HB180 Alabama 2012 Session

Summary

Primary Sponsor

Craig Ford

Independent

Session

Regular Session 2012

Title

Retirement, DROP reestablished, exceptions, Secs. 16-25-150, 36-27-170 am'd; Act 2011-27, 2011 Reg. Sess. am'd

Summary

HB180 reestablishes the Deferred Retirement Option Plan (DROP) for new participants in Alabama's Teachers' Retirement System and Employees' Retirement System and removes limits on interest paid on DROP accounts.

What This Bill Does

It would allow new DROP participation for TRS and ERS members who meet specific criteria, including 25+ years of service, age 55 (52 for state police under ERS), and salary of $100,000 or less. Eligible participants can choose a DROP period of 3 to 5 years, participate only once, and face forfeiture rules if they terminate early (while contributions and interest remain); post-involuntary termination or death there are protections. While in DROP, the member's service stays the same, contributions continue, and the DROP earns interest like active accounts, but the member cannot receive a retiree cost-of-living increase during DROP and must withdraw after completing the period, after which normal retirement benefits resume and post-DROP school employment is not allowed.

Who It Affects

• Group 1: Eligible teachers and education employees in the Teachers' Retirement System and Employees' Retirement System who meet the criteria and may participate in DROP; their retirement timing, benefits, and eligibility during and after DROP would change (including no COLA during DROP and continued contributions into DROP).
• Group 2: School districts, other employers, and the retirement systems themselves (including state police for the ERS section with a different age rule); these groups would administer DROP, continue making contributions, enforce post-DROP employment restrictions, and handle account rules and interest payments.

Key Provisions

• Reestablishes DROP for new participants in TRS and ERS and removes prior limits on interest paid on DROP accounts.
• Sets eligibility: at least 25 years of service, minimum ages (55 for general; 52 for state police under ERS), and salary of $100,000 or less.
• Allows election to participate for 3–5 years, one-time participation, with rules on forfeiture if voluntary termination occurs early (contributions and interest preserved); involuntary circumstances provide protections.
• Requires participation to end with withdrawal after five years, and prohibits full- or part-time work for the local school system after DROP completion.
• DROP funds continue to be contributed by both the employer and employee; DROP accounts earn interest at the same rate as active accounts; no fees apply to DROP; no retiree cost-of-living increases during DROP.
• No effect on other employment rights and benefits; annual and sick leave continue to accrue; salary adjustments and cost-of-living adjustments may apply after DROP ends; effective date is the first day of the third month after passage.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Retirement