Township of Upper Merion, PA Pensions

Member shall pay into the fund at a rate not less than 5% nor more than 8% of his or her compensation. Compensation for this purpose shall be as defined in § 37-1A of the plan. If an actuarial study shows that the condition of the fund is such that contributions by members may be reduced or eliminated, and that contributions by the Township will not be required to keep the fund actuarially sound, then the board may, on an annual basis, by ordinance or resolution, reduce or eliminate payments into the fund by members. Individual records of contributions by members shall be maintained, including all interest credited to their individual accounts. Interest to be credited shall be 4%, compounded annually.

Interest shall be credited from the end of the plan year in which the contribution is made to the end of the month after which a refund becomes payable.

Refund of member's contributions. Any member who for any reason shall be ineligible to receive a pension after having made contributions shall be entitled to a refund of his individual account balance; such refund is payable immediately upon discontinuance of his employment with the police force or within a reasonable time (not more than 45 days after discontinuance). If such discontinuance is due to death, then such refund shall be paid to his designated beneficiary or, in the absence thereof, to his estate. If the disabled or retired member is receiving a benefit by reason of disability or retirement, then the refund payable to the beneficiary is equal to the individual account balance at the date of disability or retirement, less any pension payments made to the member.

Deposits. Contributions by members shall be remitted to the trustee monthly.

State aid. The portion of the payments made by the State Treasurer to the Township and designated by the board to be allocated to the Police Pension fund from money received pursuant to Act 205 of 1984 and allocated for purposes of pension retirement or disability benefits for policemen shall be used as follows:

To reduce the unfunded liability;

After such liability has been fully funded, to apply against the annual obligation of the Township for future service costs; or

To the extent that the payment may be in excess of such obligations, to reduce member contributions pursuant to Subsection A hereof.

Township contributions. Subject to the provisions and limitations set forth in other sections of this plan, the Township shall contribute the amounts certified to be necessary by the fund's actuary to provide the benefits provided by this plan.

Contributions by members while on military service. A member who enters the military service during a time of national emergency either voluntarily or by conscription shall continue to make contributions to the plan as outlined in Subsection A based on the compensation in effect on the last day of service with the Township's Police Department. These contributions will continue throughout the length of his military service. During military service, the trustee shall continue to contribute to the fund for the officer's benefit. However, no contributions will be made either by or on behalf of a member who voluntarily extends his military service during peacetime.

Other contributions. The fund shall be authorized to receive by gift, grant, devise or bequest any money or property, real, personal or mixed, in trust for the benefit of the fund. The trustee of the fund shall be subject to such directions not inconsistent with this plan as the donors of such funds and property may prescribe.

§ 37-4 Retirement benefits.

Normal retirement.

Each member may retire on or at any time after his normal retirement date. Any member so retiring shall be entitled to receive a monthly pension commencing as of the first day following his date of actual retirement and ending with the payment made as of the first day of the month in which his death occurs. The monthly pension to which such retired member shall be entitled to under this plan shall be equal to 50% of such member's average applicable compensation.

Social Security offset to normal retirement benefit. There shall be a seventy-five-percent offset of normal Act 600 pension benefits with Social Security retirement benefits. This offset shall be subject to negotiated reduction or elimination in future contracts but will be eliminated on December 31, 2023.

[Added 10-15-2015 by Ord. No. 2015-839]

In addition to the monthly retirement benefit described above, each member who has completed 26 years of service shall receive an additional monthly pension benefit equal to $100 per month.

Postponed retirement. An employee shall be allowed to continue as an employee beyond his normal retirement date. In such case, the employee shall remain a member of the plan until he actually retires or ceases to be an employee. Any contributions required pursuant to § 37-3A hereof shall continue.

Disability benefit.

If a member retires because of a total and permanent disability, he shall receive a monthly pension for his lifetime in accordance with Subsection C(1)(a) and (b) below:

(a)

For each month that precedes the month in which he would have been credited with 25 years of service had he continued to be employed on a full-time basis in the same position he had prior to his retirement for disability, the monthly pension shall be equal to 70% of his disability benefit compensation.

