GRS Pension Restoration Program
The GRSD worked diligently to ensure that pension restoration was included in Detroit’s plan of adjustment.
The program would allow for the potential restoration of accrued benefits, including cost of living adjustments (COLA) and Annuity Savings Fund (ASF) Recoupment, which were reduced as part of the Plan of Adjustment.
The Restoration Program is wholly driven by the GRS Funded Level. The program would be supervised and administered by the GRS Board, a newly formed independent Investment Committee, and Restoration flows through 3 Waterfall Classes of GRS participants.
There are three Waterfall Classes:
- Waterfall Class 1 – Retirees in retirement benefit pay status as of June 30, 2014, and their surviving spouses and beneficiaries.
- Waterfall Class 2 – Retirees who entered into retirement benefit pay status after June 30, 2014, and their surviving spouses and beneficiaries, and who are in pay status as of the end of the GRS Fiscal Year prior to the year in which the restoration decision is made.
- Waterfall Class 3 – All other GRS participants who are not in retirement benefit pay status.
Restoration of Benefits
- If the projected funded level is above the Restoration Target, assets are transferred to a Restoration Reserve.
- If assets in the Reserve are sufficient to fund a restoration increment for the actuarial life expectancy to a Waterfall Class, restoration is provided:
- 4.5 percent benefit cut is restored in 0.5 percent increments until full restoration of 4.5 percent to each Waterfall Class
- COLA restored in 10 percent increments to Waterfall Classes in accordance with schedule
- ASF may be recouped as well – first non-retirees to retiree level, then all other ASF participants.
Generally, in the event the projected funded level falls below the applicable funding target, transfer of assets from the restoration reserve to the pension plan will occur and future restoration benefits may be suspended, diminished or terminated.
In the event the GRS satisfies the permanent restoration targets in 2028, 2033 and 2043, (an additional 1 percent outperformance above restoration trigger); restoration benefits in effect at that time which are fully funded shall be permanently restored and not subject to suspension, diminishment or termination.