The estimate was not for the solvency of the City of Detroit but the time until the pension fund cannot meet its monthly distribution obligation. The pension plan has some assets which can be liquidated to pay benefits currently. However, if you discount all the future promises to today’s date at their present value the fund is way underfunded.
The City of Detroit filed bankruptcy, not the pension plan. For the time being retirement benefit payments can continue. Once it is determined the City will not fund the plan at its promised level, the pension plan itself will have to go into bankruptcy or otherwise revise their benefit obligations.
Thank you for the clarifications. Do you know what other major cities - if any - might face a non-pension related bankruptcy?