SB373 Summary

• Reestablishes the Deferred Retirement Option Plan (DROP) for members of the Teachers' Retirement System and Employees' Retirement System, allowing new participants after the April 1, 2011 cutoff date.

• Allows eligible members with at least 25 years of creditable service and age 55 (or 52 for state police) to participate in DROP for 3-5 years, with 60 percent of the monthly retirement allowance deposited into a DROP account during the participation period.

• Removes previous limits on interest rates paid on DROP accounts, allowing accounts to earn interest at the same rate as active member accounts based on two-year United States Treasury note yields.

• Participants who voluntarily terminate within the first three years forfeit the retirement allowance portion of their DROP account but retain member contributions and accrued interest; no penalties apply for involuntary dismissal, disability, involuntary transfer, or death.

• Employees must withdraw from service upon completing DROP, cannot participate in future employment with the school system or state, and cannot receive retiree cost-of-living increases until one full year after withdrawal from service.