1、CRS INSIGHT Prepared for Members and Committees of Congress Legal SidebarLegal Sidebari i When the City Goes Broke: Pensions, Retirees, and Municipal Bankruptcies April 10, 2018 In recent years, a significant number of cities, towns, and other municipalities in the United States have found themselve
2、s increasingly unable to pay their debts. In order to offer municipalities relief from many types of debts they cannot repay, Chapter 9 of the Bankruptcy Code authorizes certain municipalities to file for bankruptcy. However, filing for bankruptcy may adversely affect the municipalitys creditors, es
3、pecially beneficiaries of underfunded municipal retirement plans (who, along with bondholders, often hold “the lions share” of a municipalitys financial obligations). Because a number of municipalities face a “dramatic and growing shortfall in public pension funds,” many “firefighters, teachers, pol
4、ice officers, and other public employees” who purportedly have “a right to pension benefits at retirement” face a significant risk that their pensions will ultimately not be fully repaid. The fact that public pensions, unlike their private counterparts, are neither subject to the “vesting and fundin
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