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At last, some promising news: the San Diego City Employees' Retirement System is discussing lowering the fat interest payment on its so-called DROP accounts. DROP is an acronym for Deferred Retirement Option Plan, under which a City employee declares his or her intention to retire in five years. The employee draws his or her regular paycheck for that period, but a similar amount is also deposited in the so-called DROP account -- classic double-dipping. For years, the City has been paying 8 percent a year on the DROP account. SDCERS board member William Sheffler says that's too high. It's like paying someone 8 percent on a five-year certificate of deposit (CD); it doesn't happen. Sheffler thinks that an interest rate not far below 3 percent would be about right. It is being discussed among SDCERS board members. Sheffler says that between 2007 and this year, the DROP program has lost $36 million.
At last, some promising news: the San Diego City Employees' Retirement System is discussing lowering the fat interest payment on its so-called DROP accounts. DROP is an acronym for Deferred Retirement Option Plan, under which a City employee declares his or her intention to retire in five years. The employee draws his or her regular paycheck for that period, but a similar amount is also deposited in the so-called DROP account -- classic double-dipping. For years, the City has been paying 8 percent a year on the DROP account. SDCERS board member William Sheffler says that's too high. It's like paying someone 8 percent on a five-year certificate of deposit (CD); it doesn't happen. Sheffler thinks that an interest rate not far below 3 percent would be about right. It is being discussed among SDCERS board members. Sheffler says that between 2007 and this year, the DROP program has lost $36 million.