Council keeps DROP, overrides Nutter

In a blow to Mayor Nutter's reform agenda, Philadelphia City Council on Thursday unanimously voted to keep the controversial DROP pension program.

In June, Nutter had vetoed a council bill that preserved the Deferred Retirement Option Plan but modified it to lower its cost.

Nutter wants to completely eliminate the program, which costs the city from $9 million to $22 million yearly.

On Thursday, all 17 members voted against the mayor.

Councilman James Kenney, a prominent DROP critic who has supported plans to kill the program, said he voted to override the veto and keep DROP because the alternative was more costly.

"If I voted to sustain the mayor's veto, we get the old DROP," Kenney said, "and that's more expensive for the pension program."

Council members Jannie Blackwell and Frank DiCicco, who had initially voted against Council's DROP reforms, also voted to override the mayor's veto.

Council's legislation would reduce the program's cost by bumping up the retirement age for non-uniformed employees.

It also would reset the interest rate on payments into DROP accounts from a guaranteed 4.5 percent to the rate on one-year Treasury bonds for employees who qualify for DROP more than 90 days after the bill becomes law.

Although Council members believe their revised DROP proposal will save money, it comes with a cost of $15 million to $20 million if paid up-front.

DROP allows participating city employees to pick a retirement date four years in the future. That decision freezes their pension payments, and prompts the city to put the yearly benefit into an account. At the end of the four years, the employee gets a lump-sum check for the amount in the account, plus a yearly benefit at the lower, frozen amount.