Concerning special service members of the Iowa public employees’ retirement system by establishing a deferred retirement option plan

This bill concerns special service members of the Iowa public employees’ retirement system (IPERS) created in Code chapter 97B.50B establishes a deferred retirement option plan (DROP) for special service members of IPERS. The new Code section provides that special service members of IPERS who are at least years of age and have at least years of service are eligible to participate in the DROP plan. The DROP plan provides that an eligible member can delay retirement, continue working for a set number of additional years, and have a portion of the retirement allowance they otherwise would have received if they had retired instead of participating in the DROP plan deposited in an account that is then distributed to them when they eventually retire. However, the member’s retirement allowance is set at the time the member enters the DROP plan. Prior to participating in the DROP plan, a member shall submit an application to the system indicating when they intend to start participation in the DROP plan and when they intend to terminate their participation in the plan and retire. The bill permits an eligible member to elect to participate in the DROP plan for three, four, or five years. However, for the two-year period beginning on the implementation date of this Code section, an eligible member between the ages of and can elect to participate in the DROP plan and terminate their participation in one or two years. If an eligible person who participates in the DROP plan is a manager or supervisor, the bill requires the manager or supervisor to return to the highest rank or position the manager or supervisor held prior to becoming a manager or supervisor. Upon electing to participate in the DROP plan, the eligible member continues to work but has a portion of the retirement allowance they would have received if they had decided to retire credited to an account. The amount credited is equal to a percentage of the retirement allowance they would have received. The percentage rate is determined by starting with percent and adding percent per month, up to a maximum of 100 percent, based upon the number of months between the month the member first became eligible to participate in the DROP plan and the month the member actually participates. The bill provides that the amount deposited in the member’s account does not accrue interest or dividends. Upon termination from the DROP plan, the eligible member begins to receive a retirement allowance based upon the amount the member would have received when the member commenced participation in the DROP plan plus the amount in the member’s account. If the member terminates participation in the plan prior to the date set by the member and the termination is not due to the member’s death or disability, IPERS shall withhold percent of the amount in the account as a penalty. The bill provides that participation in the DROP plan does not guarantee continued employment. The new Code section also provides that if the IPERS actuary determines that the DROP plan has increased the actuarial cost of the system, the contribution rate paid by special service members shall be increased to cover this increased cost.