Dallas public servant's pension fund goes down the shitter - Polidicks

[quote]A run on a pension fund is virtually unprecedented. But that is what is happening in Dallas, where policemen and firefighters are pulling money out of their city’s chronically underfunded plan, and Mike Rawlings, the mayor, is suing to stop them. At the start of the year the fire and police pension fund had $2.8bn in assets. Since then nearly $600m has been withdrawn from the plan, of which almost $500m has been taken out since August 13th. That is an alarming acceleration; in 2015 total withdrawals were just $81m. Even at the start of 2016, the plan was just 45% funded, and was expected to become insolvent within 15 years. When some workers take out their money, they get the full value of their benefits; leaving a smaller pot to be shared among the remaining members. (The city estimates that the funded ratio has fallen to 36% after the withdrawals.) As in a bank run, it seems rational to withdraw your money if you worry that all the benefits won’t be paid. The crisis is the result of three linked issues: overgenerous pension promises; the flawed nature of public-sector pension accounting in America; and some bad investment decisions. [/quote] [url]http://www.economist.com/news/finance-and-economics/21711335-pensions-crisis-has-been-brewing-decades-and-it-not-confined-dallas[/url] The shithole of Dallas PD has had [URL="http://www.dallasnews.com/news/dallas-police/2016/12/12/dallas-99-cops-quit-10-weeks-putting-police-hiring-spree-life-support"]100 officers quit in 10 weeeks[/URL] because of the terrible pension, pay, and department politics. And thats likely not to stop.

[QUOTE]and Mike Rawlings, the mayor, is suing to stop them[/QUOTE] Yeah fuck those guys wanting the money they were promised.

Kind of interesting when the Texas State Police managed to push through measures to tremendously increase salaries in late 2015, making them one of the best paid state police agencies in the country. Plus Texas is relatively cheap compared to say, California or New Jersey. 50 hour work week compared to more conventional low 40 somethings, but even so, you still get overtime, and those are base rates. Not a word of state pensions failing. Just Dallas. [url]https://www.dps.texas.gov/trainingacademy/recruiting/benefits.htm[/url] They fucked things up this badly based on ludicrous 8-10% predicted annual growth. Whoever greenlit the financial planning behind the pension fund should be shot.

this is happening all across the states

what are some major consequences for having this happend?

[QUOTE=sipderbat;51555223]what are some major consequences for having this happend?[/QUOTE] The entire find is going to be insolvent. It went from 45% funded to 35%. Which means a ton of firefighters and police officers will never see a penny of their promised pension. It's partially fuelling the exodus of police officers from the city.

Ugh, and it's bipartisan too, this bullshit.

In contrast, my pension fund is only ~80% funded and we just had a 0% return this year, but are still projected to become fully funded Whoops my merge

So: [B]* The police department over promised on pensions * The city underfunded the department/fund, hoping to avoid voter-unfriendly property-tax hikes * The financial managers overestimated annual gains and took excessive risks with the investments * The officers/employees were counting on (perhaps naively) the pension being their primary retirement vehicle[/B] Quite a grim outlook.

[QUOTE=Zephyrs;51555103]They fucked things up this badly based on ludicrous [B]8-10% predicted annual growth[/B]. Whoever greenlit the financial planning behind the pension fund should be shot.[/QUOTE] What kind of idiot expects such in this economy?

It sounds like they've built a system to make the first person to pull their money out the best off.

[QUOTE=Code3Response;51555263]The entire find is going to be insolvent. It went from 45% funded to 35%. Which means a ton of firefighters and police officers will never see a penny of their promised pension. It's partially fuelling the exodus of police officers from the city.[/QUOTE] and if there not getting payed this could back fire like corrupt cops or something

So the takeaway is crime doesn't pay...and neither does being a lawkeeper?

[QUOTE=Vlevs;51555438]What kind of idiot expects such in this economy?[/QUOTE] So here's the thing. This isn't actually [i]that[/i] out of line. They invested in risky ventures that fell through, but Dallas has had substantial population growth in the past. [url=https://en.wikipedia.org/wiki/Demographics_of_Dallas#Historical_growth]See here.[/url] An underfunded pension isn't automatically a serious problem if your population growth is substantial, because the number of retirees is small relative to the size of the new force. Economically, it's actually beneficial to defer payments if growth is substantial. This is the whole good debt vs bad debt argument. The problem is that they both overestimated the return on investments (several of theirs failed), and assumed that population growth would continue, and overestimated their safety. One or the other is a problem, but a fixable one over a couple of decades. You just roll the costs up and spread them out in small payments. Sort of like a mortgage on your house. Both at once pushes things too far, and suddenly that good, or at least ambiguous debt becomes debilitatingly bad debt.

[QUOTE=Vlevs;51555438][QUOTE=Zephyrs;51555103]They fucked things up this badly based on ludicrous 8-10% predicted annual growth. Whoever greenlit the financial planning behind the pension fund should be shot.[/QUOTE] What kind of idiot expects such in this economy?[/QUOTE] 8-10% growth for funds really isn't out of the ordinary; the growth in my superannuation fund is at around 8.5%, and I'm also afforded the option of investing in a high growth plan, which can have returns of around 12% in good years. There's nothing unrealistic about 8%, unless the fund has terrible managers. And don't forget, GDP growth is an average of many factors; most growth investments are in things that exceed GDP growth. But really, most public servants are older people who are halfway through their careers, that fund should have been using a low-risk/low-growth strategy.