The federal judge who oversaw the Detroit bankruptcy case, Steven W. Rhodes, has offered a blunt assessment of the future of public retirement systems, calling for officials to consider moving to defined contribution plans, Pensions & Investments reported today. Judge Rhodes, who retired Feb 18 as judge in the U.S. Bankruptcy Court for the Eastern District of Michigan Southern Division, Detroit, warned about the looming crisis of unfunded public pension plan liabilities. He is correct in his perception and his call for cities to consider such a move if they fail to get their defined benefit plans on a sound financial basis. As the judge who oversaw the biggest U.S. municipal bankruptcy case — where pension plans played a major role in the collapse of a city's finances — his observation should draw the attention of legislators and other policymakers and fiduciaries about the consequences of a lack of commitment to pension reform, but that doesn't need to mean abandoning a defined benefit structure.
