At its February 22, 2023 meeting, the Board of Trustees of the Police Retirement System, upon certification by its actuary, Cheiron, accepted a report that the System investment portfolio return for the Fiscal Year ending September 30, 2022 was down 11.2 percent.

In keeping with the System’s Plan Document, this means the DROP return rate as of October 1, 2022 is -11.2 percent.  This means that anyone with a DROP account balance existing on October 1, 2022 will experience this -11.2 percent rate of return at the earlier of October 1, 2023 or distribution.

The System had anticipated a negative return rate and had electronically earmarked a “worst case” potential negative return of -14.5 percent in DROP accounts.  However, this loss was only deducted if a member who was in DROP as of October 1, 2022 took distribution, i.e., payout, prior to the finalized return rate. The System will make up the difference between the worst case scenario projection and the actual final number to anyone who retired after October 1, 2022, meaning any such persons will receive payment equal to 3.3 percent (14.5 percent minus 11.2 percent) of their DROP account funds; these funds can be taken with the same options as other DROP payouts, i.e., 10-year installment, lump sum distribution, cash or rollover.  Anyone who retires and takes their payout during the remainder of the current Fiscal Year (which ends September 30, 2023), will experience the -11.2 percent rate of return applied in proportion to the portion of the year preceding the date of distribution.

How does this DROP interest rate compare with DROP interest rates for previous years?  See the attached link to see a history of DROP interest rates for System members.

DROP Interest Rates 1996 to Present - Updated 01-26-2022.pdf