The FRS Investment Plan is a defined contribution plan for plan members. The plan works by both...
2023 Proposed FRS Changes to DROP, the Pension Plan, and Investment Plan
2022 marked some of the first big changes to the FRS retirement plans since 2011. We saw investment plan employer contributions increase by an additional 3% for all risk classes, and we saw DROP extend for law enforcement officers to a total of 8 years instead of 5 with HB 5007.
2023 proposed legislation would expand on these changes and add even more changes that can benefit members of both plans. Below is a list of the current proposed changes under HB239.
- Extending DROP by 3 additional years (8 total) for all other FRS members, not just LEO from HB 5007 from last year.
- Changing the DROP annualized interest rate from 1.3% to 4%. This is still much lower than the pre 2011 interest rate of 6.5%, but with interest rates going up over the past year, the rate would increase an additional 2.7% from current.
- The bill would also reinstate the pre 2011 3% cost of living adjustment (COLA) for pension members to help combat inflation in retirement.
- For Investment plan members, a further 1% employer contribution would be added to take total contribution to 7.3% for regular risk class members, and 15.3% for special risk class.
- Additionally, the bill would revise the special risk class normal retirement age back to the pre 2011 requirement of 25YOS or age 55, a 5-year decrease from the current 30YOS or age 60 which applies to special risk members hired after July 1st of 2011.
Presently the bill is still with the house, and should it pass would likely go into effect in July of this year.
If you have questions about how this proposed legislation could impact your retirement plan, you can click the link below to schedule a meeting with one of our representatives who will be happy to address any questions you may have.