SB215 Alabama 2012 Session

Summary

Primary Sponsor

Tammy Irons

Democrat

Co-Sponsors

William “Bill” M. BeasleyQuinton RossBobby D. SingletonVivian Davis FiguresJerry L. Fielding

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

SB215 reestablishes the Deferred Retirement Option Plan (DROP) for Alabama's Teachers' Retirement System and Employees' Retirement System, allows new participation, and removes limits on interest paid on DROP accounts.

What This Bill Does

It brings back DROP as an option for eligible retirement-system members to keep working while delaying retirement benefits. It sets eligibility requirements (at least 25 years of service, age 55 or older—52 for state police under the Employees' Retirement System—and salary of $100,000 or less) with a participation window of 3 to 5 years and only one-time use. It requires that contributions continue, deposits the future retirement allowance into a DROP account, and grants DROP accounts the same interest rate as active accounts while removing prior interest limits; participants cannot receive cost-of-living adjustments while in DROP and may receive them after DROP ends. It also restricts certain actions (no service credit purchases during DROP, and limited consequences for early termination) and prohibits local school employment after completing DROP.

Who It Affects

• Members of the Teachers' Retirement System and the Employees' Retirement System who choose to participate in DROP and meet the eligibility criteria (and who would defer retirement benefits in exchange for a DROP account).
• State Police members covered by the Employees' Retirement System (age threshold of 52) and the retirement-system administrators and sponsoring school districts that fund and manage DROP and its ongoing contributions and administration.

Key Provisions

• DROP is reestablished and new participation is allowed for the Teachers' Retirement System and the Employees' Retirement System.
• Eligibility requires at least 25 years of service, age 55 or older (52 for state police under the Employees' Retirement System), and an annual salary of $100,000 or less; participation can last 3-5 years and may be used only once.
• An election to participate is irrevocable once the participation period begins, with optional allowances available at the start or otherwise the member receives the maximum benefit.
• During DROP, employer and employee contributions continue and the retirement allowance that would have been paid is deposited into a DROP account, which remains part of the retirement fund until disbursed; no service credit purchases are allowed during DROP.
• DROP accounts earn interest at the same rate as active member accounts, and the bill removes the prior limits on interest that could be paid on DROP accounts.
• DROP shall not be subject to fees or charges, and participation does not affect other rights or benefits; sick leave treatment remains the same except as specified in DROP provisions.
• Participants in DROP do not receive cost-of-living increases while in DROP; after completing DROP and receiving retirement benefits for at least one full year, they may be eligible for COLA.
• After five years, the participant withdraws from DROP and cannot participate in full or part-time employment with the local school system; the act becomes effective on the first day of the third month after the Governor signs it.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Retirement