Puerto Rico’s federal overseers have agreed to roll back some planned pension cuts under a proposed settlement with retirees, a key step toward wrapping up its more than two-year-old bankruptcy, the Wall Street Journal reported. The official retiree committee appointed in Puerto Rico’s court-supervised bankruptcy said the agreement would “substantially improve” the treatment of retirement benefits for 167,000 pensioners compared with a 30-year framework approved by the U.S. territory’s financial oversight board in May. The deal, which requires court approval, covers Puerto Rico’s $50 billion pension debt, the island’s largest single liability. It also brings Puerto Rico closer to lifting the central government out of the biggest municipal restructuring ever. But it could face opposition from investors worried that shifting additional revenue to pensioners would deepen losses on billions of dollars in bond debt. Government retirees who receive $1,200 a month or less in benefits would be shielded from any reduction under the settlement, up from a $600 threshold previously proposed by the board.
