Pensions Fly Only If You Believe They Can

There’s a bank run happening in Dallas. The funny thing is, it’s not happening at a bank.

The city’s pension for firefighters and police is disastrously underfunded. Start with the normal problem that virtually all public pension plans are facing (overpromising benefits, underinvesting in the fund). Add in an attempt to make good on promises by investing in “non-traditional” assets like timber and real estate, which didn’t pan out as the investors had hoped. Add in a deferred retirement program which allows people to accumulate assets in the fund long after their retirement date -- and to withdraw that money in a lump sum whenever they want. And what you get is a big mess.