Date of Participation
The date you become a plan participant.
Deferred Retirement Option Plan or DROP
An elective program available for Florida Retirement System Pension Plan members who are eligible for normal retirement. Under the Deferred Retirement
Option Program, you may effectively retire and defer receipt of your
retirement benefits while you continue employment with a Florida
Retirement System employer for up to 5 years. While in the program,
your deferred monthly benefits, plus interest and applicable cost-of living
adjustments, are credited to your program account in the Florida
Retirement System Trust Fund. When your program participation ends,
you terminate employment and begin receiving your predetermined
normal monthly retirement benefits, as well as your lump sum Deferred
Retirement Option Program benefits, which you may invest or spend
as you choose. Disability retirees may not participate in the Deferred
Retirement Option Program, and program participants may not qualify
for disability retirement.
Defined Benefit Plan
Under a defined benefit plan (e.g., FRS Pension Plan), you are promised a benefit at retirement if you meet certain criteria (usually involving your length of service and/or age). The amount of your future benefit is determined by formula, often based on your salary, length of service, and membership class, and may be adjusted for inflation. Your benefit is prefunded by contributions. Your plan sponsor or employer, who must ensure that sufficient funds are available when benefits are
due, bears the market risk (must make up investment losses through
increased contributions and may utilize investment gains to lower
contribution rates when the gains result in surplus assets).
Defined Contribution Plan
Under a defined contribution plan (e.g., FRS Investment Plan), no set benefit is promised to you. Instead, contributions are paid into your individual employee investment account. Your plan sponsor or employer controls the contribution rates. Investments are directed by you, the employee, among investment products offered
by the plan. You bear the market risk, realizing interest and/or
investment earnings on your accumulated contributions. Your
retirement benefit is based on the amount of money that accumulates
in your investment account. Your final benefit could be more or less
than you would have realized under a defined benefit plan, depending
upon your investment skills, luck, and market conditions.
Division of Retirement within the Florida Department of Management Services
Downside Market Result
An estimate in "Today's Dollars" of how poorly an investment of $10,000 today might do over a 10-year period. There is a 5% chance that $10,000 would grow or decline to this amount or less in 10 years.