CHICAGO — The Detroit City Council Tuesday voted against Michigan legislation that would dissolve the city’s two main pension fund boards and transfer management of the two funds to a nonprofit group in Lansing.

The council’s resolution opposing the legislation is moot. The state bills do not need Detroit’s approval to move forward, but the move is likely the first salvo in what is expected to be a hard-fought battle against Mayor Dave Bing’s plan to shift management of the city’s massive retirement systems to save an estimated $20 million annually.

Savings would come mainly from administrative savings, the expectation of higher investment returns, and a shift to a defined contribution plan, Bing officials said.

At Tuesday’s council meeting, representatives from the city’s General Retirement System and the Police and Fire Retirement System and council members blasted the mayor’s aides for bypassing the council by taking the measure to the legislature.

Deputy mayor Saul Green warned the council that if the city doesn’t get its retirement costs “under our control, our ability to pay them is in dire, dire jeopardy.”

The main bill, the Distressed Municipal Pension System Act, outlines six triggers that would alert the Michigan treasurer to declare a pension fund distressed. If a pension system is found to meet two of the six triggers, its board would be dissolved and it would come under management of the Municipal Employees Retirement System, a nonprofit pension management group based in Lansing.

The second bill amends the Municipal Employees Retirement Act of 1984 to create two more seats on the MERS board for two years. The additional seats would give Detroit some additional control over the funds during a transition period, city officials said. Both measures are in the Senate and House appropriation committees.

Bing crafted the legislation to help lift some of the burden off the city for annual contributions that are expected to total $687 million over the next three fiscal years, and reach a quarter of the city’s revenues by 2012, his aides said.

“The theory is that the current pension boards have done such an abysmal job of investing and administering that if those jobs are transferred to a perhaps more experienced, more disinterested, less conflicted group, then a better outcome would occur,” said Robert Stevenson, an Ann Arbor-based pension attorney with Stevenson Keppelman Associates.

“From my viewpoint, I think this is an overreaction,” he added. “If the trustees are doing a bad job, they get sued — you don’t change the rules of the game and take the whole retirement system away from the city of Detroit.”

Both pension plans are close to 90% funded.

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