Letter: Detroit’s pension obligations are ‘being managed proactively’

I write on behalf of the Police and Fire Retirement System of the City of Detroit to respond to your March 14, 2026, article, “Good debt, bad debt: Detroit is paying down its bonds – but pension costs are rising.” While we appreciate your use of Office of the Chief Financial Officer (OCFO) data, several conclusions and impressions in the piece require clarification so readers are not left with the false impression that Detroit’s pension costs are rising dramatically and are unaffordable.

First, the OCFO data cited in your article show revenue growth that supports pension funding: property tax revenue is projected to rise from $177 million in the current fiscal year to $199 million by FY2030; income tax revenue from $408 million to $481 million; and wagering revenues from $329 million to $337 million. These revenue trends, together with prudent budgeting, undercut the article’s implication of an imminent pension crisis.

Since the bankruptcy, the city (which has appointees on both pension boards) has worked collaboratively with the pension boards, actuaries and advisors to responsibly address obligations. During the payment hiatus, the city established the Retiree Protection Fund (RPF) to blunt the so-called “pension cliff.” The city contributed approximately $455 million to the RPF before resuming payments in 2024; as of June 30, 2026, the RPF balance is estimated at $295 million. Total city contribution due for Fiscal Year 2027 for the Component II legacy plans (PFRS and General) is $161.2 million, funded in the FY 2027 budget by $76.9 million from the general fund, $65.6 million from the RPF and $18.7 million from the Foundation for Detroit’s Future.

Pension obligations here are lower than in many American cities and are being managed proactively. PFRS held roughly $3.2 billion in assets when the Plan of Adjustment imposed a 10-year funding hiatus in 2014. Despite paying approximately $300 million annually in benefits during that period, and after foundation payments were reduced by accelerated discounted payouts, diligent fiduciary oversight and favorable markets resulted in roughly $3.0 billion in PFRS assets as of January 2026 — a positive development that reduces required city contributions.

Per the board-approved actuarial report (January 2026), the PFRS legacy plan is 73.86% funded with an FY2027 employer contribution of $80.57 million. The pension hybrid plan (hire date 2014+) is 92.78% funded with a forecasted City contribution of $33 million for FY2027.

Your article also noted “adjustments to health care costs and some cost-of-living adjustments.” In fact, retiree health programs for first responders were eliminated and COLA restorations remain unmet for over a decade. First responders are mandated to retire at age 60, creating a five-year Medicare gap during which modest pension benefits must cover healthcare. A supplemental VEBA has been established to help subsidize these costs; we encourage state, city, and private support to bolster this fund. It is also important to note that Police and Fire retirees are generally not eligible for Social Security.

Detroit’s first responders and retirees deserve recognition for their service, not implications that their pensions are an unreasonable burden. A close reading of OCFO charts and the actuarial data demonstrates that pension obligations are forecasted and accounted for in the City budget and that sound stewardship will sustain appropriate funding without undue strain on municipal finances.

We request that you publish this clarification and encourage future reporting to reflect the full context of the OCFO and actuarial data.

Ron Thomas is chair of the Police and Firemen’s Retirement System Board of Trustees.