Dallas Police And Fire Pension Board Votes To Halt DROP Withdrawals
The Dallas Police and Fire Pension Board voted Thursday morning to halt withdrawals from the fund’s Deferred Retirement Option Program, known as DROP.
The program allowed first responders eligible for retirement, but who wanted to keep working, to maintain a separate savings account with an interest rate of at least 8 percent.
Dallas Mayor Mike Rawlings filed a lawsuit Monday demanding that the withdrawals stop. Rawlings filed the suit as a private citizen.
Before the vote, Rawlings spoke this morning with KERA about the DROP program:
“I think it’s critical to realize that the citizen’s didn’t vote these benefits in, the beneficiaries voted their features and benefits in and they voted themselves a guaranteed 8 to 10 percent return on investment every year for money they left in the account, and anybody would take that, and that creates a real hole that we’ve got to deal with.”
Thursday's vote stops more than $154 million in requested withdrawals from being distributed Friday. Pension officials say the withdrawals would drop reserves below what's needed to sustain the fund. More than $500 million has been withdrawn since August, which has been described as a run on the bank.
The Police and Fire Pension Fund could go broke in as soon as a decade without any changes.
System officials say they are working to convert illiquid assets to liquid assets to resume monthly payments in January.
Both the city and pension system are proposing plans to lower benefits to stabilize the fund.
The Associated Press contributed to this report.