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Board: DROP earnings credited through quarter before termination, per restatement language
Summary
Board advisors told a public commenter that DROP account earnings are credited through the most recent quarter prior to a firefighter’s termination, a policy reflected in the plan restatement’s Section 4.06; the restatement is awaiting city council placement but the board said its interpretation stands.
At the Edgewater Firefighters Pension Board’s June 9 quarterly meeting, a public commenter asked what happens to DROP (deferred retirement option plan) earnings if a member terminates mid‑year. Counsel Pedro answered that the board’s interpretation — reflected in the plan restatement language — credits DROP earnings through the most recent quarter prior to a member’s termination.
“...the drop accounts are earned interest equal to the actual earnings of the investments of the City of Edgewater Firefighters Pension Plan credited through the most recent quarter and prior to termination of employment...,” Pedro read from the restatement language, citing Section 4.06 of the deferred retirement option plan.
The actuary, Doug, described how that interpretation operates in practice: if a member terminated on a date between quarter‑ends, the DROP balance would be credited through the quarter ending immediately prior to the termination date (for example, a termination between April 1 and June 29 would be credited through March 31; staying through June 30 would include interest through June 30). Doug said this approach was part of the restatement because the ordinance had been silent on the timing.
Board counsel and staff said the restatement containing the clarifying language has been exchanged with the city attorney and appears ready, but it remains to be placed on a city council agenda for formal municipal approval. Counsel said the board’s interpretation of how DROP earnings are credited stands regardless of the council’s timeline: “that was the Board's intention in interpreting that,” he said.
The board did not take formal action to change benefits at the meeting; counsel and the actuary emphasized the interpretation is intended to avoid creating additional plan liabilities because the credited returns are net of fees and administered per the restatement text. The board said it will follow up with the city attorney and notify trustees when the item is placed on a council agenda.
The meeting includes a record of the restatement language in Section 4.06 and the board’s verbal confirmation of its crediting interpretation; trustees were directed to await city council scheduling for formal municipal adoption.
