NY A06679

Establishes a Deferred Retirement Option Plan (DROP) allowing police and fire employees with 20 years of service in the New York State and Local Police and Fire Retirement System to defer retirement benefits while continuing employment for 12 to 60 months.

Deferred benefits accrue interest at 1.5% annually and are held by the retirement system; upon DROP completion, members receive the total deferred amount plus interest without optional modification, then begin regular retirement payments.

Members' retirement benefits are calculated based on their salary and service at DROP entry; additional DROP participation after reaching 32 years of service is limited to 60% of the full annual retirement allowance.

Upon DROP termination, members may receive deferred benefits as a lump sum, rollover to an eligible retirement plan, or split between direct payment and rollover, with all payments subject to IRS withholding requirements.

Enacting this bill is estimated to increase annual employer contributions by 1.4% to 5.0% of salary depending on retirement plan tier, plus past service costs averaging 75% to 100% of salary per member due February 1 or March 1, 2024.