Mayor Nutter
wants City Council to abolish the DROP program for city employees. The reason? It costs the city money -- an estimated $258 million over the last 10 years, according to a report issued Tuesday (Aug. 3) by Boston College economists. The program works this way: When employees enter DROP, they kee[p working bbut their pensions are frozen at the date they signed up. Meanwile, the city banks contributions it would normally make to the pension fund in the employee's name and gives that money -- plus 4.5 percent interest -- in a lump sum when the employee finally retires, four years after joining the program. DROP was supposed to be revenue neutral, but the Boston econmists say it costs money because it encourages employees to retire earlier than they normally would -- meaning the city has to pay out extra years of pension. The city unions hate the idea of dropping DROP and are likely to oppose it. Council will mull trhe issue when it returns in September.
