1. #1
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    Question pros and con of the drop

    question. not that i don't want to go into the drop or that i think it's a bad idea, but what if someone was able to find a mutual fund or some other can of investment company that can get you more then 8% why would i want to put in 5 more years. here is what i know about the drop,1) your pension goes into a account that would have a 8% return. 2) you still get a paycheck from the department. 3)after the 5 years you can keep your money in the account and keep getting the 8% return or withdraw it and do what you want with it. these are just some of my thoughts and i don't have anything against the drop i would just like to know what everyone else thinks.

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    I feel its one of the few situations where it appears to be a win/win situation. Our city only has a 4 year DROP. Im guessing, since im far away from retirement, that most FF end up taking about 120K from the DROP account. Now, looking at the average FF, most dont seem to plan well for retirement and that "nut" sure can help. I dont really see the complaint about working 4 (or in your case 5) more years being relevant. Could it be bitterness over when the program began? A little late for you maybe? Everybody I know who has entered the DROP did so with open arms and big smiles.
    Just another one of the 99%ers looking up.

  3. #3
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    In my opinion, the "Drop" is one of the best things they ever came up with. In our system it's a maximum of 10 years on the drop, with talk of going to 13. There is also a minimum and maximum amount of interest that can be earned, no lower than 5% and no higher than 10%. For a couple of years now our fund has been earning the 10%.

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    Our department has a five year drop. The way it is explained to me is that when you drop you have, in effect, retired; you just keep working.

    The money that you would have been paid out for your retirement is instead taken and put into your drop account. In addition, you quit having retirement deducted from your paycheck.

    The plus: of course, you get an extra "chunk" of money to retire on. We have a few more options for investing the money-I've heard of guys ending up with 300k+ in their accounts at the end of their drop period.

    The minus: if a better retirement option comes into effect, it doesn't matter; you're already retired, and you're getting what you're going to get. The way money seems to be tight in most municipalities, I doubt a better retirement is going to come along.

    I was told our drop came about because of the police officers; they were retiring as soon as they became eligible. The drop was used as a carrot to try to get them to stay a little longer; it costs a pretty fair sum of money to get a police officer trained, equipped, up and running. We use the same pension system, so we were offered the drop, too.

    This is how it works where I am; sounds like your own mileage may vary according to the local policies/laws of your employer.

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    I would tend to doubt that a DROP program was started to try and KEEP members, after all RETIREMENT is what its all about. More often than not they are an enticement to more senior members to RETIRE. Its alot cheaper to pay some new guy starting pay and usually a worse pension plan. It also benefits the city by knowing when (with some exceptions noted) they will need to hire a new class. They can look forward on the DROP rolls and see that by OCT xx 2007 we will loose another 80 guys and need to put another class thru so as to not going into further OT deficit. Where as without it, FF John Doe knows hes retiring in Sept but the city doesnt get that foresight.
    Just another one of the 99%ers looking up.

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    Ok so what is "DROP"? Can someone link me to something with useful information? Or just give me a run down?
    Local #10

    Charles Stephen
    Eric Jeffrey
    Born 7/24/07
    My new twin boys that I love even more than being on the job!

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    DROP was developed to retain employees. For every five employee that stay past the normal retirement time, the municipality does not have the cost of hiring a new employee and the additional costs related to their employment. It can be terrible if you are a seniority based system if you encourage your members to stay past the normal retirement.

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    My department does not have the drop program. I, for one am glad we don't. I would probably be tempted to stay. We have a 3%@50 formula. In short at 30 years I can retire at 90% of my salary, excluding overtime.
    If I can't manage my money on that than I screwed up somewhere. I plan on retiring at 50 and sailing off (literally) into the sunset. I am greedy enough to be tempted to stay for the extra cash!

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