(b)

For each month beginning with the month in which he would have been credited with 25 years of service had he continued to be employed in the same position he had prior to his retirement for disability and until his death, the monthly pension shall be equal to 50% of his disability benefit compensation.

For purposes of this Subsection C, disability benefit compensation shall be equal to the greater of his average applicable compensation or 1/12 of the compensation he received for the last 12 months of service. In the case of a member who has not served for 36 months, his average applicable compensation shall be the average of his compensation for the number of months that he was employed as a member.

Any payments under this Subsection C will be offset by other settlements received by the member on account of his disability, such as workers' compensation, or any future earnings from employment by the Township or otherwise. In no event, however, will the member's disability pension paid under this Subsection C exceed 100% of his compensation received in the twelve-month period preceding his retirement for disability.

Social Security disability pension offset. For all police officers hired on or after January 1,2009, there shall be a dollar-for-dollar offset of benefits received as disability pension from the Act 600 Police Pension Plan and Fund and the disability benefits received from the Social Security Administration.

[Added 10-15-2015 by Ord. No. 2015-839]

Cost-of-living adjustment.

[Amended 12-2-1999 by Ord. No. 99-700]

There shall be a cost-of-living increase provided to all members who retire; provided, however, that such cost-of-living increase shall not exceed the percentage increase in the All Urban Consumers CPI for the Philadelphia area from the year in which the member last worked. The cost-of-living adjustment shall be calculated on the member's average applicable compensation and shall apply to all members on retirement who have not maximized the cost-of-living allowance (COLA) benefits listed, provided further that in no case shall the total police pension benefits exceed 75% of the salary for computing retirement benefits, provided further that the total cost-of-living increase shall not exceed 30%. No cost-of-living increase(s) shall be granted which would impair the actuarial soundness of the plan. The initial cost-of-living adjustments shall be made in January following the year of retirement. All subsequent adjustments shall be made in January and calculated on the twelve-month percentage change in the consumer price index as of the previous October.

Subject to the limitations of Act 33 of 1996 which amended Act 600, members receiving retirement benefits for 20 or more years shall be granted a cost-of-living adjustment increasing their pension benefit equal to, but not in excess of, 100% of their average applicable compensation. In order to qualify for this benefit, a member must serve until his normal retirement date. Any member who elects early retirement, vesting or disability will not be eligible for this benefit.

Early retirement benefit. Each member may retire on or at any time after his early retirement date. Upon termination, the MEMBER must file with the Secretary of the Township a written notice of his intention to elect an early retirement benefit. This benefit shall become effective as of the date of the notice or the date designated in the notice, whichever is later. The amount of the early retirement benefit shall be the actuarial equivalent of a vested retirement benefit as computed in § 37-6A. The actuarial equivalent of the vested retirement benefit shall be determined by actuarially reducing the vested retirement benefit to reflect that it will commence on the effective date of the early retirement rather than on the member's normal retirement date. The actuarial reduction shall be calculated using the actuarial assumptions reported in the last actuarial valuation report filed with the Public Employee Retirement Commission.

[Added 12-2-1999 by Ord. No. 99-700]

Deferred retirement option plan (DROP).

[Added 6-5-2003 by Ord. No. 2003-727; amended 11-4-2004 by Ord. No. 2004-740]

Eligibility. Any member who has reached his/her normal retirement date may elect to become a participant in the DROP.

Election to participate. Election to participate in DROP is irrevocable. The member shall make the election by using forms and procedures as prescribed by the Trustee.

DROP pension payments. Upon entry into the DROP, a member's service and average applicable compensation shall be frozen and his/her DROP pension payment shall be calculated as if he/she actually retired on the date he/she entered the DROP. The monthly DROP pension payment, plus any applicable COLA, shall be paid to an individual DROP investment account. The Trustee or a third-party administrator shall maintain the account.

