We help municipalities analyze the pros and cons of DROP plans, which allow municipal employees to retire for pension purposes, while still remaining as active employees for all purposes other than pension.
Consider this example:
- A DROP plan will allow police officers to voluntarily remove themselves from the Act 600 pension plan, while not terminating employment.
- For a given period of time, an officer may stay employed and collect a pension. However, that officer is not considered a participant in the Act 600 plan and the municipality gets no state aid for that officer.
- When employment is ultimately terminated, the officer will continue to receive the Act 600 payment and will have access to the DROP account, which can be rolled into an IRA or liquidated.
- While participating in DROP, the officer’s salary increases will not produce any increase in his Act 600 pension amount.
The Keystone Pension Portfolio for Municipal Pension Plans includes comprehensive DROP management and consulting for it clients.
To learn more about our services for municipal plans, including DROP consultation click here.