The Deferred Retirement Option Plan (DROP) interest rate for calendar year 2019 will be 4.11%, effective January 1, 2019. The rate was approved by the HMEPS Board of Trustees at the October 2018 Board meeting.
The DROP interest rate calculation is set forth in the HMEPS Pension Statute, as amended by SB 2190 in the 85th Texas Legislature. Under the amended Statute, the DROP interest rate as of January 1 of each year is a rate equal to half of HMEPS’ rolling five-fiscal-year investment return net of investment expenses, but not less than 2.5% nor more than 7.5%. The HMEPS net five-year investment return is 8.21%. Half of 8.21% is 4.11%. Therefore, DROP participants in 2019 will receive 4.11% interest on their DROP accounts.
DROP is an optional retirement method for Group A and Group B members who have reached their normal retirement eligibility (age and years of credited service) but do not want to retire. It is an alternative method of accumulating and receiving a pension benefit from HMEPS. To speak with a benefit counselor to learn more about DROP, please call the HMEPS office at 713-595-0100.