"With their pension fund teetering on the edge of bankruptcy, Dallas police officers are grabbing what they can before the whole thing crashes down.
Panic has set in and dozens of officers are pulling their retirement money out of the system as quickly as possible, WFAA reported over the weekend.
One assistant police chief recently pulled $1 million out of the retirement fund and more than $300 million has been withdrawn in recent years, the Dallas ABC affiliate reported, citing unnamed sources.
Like most public pensions systems, the Dallas Police and Fire Pension System gives members the option to withdraw a lump sum when they retire or to collect an annual payment for the rest of their lives. Think of it as the difference between taking the payout or the annuity in a lottery—the lump sum is probably less than what you'd get with the installment plan (depending on how long you live, of course) but at least you know how much money you're getting.
It seems that many newly retired officers believe that its better to get some money today instead of being promised more money tomorrow.
That's because tomorrow might not come for a pension system that has been badly managed for decades and is now $5 billion in the red.
According to Moody's, the system will be completely broke in about 20 years.
...Retirees will be eligible to start drawing a pension on October 1, but it looks like many new retirees are planning to pull all their cash out of the city's pension fund as quickly as possible, leaving officials scrambling to figure out how to deal with the loss of assets.
The city poured $29.3 million into the fund this year, but members of the pension board told the city council in May that an immediate infusion of $600 million—equal to 20 cents of every dollar the city spends this year—would be required to keep the fund solvent.
The pension fund expects to earn 7.5 percent annually—a figure that many experts say is too high a target in the current investment environment..."
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