Does the pension escalator still kick in during the DROP period?
No. The rules regarding the pension escalator will apply at the end of the DROP period. Your eligibility for an increase is determined by your status as of July 1. If you are age 55 or more, you must be retired for one year to be eligible. If you are not age 55 as of July 1, you must be retired for two years to be entitled to the increase. Thus, if your DROP period ends on June 30, your effective date of retirement will be July 1. If you are age 55 on July 1 of the following year, you will be entitled to receive any pension escalator that is available payable July 31 of that year. If you are not age 55 on July 1 of the following year, you will need to wait another year before the pension escalator applies (again payable July 31 of that year and assuming there is money available for the pension escalator).
