On Wednesday,the Columbus Dispatch published an editorial entitled “Drop the Secrecy,” which highlights a new study by NTU’s friends at the Buckeye Institute that found a pension planused by police officers and firefights allows public employees to retire asmillionaires using tax dollars.
At issue is a secretiveand overly generous pension plan called the Deferred Retirement Option Plan(DROP). As the editorial board points out, “DROP is, essentially,government-sanctioned double-dipping. Police and firefighters become eligiblewhen they are 48 and have at least 25 years of service. Instead of retiring,they commit to continue working for at least three more years, but no more thaneight. The benefit of DROP is that, even as participants continue to work, thepension fund begins making their pension payments, depositing them in anaccount that automatically earns 5 percent interest each year. The pensionamount is increased by a 3 percent cost-of-living allowance each year. Anemployee has no access to the account until he retires. When that employeetruly retires, he collects the lump sum of the deferred pension payments,sweetened by interest and cost-of-living raises. For some of thehighest-ranking officers, that will be more than $1 million.”
Butthis is a very expensive program for municipal and county governments, and thetaxpayers who fund them, when the country is experiencing the worst economicdownturn in generations. Government simply cannot afford to provide gold-platedretirement benefits. Taxpayers deserve to know that their money is going tothese programs so that they can demand more accountability from theirgovernments. This report is an important step in bringing about thataccountability.