Tuesday, July 29, 2014
Inquirer Daily News

Police and fire spared from DROP change?

Philadelphia City Council appears intent on not only saving the Deferred Retirement Option Plan, but possibly cutting police and fire personnel out of one of the primary cost-saving changes.

Police and fire spared from DROP change?

Philadelphia City Council appears intent on not only saving the Deferred Retirement Option Plan, but possibly cutting police and fire personnel out of one of the primary cost-saving changes.

Council members asked 16 witnesses s a total of one question during the public hearing on DROP Wednesday morning before recessing the hearing shortly after 12:30 p.m. Some Council members and staff are now discussing an amendment that would exempt police officers and firefighters from a proposal to delay entry into DROP by two years, according to two sources familiar with the proposal.

The hearing is to reconvene at 1:30 p.m.

DROP allows employees to begin collecting their pension in an interest-bearing acccount for up to four years before they actually retire from the city, with a lump-sum payout when they retire. In exchange, their pensions are frozen at a lower level. Mayor Nutter has called for DROP's elimination, and his bill to make that happen appears to be going nowhere.

Council wants to preserve DROP for city employees, including 10 remaining Council members who would still be eligible to join the program at some point. Council's bill with changes to the program appears headed out of committee, with the possible amendment.

DROP has cost the city at least $100 million since its inception in 1999. Council has offered a bill that purports to greatly reduce -- but not eliminate -- that cost by pushing the date employees can enter DROP by two years and tying the interest rate on DROP accounts to Treasury notes, instead of a fixed 4.5 percent.

But the Fraternal Order of Police and the Philadelphia Firefighters Union have argued that DROP works for police and firefighters by encouraging them to stay on the job longer without dipping into their pensions much earlier than they would without DROP. Studies commissioned by both the Mayor and City Council say DROP's cost is mostly caused by civilian employees -- Philadelphia is only one of two municipalities in the state that offers DROP to non-uniformed workers.

The amendment under discussion reportedly would exclude police and firefighters, who currently can retire at age 45 under pre-1987 plans, or 50 for those hired thereafter.

 

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