7:45 p.m., June 29
Philadelphia Finds DROP a Big Drain
Philadelphia has had a Deferred Retirement Option Program (DROP) similar to San Diego's for 11 years. Under DROP plans, a city employees picks a retirement date a few years ahead; the city puts his or her pension payment into an interest-bearing account, as the employee continues working for regular pay. Employees leave with both the sum in the DROP account and retirement pay. When Philly adopted it in 1999, it was not to increase the city's cost. But a study by Boston College researchers shows that DROP has cost the city pension fund $258 million since its inception. "Under no plausible assumption is DROP cost-neutral," says Anthony Webb, lead author of the Boston College study. The current Philly mayor says DROP has to go, but employee labor unions are expected to resist.
San Diego has had a DROP plan for 13 years. It was to be cost-neutral, too. But a study to determine that has been delayed and delayed. One of the proposals in the pending possible sales tax increase is that this study would be finished and acted upon.
All along, critics have said that DROP is egregious double-dipping.
More like this:
- Employers squeezing employees' 401 (k) plans — Feb. 16, 2014
- Pension Costs Reach 69% of City Payroll, Says DeMaio — Jan. 19, 2010
- Workers Dealt Hand That’s All Aces — Jan. 30, 2008
- New Study Shows Topside Inequities in City Bureaucrat Retirements — Dec. 14, 2007
- City Pension Funds in Red — Sept. 25, 2003