Detroit Retirees Got Extra Interest After Guaranteed 7.9%

Unusual fund management involved money transfers from city pension to employee savings plan to make guaranteed interest payments—and more in flush years.

Edna Love’s 58 years as a nurse for Detroit’s health department earned her a $2,000-a-month pension when she retired in 2011. That pales next to the $1 million she got from a separate city-sponsored savings plan where she put 5 percent of her pay year after year.

The annuity savings program within the Detroit General Retirement System created a class of privileged retirees in a city where pensions average about $19,000 a year, according to municipal records. The accounts got $756.2 million from the pension fund during 1985 through 2007 as extra interest, atop a guaranteed 7.9 percent backed by public money.

The transfers and extra interest were authorized by the pension board and city council, and were discontinued last year, Bassett said.

“These were revenue from those investments, and we thought we would be able to share them,” she said.

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