Federal Judge ‘DROPs’ Police and Firefighter Pension System Lawsuit

Board froze DROP program due to insolvency woes.

A lawsuit concerning the Dallas Police and Fire Pension System’s (DPFP) pension option has been thrown out by a federal judge.

The Deferred Retirement Option Plan, otherwise known as DROP, allowed Dallas police officers and firefighters to retire on paper, receiving their pension checks while still working within their respective sectors. KERA News reports that the checks would go to an individual account with little withdrawal restrictions. The accounts also saw interest rate growths of at least 8% for years.

Following issues with insolvency due to DROP-related withdrawals and concerns, the DPFP board froze all DROP distributions in December 2016, leading to a lawsuit filed by six retired Dallas police officers last January. According to the DPFP’s 2016 Comprehensive Annual Financial Report, the plan’s net position decreased by more than $500 million as a result of payments from the DROP plan.

Although the filing officers claimed what the board did was unconstitutional, federal judge David Godbey felt otherwise Friday. KERA reports Godbey ruled in favor of the board because the fund would have faced swift insolvency without board and legislative intervention.

Judge Godbey dismissed the case with prejudice, negating the officers from refiling. However, the publication reports that the plaintiff’s attorney seeks to appeal this ruling.

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