The Deferred Retirement Option Plan (DROP) interest rate for calendar year 2027 will be 5.29%, effective January 1, 2027.
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 2026 is 10.58%. Half of 10.58% is 5.29%. Therefore, DROP participants in 2027 will receive 5.29% interest on their DROP accounts. The rate was approved by the HMEPS Board of Trustees at the October 2026 Board meeting.
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.