Deferred Retirement Option Plan (DROP)

The Deferred Retirement Option Plan, known as DROP, is a voluntary program which provides eligible Members an alternative method of accruing benefits from SDCERS while employed by the City of San Diego ("City"), in addition to their service retirement benefit.

You must be age and service eligible to participate in DROP, and must have been hired by the City of San Diego before July 1, 2005. To participate, you must enter into an irrevocable contract with SDCERS and the City and agree that you will leave employment and retire no later than five years from the date you entered DROP.

At its November 9, 2018 meeting, the SDCERS' Board of Administration approved staff's recommendation to change the DROP (Deferred Retirement Option Plan) interest rates for the DROP Participation Accounts and DROP Annuities, effective January 1, 2019.

The interest rate for DROP Participation Accounts was increased to 2.7 percent. DROP Participation Accounts are the accounts that Active DROP members (those still working) contribute to during their five-year-maximum participation period. The current rate is 2.0 percent, through December 2018.

The interest rate for a new DROP Annuity was increased to 3.0 percent. A DROP Annuity is a payment option available to DROP participants when they retire from DROP. Under this payment option, retirees receive a monthly DROP payment (annuity) in addition to their monthly retirement benefit (pension). The current rate is 2.8 percent for anyone who enters into a DROP Annuity through December 2018. Important: This has no effect on retirees who have already entered into a DROP Annuity. The DROP Annuity rate is permanent once the annuity disbursement begins.

Deferred Retirement Option PLAN (DROP)

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