Nutter requests study of controversial city pension program DROP

Mayor Nutter wants to examine the city’s Deferred Retirement Option Plan. Commonly referred to as the “DROP” program, it is meant to retain experienced workers long enough to train replacements. In legislation he sent to Council on Thursday, he also proposed changes to the pension fund.

Mayor Nutter wants to examine the city’s Deferred Retirement Option Plan. Commonly referred to as the “DROP” program, it is meant to retain experienced workers long enough to train replacements. In legislation he sent to Council on Thursday, he also proposed changes to the pension fund.

Transcript:
The DROP program is both complicated and controversial.

When an employee signs up for it, pension payments stop and the money is deposited in an interest bearing account. This is an incentive for setting a retirement date up to four years in advance. When that retirement day does come, those employees get a lump sum payment.

Mayor Nutter wants to study the impact of the program on employees decisions to retire. He also wants the interest in those accounts to be adjustable.

Nutter: “In a time of this kind of fiscal instability, wild gyrations in the stock market, it is beyond me to understand why folks in the DROP program would have a guaranteed four and a half percent return rate. No one anywhere has a four and a half percent guaranteed return rate on anything.”

Nutter also wants to get rid of the cost-of-living allowances for city pension recipients unless the pension fund is more than 76 percent funded.

Listen:
Click on the play button below or right click on this link and choose “Save Link As” to download. [audio: reports20090313drop.mp3]