After a one month hiatus after the city released its most recent budget after declaring the largest municipal bankruptcy in American history, the city of Detroit, Michigan resumed mediation sessions with the city’s retired civil servants.  The mediation is designed to come to a middle ground on the pensions owed to former city employees.

Progress has been slow, but the main sticking point appears to be the proposed “freeze” of cost-of-living increases currently built into the pension plans.  These cost-of-living increases are designed to keep pension incomes abreast of rising inflation as time goes by.  Pensioners are understandably unwilling to be locked into an income model that means their retirement income will be worth less each year that passes.  It’s estimated that the freeze would result in pensions being worth 13% less over the lifetimes of the pensioners.

The 10-year freeze on cost-of-living increases is in addition to a proposed 4% reduction in police and firefighter pensions as well as a 26% cut in monthly checks to non-uniform city retirees.  The mediation efforts will continue, but for the moment, there appears little room for compromise on the issue, and most of the 33,000 pensioners involved in the negotiations expressed a desire to forestall any further issues until the cost-of-living issue is resolved.