Dallas Police See Exodus as Doubts Rise on Pension Promises

Dallas’s police and firefighters are quitting in droves, wagering that financial-market losses are about to render their promised pensions too good to be true. 

With the city considering benefit cuts to help close a retirement-fund shortfall that grew by $1.2 billion last year, more than 200 workers have decided to retire or leave, about double the normal rate, said Mayor Pro Tem Erik Wilson, who sits on the Dallas Police and Fire Pension System’s board. That’s threatening to put further pressure on the fund as benefits come due, including lump-sum payouts to older employees who’ve been drawing a paycheck while earning a guaranteed 8 percent return on their pensions. 

“I’ve had 40 to 50 officers in my office this week asking what they should do,” said James Parnell, 52, secretary-treasurer of the Dallas Police Association and 25-year veteran. “They’re very nervous about what is going to happen, they’re fearing a run on the money.” 

Turmoil in world stock markets and near record-low bond yields are taking a toll on pensions for cities like Dallas, which count on annual investment returns of more than 7 percent to cover promised benefits. In the year through June, U.S. state and local-government plans posted the smallest gains since 2009, leaving them with almost $2 trillion less than they will eventually need, according to data from the Wilshire Trust Universe Comparison Service and the Federal Reserve.

DYI Comments:  The time to panic is before everyone else.  If you are a Dallas firefighter or policemen with a significant build up in your pension definitely quit your job and roll your lump sum into an IRA.  The politicians over promised pension benefits to gain your votes and the feds with their sub atomic low interest rates plus a high flying overvalued market it will be IMPOSSIBLE to meet their stated pension obligations.  This is a classic.  Just as you can have a run on a bank; this is a run on a pension.  In the end the Dallas firefighters and policemen will have their pension converted to a 401k type plan but getting there will be rough.

DYI