Philadelphia City Council is trying to cut the cost of the retirement incentive program known as DROP.
For four years, pension payments for DROP participants go into a special account. Upon retirement, they get that money as a lump sum.
Now money in DROP accounts earns 4.5 percent interest. Council wants to cut that to the interest rate paid on one-year treasury bonds, which is currently .2 percent. Council President Anna Verna said even as amended, DROP would cost Philadelphia more than a typical pension.
“Probably not in the first couple of years, the bill would eliminate any costs created by the guaranteed interest of 4.5 percent,” said Verna.
Proponents of the bill say eliminating DROP entirely would spur lots of employees to sign up before the program closes.
Councilman Frank DiCicco said even with the modifications, most of the public won’t be happy with DROP.
“It’s going to be a tough sell for Council to convince the citizens of Philadelphia that in any way shape or form DROP is a good program,” said DiCicco.