DROP Interest Rates for Calendar Year 2022

Date: Nov 05, 2021


At today’s meeting, SDCERS’ Board of Administration voted to approve staff’s recommended DROP account and DROP annuity interest rates for the next calendar year – meaning these rates will be effective January 1, 2022. The DROP account rate is the interest rate used by SDCERS while a Member is in DROP and the DROP Annuity rate is the interest rate used by SDCERS to annuitize the DROP monies of a Member who has exited DROP and retired. These rates are calculated annually using publicly available indexes as of September 30th of each year. (See Board Rule 6.10(c) and 6.40(b) for more information about how these rates are calculated.)
Therefore, effective January 1, 2022, the annual DROP account interest rate (compounded quarterly) will be decreased slightly to 0.8%, compared to the current rate of 1.0%. This interest rate will be compounded quarterly and applied to all active DROP participants’ accounts as long as the participant is actively employed by the City of San Diego, San Diego Unified Port District, or the San Diego Regional Airport Authority on the last day of each quarter. This rate is subject to change annually, which means a DROP participant’s account may receive a different interest rate every year during their participation period.
The DROP annuity interest rate will stay the same at 2.1%. This interest rate will be applied to the funds remaining in a DROP retiree’s account when they exit DROP, if the retiree chooses to annuitize all or part of their DROP account, and it will be factored into the calculation of their monthly DROP annuity.
Unlike the DROP account interest rate, the DROP annuity rate will not change for an individual member – the rate that is in effect when a member exits DROP is the rate that will be applied to their annuity, regardless of whether or not the DROP annuity rate changes in future years. Therefore, when you are getting close to your DROP retirement date, your decision to exit DROP before or after the New Year may be affected by the Board’s decision to increase or decrease the DROP annuity interest rate. However, if you do not plan to annuitize your DROP account upon exiting DROP, then the DROP annuity rate changes will not affect you. Click here to review your options regarding how you can receive the funds in your DROP account when you exit DROP.
Please attend a DROP Exit webinar if you are nearing your target DROP exit date:
November 16th at 1:30 p.m.: https://attendee.gotowebinar.com/register/1042833321240571663
November 19th at 1:30 p.m.: https://attendee.gotowebinar.com/register/1325148324834998287
December 15th at 11:00 a.m.: https://attendee.gotowebinar.com/register/5940220839076014095
If you are currently in DROP and considering retiring soon, you must begin the process by first going to your Member Portal account and clicking on “DROP Retirement Application” from the left menu, under Tools. Review this information, make your selections, and submit the initial application online. Once received, you will be contacted by an SDCERS staff member to schedule your personal phone counseling appointment. At your appointment, you can ask questions and make any changes you’d like to your application. Your electronic application is not final and you have not retired until you’ve submitted your signed application signature page, which will be emailed to you by your retirement counselor during or after your appointment.

Document Under Categories: Board, DROP, News Articles, Press Release