In Unprecedented Move, Dallas Pension System Suspends Withdrawals

In Unprecedented Move, Dallas Pension System Suspends Withdrawals

TDC Note – We have been echoing what Jim Sinclair has been saying for the past several years – get out of the system, now – why? Because we know he is right. We have been covering the pension crisis the past year, specifically pointing out the dangers of underfunded, underperforming and will never, ever be able to pay. See below if you still don’t believe me.

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Two days after the Mayor of Dallas, Mike Rawlings, filed a lawsuit against the Dallas Police and Fire Pension system to block withdrawals, which he referred to as a “run on the bank” of an “insolvent” pension system in “financial crisis, the Pension’s board has finally taken steps to halt further withdrawals.  Of course, this delayed action has come only after $500 million in deposits have been withdrawn since just August.

According to the Dallas Daily News, an incremental $154mm in withdrawal requests were pending at the time the decision was made earlier today.

The Dallas Police and Fire Pension System’s Board of Trustees suspended lump-sum withdrawals from the pension fund Thursday, staving off a possible restraining order and stopping $154 million in withdrawal requests.

 

The system was set to pay out the weekly requests Friday. Pension officials said allowing the withdrawals would leave them without the liquid reserves required to sustain $2.1 billion fund.

 

“Our situation is currently critical, and we took action,” Board chairman Sam Friar said.

Rawlings

While Dallas citizens cheered the decision, even opponents of the Mayor’s admitted that the redemptions had to be halted if the city had any chance of saving the pension system from insolvency.

Rawlings on Thursday afternoon told a crowd gathered at a Dallas Regional Chamber that “the bleeding has stopped. We can turn this ship around.”

 

The crowd responded with cheers after the mayor’s announcement of the board’s decision.

 

At the pension board meeting, the mood was more somber.

 

Council member Scott Griggs said he couldn’t let the $154 million “go out the door” on Friday.

 

His council colleague, Philip Kingston, a board trustee, said the mayor “unquestionably” forced the pension board’s hand. He said Thursday was “the worst day I’ve had in public office.”

 

“Unfortunately, financially, this had to happen,” he said.

 

The fund has about $729 million in liquid assets. It needs to keep about $600 million on hand, meaning the restrictions could have been coming at some point even without the mayor’s actions. The withdrawal requests this week alone would have meant the fund would dip below that level.

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