Option, ASF Recoupment Cash Payments are due on or
before March 24, 2015.
Income Stabilization Fund:
If you timely filed an application for the Income Stabilization Fund (“ISF”)
program and were determined as an Eligible Pensioner by the Michigan Department of Treasury, your
March 1, 2015 pension benefit may include restoration of all, or a portion of, the 4.5% Benefit Reduction
and/or COLA reduction. Eligibility was based upon total household income equal to, or less than, 140%
of the Federal Poverty Line in 2013.
The Treasury Department calculated the amount of benefit you will receive, if any, under the State
Contribution Agreement, as an Income Stabilization Benefit amount or an Income Stabilization “Benefit
Plus” amount. An Income Stabilization Supplemental benefit, not greater than your 4.5% Benefit
Reduction, is paid however, only if your 2013 total household income (based upon household size) is
below 130% of the 2013 Federal Poverty Level.
An Income Stabilization Benefit Plus is paid, or may be paid at some time in the future, if your 2013
household income indexed for inflation is less than 105% of the Federal Poverty Level in the applicable
year. The Benefit Plus may restore the cumulative COLAs and 4.5% Benefit Reductions as a result of the