WASHINGTON — The Senate Finance Committee's top Republican said Wednesday that the bankruptcy judge's ruling Tuesday that Detroit's public pension funds could be subject to cuts is a wakeup call for Congress to consider his pension bill.
The SAFE Retirement Act (S. 1270), which Sen. Orrin Hatch, R-Utah, introduced in July, would allow state and local governments to invest in annuity contracts with private life insurance companies for employee retirement benefits.
But some pension experts have questioned whether the proposal is workable.
In a statement issued this week, Hatch said, "It's an indisputable fact that Detroit's public pension debt was a major factor that drove it into insolvency. Today's ruling is a wake-up call that we have to get serious about confronting skyrocketing public pension debt, which is reaching a crisis point in some parts of our country. Continuing to ignore the financial disaster coming our way is a risk we can't afford to take. The times is now to act. I've introduced legislation to begin tackling this crisis in a reasonable way to ensure taxpayers aren't on the hook."
A report on city pension plans released by Morningstar, Inc. in November found Detroit to have the second strongest pension plans, after the District of Columbia.
Morningstar, which looked at the pension plans of the 25 most populous cities in the nation, said Detroit's funded ratio was 91.4%, just behind D.C.'s funded ratio of 104%. A funding ratio is an actuarial comparison of a pension's assets to its liabilities.