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Airport Authority: General Members

DROP

Note: DROP is available only to Airport employees hired before October 3, 2006:

Eligibility and requirements

The Deferred Retirement Option Plan (DROP) is a voluntary program which provides members an alternative method of accruing benefits from SDCERS while employed by the Airport. 

You must be age and service eligible to participate in DROP. To participate, you must enter into an irrevocable contract with SDCERS and the Airport and agree that you will leave employment and retire no later than five years from the date you entered DROP.

While participating in DROP and working:

  • You will continue to receive a bi-weekly paycheck;
  • You will no longer make retirement contributions to the pension fund; and
  • You cannot access your service retirement or DROP funds until you retire and leave employment.

Contributions to your DROP account

SDCERS will calculate your service retirement benefit based on your age, service credit and final compensation at the time you enter DROP. You will no longer accrue service credit. Any salary increases will not affect your service retirement calculation because your benefit is determined on the date of entry into DROP. The following funds are deposited into your DROP account for the duration of your participation

  1. SDCERS will deposit your monthly service retirement benefit into your DROP account;
  2. You will contribute 3.05% of your pensionable salary each pay period;
  3. The Airport will contribute 3.05% of your pensionable salary in matching contributions;
  4. Annual COLA (Cost of Living Adjustment) increases to your monthly retirement benefit that occur while you are in DROP will be added to your DROP account;
  5. The 13th Check (supplemental benefit) will be deposited into your DROP account if you are eligible and if it is distributed; and
  6. Interest is credited to your DROP account each quarter, at a rate determined by the Board.


Click here to review the DROP Interest Crediting Process.

Payment of your DROP benefit and your retirement payment when you retire


Your DROP benefit is the value of your DROP account at the end of your participation period, including all six income sources described above. You are required to begin distribution of the funds in your DROP account when you retire. The distribution may be made as a single lump sum, as an annuity of 240 equal monthly payments over your life expectancy or as otherwise allowed by the Board, subject to applicable provisions of the IRS code.

Once you leave DROP, your monthly retirement payment will no longer be deposited into your DROP account. It will be distributed directly to you.

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 Booklet

DROP Interest Crediting Process

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