Detroit's emergency manager proposed freezing pension benefits for some current city workers starting in 2014 and will launch a two-month probe into the city's dysfunctional and error-prone handling of employee benefits, Reuters reported yesterday. A copy of Kevyn Orr's proposal was released by one of Detroit's two pension boards yesterday, the same day the city's auditors posted a report that shed light on how Detroit overpaid benefits, including unemployment compensation for almost two years to 58 people who never worked for the city. The report also raised the question of whether there was fraud in doling out some unemployment claims. The auditors' review of nearly two years of unemployment compensation claims found that 13 percent were likely fraudulent and another 36 percent were highly questionable and required investigation. In his pension proposal, Orr would close the general retirement fund, which represents non-uniform city workers, to all future city workers and freeze it for current workers as of Dec. 31. The city would replace the pensions with 401(a) and 457(b) retirement plans.
