Deferred Retirement Option Plan (DROP)

As a Tier 1 Member, at any time after you attain 20 years of credited service (see Retirement Benefit), you may elect to participate in the Deferred Retirement Option Plan (DROP).  DROP is a voluntary and irrevocable benefit program that offers you the opportunity to receive a one-time lump sum payment, at the time of your retirement, in addition to your monthly retirement benefit.  The process to enter into DROP is that at the time you elect to participate, your monthly retirement benefit is calculated (solidified) based on the salary and service at the time of your participation and then that monthly amount is deferred each month while you continue to work with your employer up to a maximum of 60 months (5 years).  Then, either before or at 60 months, you would terminate your employment with your employer and officially retire, thus receiving your previously calculated accumulated DROP retirement payments, plus interest, and you would also begin to receive your monthly retirement benefit payments. 

At at the time you exit DROP and officially retire, PSPRS automatically issues ALL of the taxable portion of your DROP, with interest, into the 401(a) Public Safety Personnel Defined Contribution Retirement Plan (PSPDCRP) currently administered by Nationwide Retirement Solutions.  If you have any previously taxed monies, those funds will be issued to you in the same manner as your monthly retirement payment (either direct deposit or check). 

For members wishing to consult with a financial advisor for retirement planning and overall financial wellness, PSPRS has partnered with Public Safety Financial/Galloway.

IMPORTANT:  If your DROP lump-sum is required to be split with an ex-spouse/alternate payee pursuant to an acceptable certified Domestic Relations Order (DRO) or other court Order, and since all of the taxable portion of the DROP monies are required to be sent to Nationwide Retirement Solutions, PSPRS will direct the entire taxable portion to Nationwide and will advise them of the amount awarded to each party.  If there are any previously taxed contributions, those monies will be divided and paid to you and the ex-spouse/alternate payee, as applicable, at the same time and in the same manner as your monthly retirement benefit payments are issued (either direct deposit or check).

As a participant in the PSPRS, the benefits that are available to you vary depending on your Membership Tier:

Membership Tier 1¹

Interest on the DROP payment is earned at the System’s assumed earnings rate, which is set each fiscal year (FY) by the Board of Trustees.

The interest rate for the following years is 7.3%:

July 1, 2018 to June 30, 2019 (FY 2018/19)

July 1, 2019 to June 30, 2020 (FY 2019/20)

During DROP participation, the employee and employer stop making contributions to the System.

Membership Tiers 2 and 3

Not available.

¹Membership Tier 1 DROP Contributions Rollback

Pursuant to 2011 S.B. 1609, Tier 1 members who did not attain 20 years of credited service as of January 1, 2012 were required to continue to make contributions to the System (i.e., DROP Contributions) during their participation in DROP.  At the end of their participation in DROP and official election to retire, those DROP contributions, plus interest, were returned to the member in addition to their accumulated DROP and monthly retirement benefit.  However, the requirements to pay DROP contributions were reversed in accordance with 2019 S.B. 1146 and, for members that have paid, or previously received, their DROP contributions, the DROP contributions have either been reversed (with interest) through the members employer, or adjusted, as applicable, to the member.  All eligible Tier 1 members participating in DROP will receive the same DROP benefits based on the original DROP program.

Making the Choice

You may estimate potential benefits by creating an online account via Members Onlyor you may contact your Local Board for an estimate or retirement packet. For additional benefit information, you may access the PSPRS Member Handbook.