Deferred Retirement Option Plan (DROP)
The Deferred Retirement Option Plan (DROP) is an enhancement to the Fire and Police Pension Plan that can provide members with another way to save for their retirement years. It is an optional, voluntary program that allows members to work and receive pay and benefits as an active employee while accumulating service pension payments in a DROP account. Members are considered “retired” for purposes of pension calculations only. For all other purposes, you are considered an active member of your respective department.
Who is eligible to participate in DROP?
You are eligible to enter DROP if you are in:
- Tier 2 or Tier 4 and have at least 25 years of service, or
- Tier 3, Tier 5, or Tier 6 and have at least 25 years of service and are at least age 50.
DROP is available to the following members of the Fire and Police Pension Plan, if all other eligibility requirements have been met:
- Police Department: All members of the Police Department, except for the Chief of Police,
- Fire Department: All members of the Fire Department, except for the Chief Engineer,
- Harbor Department: All members of the Harbor Department, or
- Airport Department: All members of the Airport Department.
Note: On the day you enter DROP, you must be on active duty/working status, (includes light-duty). If you are on a non-working status, (sick, IOD, vacation, accumulated time off, etc.) your intended effective date of DROP participation will be adjusted to reflect the date which you returned to active duty/working status.
How long may I participate in DROP?
Members who entered DROP prior to February 1, 2019, may participate in DROP up to a maximum of 60 months (5 years). See below for new provisions applicable to members entering on or after February 1, 2019.
How does DROP work?
- While in DROP, your monthly pension payment is held in a nominal account with a guaranteed interest rate of 5% annually.
- When you decide to leave the DROP program (after 1 day or up to 5 years maximum), you are required to terminate sworn employment with the Fire, Police, Harbor or Airport Department.
- You will then begin to receive your service pension benefits on a monthly basis.
- In addition, you may receive your accumulated DROP account balance in a lump-sum, rollover or combination lump-sum and rollover.
How may I enroll in DROP?
Review our HOW TO: Enroll in DROP guide.
What happens once I enroll in DROP?
- You are considered “retired” for pension calculation purposes only; no further service credit is earned. Your service credit accrual and all of your eligibility conditions are frozen on the date you enter DROP.
- You must purchase prior service time, lost service time (Tier 2), Workers’ Compensation State Rate Time or Academy/Drill Tower Time (Tiers 3, 4, 5, 6) prior to enrollment in DROP for that time to be counted toward your service credit. Purchases of service must be completed prior to enrollment in DROP.
- You must be on active duty/working status (includes light-duty) on your DROP entry effective date. If you are on a non-working status (sick, IOD, vacation, accumulated time off, etc.), your intended effective date of DROP participation will be automatically adjusted to reflect the date when you returned to active duty/working status.
The following provisions only affect members who enter DROP on or after February 1, 2019:
- Your participation in DROP will be suspended for any calendar month in which you do not spend at least 112 hours on “active duty” status;
- If you sustain a serious injury on duty and are admitted to the hospital for a minimum of 3 consecutive days as a direct result of that injury, your participation will not be suspended during the first 12 calendar months following the date of injury;
- If your DROP participation is suspended, you will be eligible to participate in DROP for a maximum of 30 additional months beyond your original 5-year/60-month participation period. Your participation period can only be extended for as many months as your participation was suspended;
- No interest accrues on your DROP account following the initial 5-year/60-month participation period, including any periods of participation suspension.
How do I exit DROP and retire?
Review our HOW TO: Exit DROP guide.
How may I review my account balance?
DROP Statements are available to participants on a semi-annual basis and can be viewed the first week of July and January each year.
Members who have recently entered DROP may not receive statements because their pension calculations have not yet been finalized. Reasons for non-finalized calculations may include but are not limited to, outstanding MOU approval and outstanding employing department verifications.
If you have any questions, you may contact the DROP/Service Pension Section at (213) 279-3100 or toll-free at (844) 88-LAFPP (52377).