SDCERS Board Approves Changes to DROP Interest Crediting Rate

Date: Dec 16, 2011


At its December 16, 2011 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, 2012. The changes are as follows:

  • The interest rate for DROP Participation Accounts was lowered from 2.3% to 1.9%.  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 4.8% to 4.4%.  A DROP Annuity is 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).

IMPORTANT: The change in the DROP Annuity Rate from 4.8% to 4.4% is applicable only to Members retiring on or after after January 1, 2012. 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, 2012 will continue to receive the interest rate for their DROP annuity that was in place on the date of their retirement.

Document Under Categories: Board, DROP