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THE FACTS – Unfunded liabilities are not debts owed by the city: The so-called unfunded liabilities are not a debt but a projection based on assumptions. The unfunded liability figure is not the same as a conventional debt that must be paid off to be eliminated. It is an abstract accounting number that can go up or down significantly over a relatively short period of time depending on the state of the overall economy and the health of financial markets.
THE FACTS – The unfunded liabilities are not “in the form of pensions to retired workers”
Detroit pensions are pre-funded. This means the City has paid into the system far more than what is being drawn by current retirees. Retiree payouts come from the balance of what has been pre-funded. Retiree benefits are not unfunded.
THE FACTS – The City’s plans has asset values exceeding $5 billion: The City’s pension funds have a value of over $5 billion. The police/fire plan has a funded ratio (using Orr’s figures) of approximately 80%. No plan is required to be funded to 100% because not all current employees can retire at the same time because they are not the same ages.