DALLAS (AP) — The Dallas City Council heard the city's plan to fix the ailing Dallas Police and Fire Pension plan Wednesday, including a proposal to reduce benefit checks for the members who have withdrawn more than $500 million in deferred retirement funds since August.
Dallas Chief Financial Officer Elizabeth Reich presented the plan to the city council, which is to vote on it next week. She said the proposal would bring the pension plan, which has been plagued by overvalued real estate investments and the large volume of withdrawals, to 100 percent solvency in 30 years.
Actuaries hired by the pension system estimated earlier this year that the plan, which covered about 9,900 members and beneficiaries as of the last annual report, was 45 percent funded and could become insolvent in 15 years. After members withdrew more than $500 million in deferred retirement funds, the $1.5 billion plan is closer to 36 percent funded and could be insolvent in 10 years, the city said.
Reich said the proposed plan would consider a portion of those withdrawn funds prepaid benefits and reduce the monthly checks sent to those retirees. The proposal would allow retirees to return a portion of the withdrawn funds to avoid the reduction in monthly checks.
Reich said the proposal calls for the city to infuse about $1 billion into the system over the next 30 years and would also reduce or eliminate some provisions including a guaranteed 8 percent interest return on the deferred retirement plans. She noted that there were 517 deferred retirement accounts as of Nov. 18 with more than $1 million, 39 of which had more than $2 million and the largest of which was worth $4.3 million.
"Among peer group cities, Dallas has the most generous (deferred retirement) plan," Reich said. "Police and fire took advantage of something they were offered, and it was a great deal, and I don't fault anyone for that."
The city's proposal comes as members of the pension system are voting on a different set of proposed changes designed by the system's leadership.
A phone call to the pension plan's executive director was not immediately returned Wednesday.
It was unclear whether city and pension officials would combine the two proposals before submitting a fix to state lawmakers. State Rep. Dan Flynn, who chairs the House committee on pensions, said he'd like to see one plan presented to the Legislature.
"While we still have a ways to go in bringing both sides together for the good of the thousands of police and fire still on the job, this is a good first step," he said.