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Bankruptcy Judge Meredith Jury ruled yesterday that pension bondholders can’t force the bankrupt California city of San Bernardino to pay them as much as the state’s powerful retirement system, a judge ruled, Bloomberg News reported yesterday. Judge Jury acknowledged that her decision yesterday is likely to be seen as unfair to the municipal-bond market and may even discourage investors from buying pension-obligation bonds in the future. “What I see as unfair and might seem unfair to the outside world does not matter under law,” Jury said. She said there was no legal way to force bondholder debt to be repaid exactly as monthly pension dues owed to the California Public Employees’ Retirement System (CalPERS). In January, bondholders sued San Bernardino in federal court, seeking to convince Judge Jury that their debt must be given equal repayment status as the city’s payments to CalPERS. San Bernardino filed bankruptcy in 2012, blaming the high cost of fire and police contracts, including pensions. Since then, the city has battled fire and police unions over its plan to impose cuts.

More than 400 employees of Atlantic City, N.J., municipal government and its school district could be laid off under a pair of plans made public on Friday, the Press of Atlantic City reported yesterday. Layoff notices went out to nearly 200 Atlantic City government employees, including about 88 firefighters and 107 employees in other city departments. Meanwhile, the state monitor overseeing the city school district confirmed that it will lose 226 full-time positions under the proposed 2015-16 school budget he will present to the school board at a special meeting today. The news of the possible layoffs, which could be in effect by the end of June, has been anticipated for months as the city and school district struggled to deal with the city’s ongoing financial crisis.

The Illinois Supreme Court on Friday unanimously ruled that the Illinois pension reform law passed in 2013 is unconstitutional, Pensions&Investments reported on Friday. The pension law — which reduced cost-of-living adjustments, capped pensionable salaries and raised retirement ages — violates the state's constitutional clause that pension benefits “shall not be diminished or impaired,” the Supreme Court affirmed on Friday. On Nov. 26, Attorney General Lisa Madigan appealed the Circuit Court's ruling to the state Supreme Court, maintaining pension benefits could be altered in light of Illinois' roughly $100 billion pension funding crisis. The Supreme Court rejected that argument, faulting the state for underfunding the plans. The pension funding crisis “is a crisis for which the General Assembly itself is largely responsible,” said Justice Lloyd Karmeier writing for the court.

Corporate pension insurer Rothesay Life on Wednesday completed a £675 million ($1.02 billion) buyout of the pension plan for Lehman Brothers’ European arm, the Wall Street Journal reported today. Under the deal, the London-based insurer will take over the liability for the defined-benefits pension plan of Lehman Brothers International (Europe). The bulk annuity deal ensures some 2,466 former Lehman employees in Britain will finally receive their full pensions more than six years after the investment bank’s collapse.

Since crude prices began tumbling last year, energy companies have announced plans to lay off more than 100,000 workers around the world, the Wall Street Journal reported today. At least 91,000 layoffs have already materialized, with the majority coming in oil-field-services and drilling companies, according to research by Graves & Co., a Houston consulting firm. Now the cutbacks are slowly showing up in federal employment data. Direct employment in oil and gas extraction, which had grown by more than 50,000 jobs since 2007, has fallen by about 3,000 jobs since it peaked in October at 201,500, according to the Bureau of Labor Statistics; 12,000 jobs have disappeared from the larger category of energy support since it reached 337,600 jobs in September.

The New York City comptroller, Scott Stringer, went public last week with news that billions of dollars have been leaking out of the city’s five public-employee pension funds, in payment for Wall Street money management that wasn’t worth it, according to a New York Times today. Stringer’s office did an analysis of the funds over the last 10 years and found that the high fees of managers and failure to reach performance goals had eaten away $2.5 billion of the pension systems’ value. If you take the funds’ gains since 2004, and subtract the fees, the analysis said, you end up basically at zero. To be more precise: The analysis found that over the 10 years, the managers of “private” asset classes, such as hedge funds and real estate, fell $2.6 billion short of target benchmarks after fees were accounted for, according to the editorial. Over the same period, managers of public asset classes, like stocks and bonds, slightly exceeded their benchmarks. “However, those managers gobbled up more than 95 percent of the value added — over $2 billion — leaving almost no extra return for the funds,” Stringer’s office said.

Ford Motor Co.'s Americas chief indicated on Wednesday that the No. 2 U.S. automaker will be looking to bring its labor costs in line with those of its smaller rival Fiat Chrysler Automobiles when it opens talks this summer with the union representing its hourly workers, Reuters reported yesterday. Joe Hinrichs, Ford Motor Co. executive vice president and president of the Americas, said that the subject of entry-level workers, who are paid less than their veteran co-workers, will be a subject of talks with the United Auto Workers. Ford, Fiat Chrysler and General Motors Co. will negotiate new deals to replace ones expiring in mid-September. Hinrichs, who declined to discuss the pending talks in detail, said that Ford needs to remain competitive in order to maintain its investment in U.S. plants, and pointed to the UAW's desire for a deal that is similar at all three automakers in helping Ford lessen the advantages that Fiat Chrysler gained during its 2009 bankruptcy. 

A deal in the legal battle over the state’s 2011 landmark public pension system overhaul was unveiled in court yesterday, affecting about 59,000 past and present state employees, the Wall Street Journal reported today. Frank Williams, a retired Rhode Island Supreme Court chief justice who worked to broker a settlement, said that most of the retirees and public unions suing the state had accepted the terms. Gov. Gina Raimondo said that the settlement provides certainty for public employees and for municipalities, locks in 90 percent of the savings from the pension reform and resolves six of nine lawsuits against the state. The deal, however, doesn't end years of legal wrangling over the higher retirement ages and cuts to cost-of-living increases that were designed to save the state $4 billion over 20 years. The parties have to be notified and the settlement has to be formally approved by the judge. The pension reform was done legislatively, so the settlement terms have to be incorporated into the law and approved by the General Assembly.