DROP Interest Crediting Rate Change for 2011

Date: Dec 17, 2010


At its December 17, 2010 meeting, 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, 2011.

  • The interest rate for DROP participation accounts was lowered from 2.9% to 2.3%; DROP Participation Accounts are the accounts that Active DROP members (those still working) contribute to during their participation period.
  • The interest rate for DROP Annuities was lowered from 5.0% to 4.8%. DROP Annuities are a payment option available to DROP participants after they retire from DROP. Under this payment option, retirees receive a monthly DROP payment (annuity) in addition to their monthly service retirement benefit (pension).

    the 4.8% change in the annuity rate is only applicable to Members retiring after January 1, 2011. When a DROP participant retires and selects the annuity option, the participant's annuity rate is locked in on the date of retirement and will not change thereafter. Therefore, persons retired prior to January 1, 2011 will continue to receive the interest rate for their DROP annuity that was in place on the date of their retirement.

Document Under Categories: DROP