Defined Benefits

As creditors prepare to vote on a plan to end Detroits $18 billion bankruptcy, the city still needs help from state lawmakers to pay its obligations while avoiding a fire sale of its fine art collection.

New workers will have the option of choosing a 401(k) plan or a hybrid plan in which one third with will be a 401(k) and two-thirds will be a traditional pension.

The typical U.S. corporate pension plans funding status declined by 1.1 percentage points to 91 percent in April as liabilities increased faster than assets.

U.S. Bankruptcy Judge Steven Rhodes approved the citys disclosure statement and a plain language explanation of how pension and retiree health benefits for current and former city employees would change under the plan to shrink the citys $18 billion in debt.

The downgrade is the result of narrow operating reserves, below average income indicators and an elevated debt burden, due in part to retirement pensions for full-time firefighters and police officers.

While this is a good problem to have, the question going forward is what to do with the gains.