DROP - OPERS

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Cost Neutral ? • Actuaries often get asked to design a <strong>DROP</strong> that is cost neutral. • What does “Cost Neutral” mean to an actuary? 18
Cost Neutral • Current contribution rates remain unchanged. • Projected patterns of future contributions rates remain unchanged. • There could be other definitions. • Usually plans have a provision to review the cost neutrality or lack thereof after a period of years. • Such reviews are difficult and subjective. Difficult to determine what would have happened if there had been no <strong>DROP</strong>. 19
Page 1 and 2: MEMORANDUM OHIO PUBLIC EMPLOYEES RE
Page 3 and 4: Deferred Retirement Option Plans DR
Page 5 and 6: What is a DROP? • Both types of D
Page 7 and 8: The PLOP Alternative • PLOP stand
Page 9 and 10: DROPs and Cost Neutrality A common
Page 11 and 12: DROP Operation • Upon satisfactio
Page 13 and 14: DROP Variations • DROP account is
Page 15 and 16: Potential Benefits to Members • D
Page 17 and 18: Possible Disadvantages for Members
Page 19: Disadvantages for Plan Sponsors •
Page 23 and 24: Actuarially Cost Neutral This impli
Page 25 and 26: Gray Cases • It is not always pos
Page 27 and 28: DROP Conclusions • If a DROP has
Page 29 and 30: Other Design Issues • Death or di
Page 31 and 32: DROP Valuations • In order to eva
Page 33 and 34: #2 - State Plan - Forward DROP Samp
Page 35 and 36: Sample DROP Plans #4 - State Genera

DROP - OPERS

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