The Deferred Retirement Option Plan (DROP) interest rate for calendar year 2025 will be 5.44%, effective January 1, 2025. The rate was approved by the HMEPS Board of Trustees at the October 2024 Board meeting.
The DROP interest rate calculation is set forth in the HMEPS Pension 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 five-year net investment return on HMEPS’ investments as of the end of fiscal year 2024 is 10.88%. Half of 10.88% is 5.44%. Therefore, DROP participants in 2025 will receive 5.44% 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.