A federal bankruptcy judge's ruling that public sector pensions are no more than a contractual obligation could be a "catastrophe of first order" for workers in Detroit, Professor Normal Stein told Newsweek in a Dec. 4 article.

According to Newsweek, pensions are normally regarded as deferred wages. In other words, money workers could have received in their pay checks had they not elected to set it aside.  The federal bankruptcy judge's ruling in Detroit's Chapter 9 case held that the city had nothing more than a contractual obligation to pay out pensions despite the Detroit constitution's requirement that there can be no reduction to returned public sector worker pension funds, Newsweek reported.

Commenting on the situation, Stein said "[i]t would be a human catastrophe of the first order if pensions of vulnerable older workers can be cut whenever a local government goes to bankruptcy court.”  “We will be consigning firemen and policemen, who did nothing wrong other than protecting the city and depending on the city's promise, into old-age poverty.”

Professor Stein is a nationally recognized authority on pension law, employee benefits and tax law. In addition to producing a rich body of scholarship, he is actively involved in policy development and testifies frequently before Congress.  He also organized this year's law review symposium examining the landmark ERISA pension law.