The Dallas Police and Fire Pension System is one of the most troubled pension funds in the country. It’s 45 percent funded, but has lost 15 percentage points from its funding status since 2009.
As other funds raked in solid investment returns post-recession, Dallas Police and Fire has struggled; the fund returned -12 percent in 2015.
Those struggles have been well-publicized, and it’s beginning to have an effect on the workforce as public safety workers wonder whether they should retire now to ensure money is left for their pension.
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.”
The squeeze on Dallas’s fund is even more acute because of a decision to divert money from stocks and bonds into Hawaiian villas, Uruguayan timber and undeveloped land in Arizona, among other non-traditional investments. The strategy, put in place under prior managers, backfired. The fund lost 12.6 percent in 2015 and 0.7 percent over the past three years.
The public-safety system has just 45 percent of the assets it needs to cover benefits, down from 64 percent at the end of 2014 and half what it was a decade ago. The pension could be out of cash in 15 years at the current rate of projected expenditures, according to a Segal Consulting report in July.