A leaked executive order from Detroit’s Emergency Manager revealed Monday that, as of last week, pension funds for many city workers will be frozen and replaced with a 401k-style plan.
The freeze, which was ordered by city Emergency Manager Kevyn Orr and took effect December 31st, pertains only to Detroit’s General Retirement System, which covers around 19,000 non-public safety workers.
The freeze closes the fund to any new or re-hired workers, halts benefit accruals for current workers and stops worker contributions to the fund. It also ends cost-of-living adjustments for the fund’s 12,000 retirees.
To replace the frozen fund, Orr ordered the creation of a defined contribution plan that all affected workers now have access to.
Tina Bassett, the spokeswoman for the General Retirement System, said in a statement that the freeze was “an outrageous and over-zealous action.”