  
A Defined Benefit Plan Feature
I walked into her office at 7:58.
Styrofoam cups filled the trashcan. There was a mocha on her desk. Her normally
cool exterior was beginning to ruffle. "I don't even know what a DROP plan
is," she started. "How am I supposed to put a proposal together in a
day?"
"The same way you always
do”. I tried to sound confident.
"We'll start at the beginning."
She pulled out a pad of yellow
paper. From her desk came a silver Cross pen, blue ink. She leaned over the desk
as she got ready to write. I moved to the board, pulled the cap off a black
dry-erase marker and began writing. "DROP stands for Deferred Retirement
Option Program. It is a feature added on to a defined benefit plan."
"We have a pretty
traditional plan," she said, trying to find her base. "Firefighters
get a monthly amount at retirement determined on the basis of the employee's
service with the agency and pay level at retirement. 2.5% at age 55 for each
year worked, but not more than 80% of pay in total." She was on solid
ground here, and started picking up speed. "Employees contribute 8% of
their pay into the plan. The rest of the funding comes from the agency."
"When the firefighters
retire, they start collecting these monthly checks and stop contributing to the
plan." I was citing the obvious. I thought it might come in handy in the
future.
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