D a l l a s P o l i c e a n d F i r e P e n s i o n S y s t e m  

FAQ (Frequently Asked Questions) State of the Pension System

The following FAQ’s have been compiled to address Members’ concerns and questions related to status of DROP account balances and state of DPFP. We also encourage Members to attend scheduled Board meetings in order to better understand the current financial status of DPFP and steps the Board has taken and continues to take in order to reach the best resolution possible for all of our Members.

If I am already in active DROP, do I need to retire by a certain date in order to receive an annual adjustment (COLA) as of October 1, 2016?

No. Based on the current Plan provisions, all active DROP Members and retirees who are eligible for a COLA will receive a 4% increase on October 1, 2016.

Although the proposed Plan amendments include a reduction in future annual adjustments, the amendment election will not take place until November 2016 at the earliest, with an expected January 1, 2017 effective date, and therefore the proposed amendments have no bearing on the annual adjustments that will take effect October 1, 2016. If you are in active DROP as of October 1, 2016, retiring by that date has no bearing on the amount or eligibility of your annual adjustment for 2016.

Has there been a large amount of DROP withdrawals in the last few weeks?

It is true that we have seen a significant increase in DROP withdrawals by Members in recent weeks since the Plan amendment discussions took place at the August Board meetings. The Board and staff anticipated that this may occur with the announcement of proposed Plan amendments and various levels of withdrawals have been incorporated into the actuarial analysis. As more people withdraw funds from the System, our long-term solvency will become much more challenging.

We want to assure Members that Trustees and staff are working diligently with legal and actuarial advisors to address the necessary Plan changes to ensure the long term stability of the Plan and preserve constitutionally protected benefits for all Members. This includes addressing liquidity needs and the additional stress on the funding of the Plan resulting from these recent increased withdrawals.

Why did the Board change active Members’ ability to transfer funds from DROP into their 401(k)?

This action was taken to ensure that the Plan remains qualified under the Internal Revenue Code. At the September 8, 2016 Board meeting, pursuant to the authority granted under Section 9.01(i) of the Combined Pension Plan document, the Board amended Section 6.14(d) of the Plan to remove the provision allowing for Members still in active service to transfer amounts from the Member’s DROP account to the City of Dallas’ defined contribution (401(k)) plan. The change was effective on September 8, 2016.

The IRS qualification issue was identified by our newly engaged tax legal counsel who was hired by the Board in August 2016.


As a member of active DROP, how is my ability to roll over funds from my DROP account into a 401(k) impacted by recent events?

This is no longer allowed as of September 8, 2016. See above Question - “Why did the Board change active Members’ ability to transfer funds from DROP into their 401(k)?”

As a Retiree, how is my ability to roll over funds from my DROP account into an IRA or other qualified retirement plan impacted by recent events?

Retirees’ ability to roll over funds from their DROP accounts into a qualified retirement plan is not impacted by the Board’s recent amendment of the Plan which ceased active Members’ ability to transfer funds to their 401(k). The 401(k) issue related to IRS compliance and is completely unrelated to rollovers to qualified retirement plans for retirees.

If I withdraw a lump sum from my DROP account, can I redeposit the money at a later date?

No. Once funds have been withdrawn from a Member’s DROP account, they cannot be redeposited.

When is the Plan amendment election going to take place?

The Plan amendment election is expected to take place in November. The Board must first approve the ballot language, which is scheduled to be an agenda item for the October 13th Board meeting. Once the Board approves the ballot, an election may then be called. Once the Board calls for an election, it cannot take place any earlier than 3 weeks and no later than 6 weeks following such Board action. We plan for the election to span a period of approximately 7-10 days to allow sufficient time for voting. Similar to previous elections, voting may be done online or over the phone. Notices will be mailed to all Members and also emailed to Members registered for eCorrespondence.

For ease of voting and timeliness of receiving important information from DPFP, we encourage you to register on Web Member Services and sign up for eCorrespondence if you have not already done so by clicking here.

How can I find out more information about proposed changes prior to the election?

Member meetings will be held in the weeks leading up to the election. We expect to post dates and locations for these meetings by the last week of September. Meetings will be held in various locations, including the DPFP office, and will take place at various times of day to allow for all shifts to be able to attend. Board Trustees will also be visiting many stations for informational sessions. Please monitor our website for more information. A summary of proposed Plan changes can be found here.

Can the State of Texas take over DPFP?

No. DPFP is an independently governed component unit of the City of Dallas. While the state legislature has the authority to change the statute which governs DPFP, DPFP is not governed by the state, but rather by the DPFP Board of Trustees. Any change of the governing state statute may affect the composition of the DPFP Board, but would not be expected to vest control of DPFP in the State of Texas or any state agency. The Texas Pension Review Board (PRB) oversees all Texas public retirement systems in regard to their actuarial soundness and compliance with certain state laws. DPFP provides financial and actuarial reports to the PRB on an annual basis and our Executive Director, Kelly Gottschalk, regularly attends PRB meetings, keeping the PRB informed of our financial situation and progress toward changes. Ms. Gottschalk also meets periodically with members of the Texas House of Representatives Pension Committee addressing any questions they may have.

Texas public retirement systems are required to notify the PRB if they receive an actuarial valuation indicating an amortization period of more than 40 years. This has been the case for DPFP the last two years. If this occurs as expected for the January 1, 2017 actuarial valuation, DPFP and its associated governmental entity (the City of Dallas) must provide a Funding Soundness Restoration Plan to the PRB, outlining planned changes which are expected to result in lowering the amortization period to 40 years or less. DPFP’s proposed Plan amendments, in combination with discussions with City officials requesting increased employer contributions, are components of the plan which will be submitted to the PRB subsequent to the completion of the January 1, 2017 actuarial valuation in mid-2017. From that point forward, DPFP will report progress updates to the PRB every two years at minimum.

Can DPFP go bankrupt?

No. Public pension plans are not capable of filing for bankruptcy.



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