Detroit Cuts Pension Deal with Retired Police, Firefighters

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/ Source: Associated Press

Detroit has reached a deal on pension cuts for retired police officers and firefighters that would help the struggling city advance the largest municipal bankruptcy in U.S. history.

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Under the agreement, retirees would see a reduction in annual cost of living payments that are attached to the pensions. The deal was announced Tuesday by mediators who have been negotiating privately with all parties in Detroit's bankruptcy.

The city had been proposing a 6 percent pension cut and no cost-of-living payments.

The deal still is subject to a vote by more than 6,000 retirees and review by a bankruptcy judge. It also is tied to the city getting $816 million from foundations, philanthropists and the state of Michigan.

Lawmakers still haven't approved the state's $350 million share.

On Friday, Detroit's plan to get out of bankruptcy cleared a major hurdle when a U.S. Bankruptcy Court judge approved the city's third attempt at settling costly interest-rate swap agreements with two investment banks.

- The Associated Press and Reuters contributed to this report.