Individual DROP investment account. Each member shall select the investments in his/her individual investment account from an array of options as selected by the Trustee. The Trustee may select a third party to provide mutual fund or other investment options, recordkeeping and reporting to the members and the Trustee. All investment and administrative costs shall be charged against the individual DROP investment accounts of the participants.

(5)

Maximum participation.

[Amended 4-2-2009 by Ord. No. 2009-781]

(a)

The maximum period of participation in the DROP is 60 months for members below the rank of Lieutenant. Once the maximum participation has been achieved, the member must terminate employment and separate from service.

(b)

The maximum period of participation in the DROP for members who have reach the rank of Captain or Lieutenant (i.e., hereinafter the command staff) is 60 months, provided that a minimum of 100% of the actuarial requirement of the pension fund is maintained. If the fund balance falls below this level, any command officer entering the DROP will be restricted for a maximum of 36 months of participation. This length of participation limit will only become effective if future legislation requires that DROP accounts earn a stated rate of interest or impose any additional costs on the pension fund. No more than two of the command staff officers, to include the Chief of Police, will be permitted to separate from service to join the DROP within any twelve-month time frame.

(c)

The Chief of Police will be permitted a maximum of 96 months’ participation in the DROP.

(6)

Distribution options. Commensurate with DROP participation, a member shall make an election, on forms designated by the Trustee, of the payout option(s) he/she wishes at the termination of the DROP period. This election may be changed at any time prior to termination. The distribution options are as follows:

(a)

A full and lump-sum distribution.

(b)

Rollover to another qualified retirement plan (as permitted by law) or to an IRA.

(c)

Purchase of an annuity.

(d)

Keep the monies in the individual DROP investment account. Monies kept in the individual DROP investment account may be withdrawn in any manner desired by the member.

(e)

Any other distribution provided by the Trustee/third party administrator.

(7)

Beneficiary designation. Commensurate with DROP participation, a member shall make an election, on forms designated by the Trustee, of the beneficiary or beneficiaries he/she wishes to receive the monies in his/her individual DROP investment account in the event of his/her death before all monies have been distributed.

(8)

Disability. A member who becomes permanently disabled during the DROP period and retires from service shall revert to his/her normal age and service pension and to directly receive those pension payments which were being deposited into his/her DROP investment account. The participant will then have access to the distributions from his/her individual DROP investment account.

(9)

Other aspects of employment. Except for promotion and as otherwise stated above, members participating in DROP shall be eligible for the same benefits as any other member.

(10)

If the Commonwealth of Pennsylvania passes and implements legislation governing DROP plans in this state, any plan in effect in Upper Merion Township will be brought into compliance with such legislation when required.

§ 37-5 Death benefits.

Death benefit if no surviving spouse nor dependent children. If a member dies prior to the commencement of pension benefits, then his designated beneficiary shall be entitled to a refund of his accumulated member's contributions with credited interest. If no beneficiary survives, then the refund is payable to the member's estate.

Pension benefit to surviving spouse and dependent children.

[Amended 6-5-2003 by Ord. No. 2003-727]

If the officer's death occurs after 12 years of service but before 20 years of service, then the survivor shall be eligible for a prorated pension to begin on what would have been the officer's superannuation date. See calculation in § 37-6B (1).

If the officer's death occurs after 20 years of service, then the survivor shall be entitled to a prorated pension to begin immediately. See calculation in § 37-6B(1).

If a member dies and is survived by a spouse or dependent children, after having become eligible to receive a pension benefit, (i.e., he/she was eligible because he/she was already receiving a pension or he/she met the age and service requirements, but he/she had not yet retired), then a monthly pension benefit shall be provided.

The amount of the monthly pension benefit shall be 100% of the pension the member was receiving or would have been entitled to receive if he/she had been retired at the time of his/her death. Any form of survivor benefits shall be offset in full by any workers' compensation benefits that are received by the survivors.

(5)

The monthly pension benefit is payable to the surviving spouse until death, then to the guardian or surviving dependent children until the last dependent child dies or reaches his/her 18th birthday, or age 23 if the child/children is attending an accredited college on a full-time basis. Full-time attendance is defined as enrolled in a course of study comprised of at least the equivalent of seven semester hours per term. Dependent children shall include stepchildren, adopted children, and any child conceived before the time of the member's death and thereafter born to the member's spouse.

