"I'm very, very disappointed," Nutter said. "We cannot afford this program. Even [with] the amended bill, today Council's own consultant indicated that this program would cost the city money."
Established in 1999, DROP allows city workers to set a retirement date up to four years in the future, at which point their pension benefit is frozen and they start accruing payments in an interest-bearing account while still on the payroll. When the employees retire, they collect a lump sum and start receiving pension payments.
DROP has drawn public ire because elected officials have enrolled - including some who signed up, ran for re-election and "retired" for a day to collect a payout before returning to serve. Seven Council members are current or past DROP enrollees. Five chose not to run again, and Councilman Frank Rizzo lost his re-election bid, leaving Councilwoman Marian Tasco as the only one planning to take DROP and return in 2012.
Cost estimates of DROP vary. A Boston College study commissioned by Nutter reported last year that DROP had cost the city $258 million since 1999. A later review by Council's consultant put the cost at $100 million.
Under the plan Council approved yesterday, employees would not be able to enter DROP until two years after they hit retirement age - which varies by job. And the interest rate, now set at 4.5 percent, would be adjusted based on U.S. Treasury rates. Also, employees could collect a lump sum upon retirement only in exchange for lower pension payments.
Anyone currently eligible for DROP would be grandfathered in and allowed to enter the original DROP at any time. And police and firefighters would be exempt from the two-year delay to enter the program - a move that angered nonuniform unions.
