DROP - OPERS

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What is a DROP? Deferred Retirement Option Plan • A Forward DROP is a plan where the member continues to work and the accrued pension benefit is “paid” into a special account that is maintained until the member actually retires. • A Back DROP is a plan where, at time of retirement, members may choose to have their benefits refigured as though they had entered a forward DROP in the past. • In either case, the pension becomes frozen at time of entry into DROP. 2
What is a DROP? • Both types of DROPs encourage members to work longer. • A Forward DROP usually places members at risk for bad decisions. For example, in most forward DROPs, members who have large pay increases following DROP entry, cannot “un DROP” and have the final average salary increased. • In a Back DROP members have all facts available at time of retirement and simply choose the best plan. 3
Page 1 and 2: MEMORANDUM OHIO PUBLIC EMPLOYEES RE
Page 3: Deferred Retirement Option Plans DR
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 and 20: Disadvantages for Plan Sponsors •
Page 21 and 22: Cost Neutral • Current contributi
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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