If a police officer who is an active participant (including a member of any current and future DROP that may exist and in which the retired officer may be a participant) is killed in service while performing police services for the employer, the participant's surviving spouse or eligible dependents (if any, as defined by Act 51 of 2009) shall receive a benefit under Act 51 of 2009[1]. The benefit provided under Act 51 is the only pension benefit that shall be payable to the survivors of a officer who is killed in service, and no survivor pension benefit of any type shall be payable under the Upper Merion Township Police Pension Plan.

[Amended 6-5-2003 by Ord. No. 2003-727; 6-26-2014 by Ord. No. 2014-823]

[1]

Editor's Note: See 53 P.S. § 891.

§ 37-6 Severance of employment.

If a member leaves the employ of the Township or ceases to be a member, whether by reason of his transfer, resignation or discharge, or by reason of disability or retirement other than after becoming eligible for benefits pursuant to § 37-4 or 37-5 of this plan, he shall be entitled to a refund of all contributions made by him and then on deposit in the fund, plus interest thereon, computed at the rate described in § 37-3A.

However, a member who has completed 12 or more years of service may elect either Subsection B(1) or (2) as described below:

He may elect to leave his contributions, plus interest, in the fund so as to receive a vested pension benefit to start at his normal retirement date. He must file with the Secretary of the Township within 90 days of the date he ceases to be an employee a written notice of his intention to vest. The amount of the vested pension benefit shall be (x) divided by (y) where (x) is the number of years of service at the date of termination and (y) is the number of years of service which the member would have had if he worked until normal retirement date, multiplied by the benefits described in § 37-4A. Years of service shall be measured in years and completed months.

He may elect to receive a refund of all contributions made by him and then on deposit in the fund, plus interest thereon, computed at the rate described in § 37-3A. If he elects to receive the refund of his contributions plus interest, he would forfeit the pension benefit outlined in Subsection B(1).

§ 37-7 Method of distribution of benefits.

Refund benefits becoming distributable pursuant to § 37-6 and death benefits becoming distributable pursuant to the provision of § 37-5A shall be paid in the form of a lump-sum distribution.

The normal form of all benefits payable hereunder shall be a pension for the life of the member commencing on the date specified and ending with a payment made on the first day of the month in which the member dies, subject, however, to the payment of a death benefit calculated pursuant to § 37-5B.

§ 37-8 Management of fund.

It is the duty of the trustee to pay the benefits to members and their beneficiaries, as provided in §§ 37-4, 37-5 and 37-6, in accordance with the instructions received from the board; provided, however, that the duty of the trustee to make such payments is wholly contingent upon the sufficiency of the fund for such purposes.

The Township may employ an actuary, investment advisors, counsel or other professional consultants from time to time in connection with the operation of the fund or of this plan. Such persons or entities shall be compensated by the Township at such rates as may be agreed upon by the Board or may be paid from the fund.

The trustee shall make an annual determination of the fair market value of the fund as of the anniversary date and as of such additional dates as the Board may direct.

The fair market value of the fund shall be reported to the actuary who shall calculate the amount to be contributed to the fund by the Township with respect to each plan year in accordance with the assumptions most recently adopted by the Board for the purpose of such computations; provided, however, that the liability of the Township to make such contributions is subject to all of the conditions and limitations set forth elsewhere in this plan.

§ 37-9 Administration; Board.

The plan shall be administered by the Board of the Township. The Board shall make and adopt rules and regulations for the efficient administration of the plan.

The Board shall keep all data, records and documents pertaining to the administration of the plan and shall execute all documents necessary to carry out the provision of the plan and shall provide all such data, records and documents to the professionals whose services are employed pursuant to § 37-8B of this plan.

