A group of retired Dallas police officers filed a lawsuit Monday against the board of trustees of the $2.1 billion Dallas Police & Fire Pension System for limiting DROP withdrawals.
To protect its liquidity after a record $523 million in withdrawals from its deferred retirement option plan between early August and December, the pension fund board voted Dec. 8 to temporarily suspend DROP withdrawals. On Dec. 29, the fund board lifted the suspension on monthly withdrawals, but not lump-sum withdrawals, and on Jan. 12 unveiled a new withdrawal policy for those with outstanding DROP balances.
Under the new policy, retirees can withdraw up to $3,000 from their DROP accounts monthly, starting March 31. In any month, additional DROP funds may be distributed if the board determines that excess funds are available beyond what is required to meet its monthly benefit payments and other obligations. For those with outstanding lump-sum DROP requests as of Jan. 12, the new policy also calls for $6.6 million total to be distributed on a pro-rata basis based on their requested amounts.
Monday's lawsuit, filed in a U.S. District Court in Sherman, Texas, argues that denying members full access to their DROP accounts violates the U.S. and Texas constitutions.
The lawsuit also seeks a preliminary injunction from the court preventing the pension fund board from limiting DROP withdrawals.
Kelly Gottschalk, executive director of the pension fund, could not be reached for comment by press time.