“I’ve had 40 to 50 officers in my office this week asking what they should do,” said James Parnell, 52, secretary-treasurer of the Dallas Police Association and 25-year veteran. “They’re very nervous about what is going to happen, they’re fearing a run on the money.”
Turmoil in world stock markets and near record-low bond yields are taking a toll on pensions for cities like Dallas, which count on annual investment returns of more than 7 percent to cover promised benefits. In the year through June, U.S. state and local-government plans posted the smallest gains since 2009, leaving them with almost $2 trillion less than they will eventually need, according to data from the Wilshire Trust Universe Comparison Service and the Federal Reserve.
The squeeze on Dallas’s fund is even more acute because of a decision to divert money from stocks and bonds into Hawaiian villas, Uruguayan timber and undeveloped land in Arizona, among other non-traditional investments. The strategy, put in place under prior managers, backfired. The fund lost 12.6 percent in 2015 and 0.7 percent over the past three years.
But then what? What do you do with your lump some payout? Take the tax hit plus penalty? Sure. but then what to do with it? Invest it in
Hawaiian villas, Uruguayan timber and undeveloped land in ArizonaHmmm?
The only smart thing to do is start a business. It is also the most revolutionary act a person can perform.
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