The financially embattled city of Stockton, Calif. – whose recent claim of bankruptcy began a trend in other broke California communities – is now being challenged on the credibility of its bankruptcy claim. The city is instead being asked to chop its pensions rather than saddle outside companies with the debt.
According to Reuters, two of the city's bond issuers have called the bankruptcy into question as it left pensions intact, favoring the California Public Employees' Retirement System over the bond debt obligations.
CALPERS is the country's largest public pension fund, and has recently announced its own troubles as its $234 billion pension system, serving 1.6 million state employees, only saw a 1 percent return on investments last year.
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