The Board shall construe the plan, shall determine any questions or fact arising under the plan and shall make all decisions required of it under the plan. Decisions and actions taken thereon in good faith shall be final and conclusive. It may correct any defect or supply any omission or reconcile any inconsistency in such manner and to such extent as it shall be the sole judge of such expediency. The Board shall act uniformly with respect to matters coming before it concerning employee in similar circumstances.

The Board and each of the individual members thereof shall be free of all liability for any act or omission except by willful misconduct or gross negligence, and the Board and each individual member shall be fully indemnified by the Township against all judgments not involving findings of their respective personal or collective willful misconduct or gross negligence and against all cost, including counsel fees, incurred in defense of actions brought against them.

The Board shall make available to members, retired members and terminated members and to their beneficiaries, for examination during business hours, such records as pertain to the person examining.

To enable the Board to perform its function, the Township administration shall supply full and timely information to it on all matters relating to the pay of all members, their retirement, death, termination of employment and such other pertinent facts as the Board may require.

The Board shall enact such rules and regulations for the conduct of its business and for the administration of the plan as it may consider desirable, provided that the same shall not be in conflict with any of the provisions of the plan. All actions of the Board shall be taken at meetings at which at least four members shall be present, or by written resolutions of not less than four of its members. Written minutes shall be kept of the meetings and actions of the Board.

The Secretary, acting on behalf of the Board, shall have the power to execute all documents necessary to carry out the actions of the Board, and any person, partnership, corporation or government agency shall accept such documents over such signature or signatures as if executed by the Board.

§ 37-10 Police Pension Committee.

A committee shall be created to monitor the operation of the fund and plan and to advise the Township Manager and Board on matters concerning the administration of the fund and plan. The Committee shall review and supervise the investment and expenditures of moneys in the fund and plan.

Each individual member of the Committee so designated shall serve until death, resignation, removal or disqualification. Any Committee member may resign upon written notice to the Board and the Committee. Any vacancies in the Committee arising from resignation, death or removal shall be filled by the successor of the individual whose resignation, death or removal has created the vacancy.

The Committee shall act by such procedure as the Committee shall establish. All decisions of the Committee shall be by majority vote. The Committee may authorize one of its members to execute any document or documents on behalf of the Committee. The Committee may adopt such bylaws and regulations as it deems necessary for the conduct of its affairs and may appoint such accountants, counsel, actuaries, specialists or such other person as it may deem advisable for the proper administration of the plan. No such regulation, bylaw or appointment shall be effective until such is approved by the Board, and the expenses incurred by the retention of such professionals shall be subject to the prior approval of the Board.

The Committee shall keep a record of all proceedings and acts and shall keep all such books of accounts, records and other data as shall be necessary for the proper administration of the plan. All actions of the Committee shall be communicated to the Board.

All books, records, accounts, ledgers, transcripts, bank records, assets and tangible property of value shall be kept and in the custody of the employer, or any person designated by the Chairman of the Board.

The Committee shall serve without compensation for its services but shall be reimbursed for all reasonable expenses incurred in the administration of the plan. Such expenses shall be subject to the prior approval of the Board.

No Committee member shall incur any liability for any action or failure to act, except in the case of liability for gross negligence or willful misconduct. The employer shall indemnify each Committee member against any and all claims, loss, damages, expense and liability arising from any action or failure to act, except for such that is the result of gross negligence or willful misconduct.

All checks, drafts, order to pay money, deposits of money and all transactions concerning the receipt or disbursement of any money shall be prepared by the employer or any person designated by the Chairman of the Board.

The Committee shall meet at least annually for the purpose of reorganizing and reviewing the biannual actuarial report. Other meetings shall be held whenever a majority of the Committee concurs that a meeting would be desirable.

§ 37-11 Township responsibilities and rights.

It is the expectation of the Township that it will continue this plan indefinitely and will, from time to time, contribute to the fund such amounts as may be needed to provide the benefits set forth in the plan.

The provisions of any ordinance establishing, amending or maintaining the plan shall not be a charge on any other fund in the Treasury of the Township or under its control, save the Uniformed Employee's Pension Fund herein provided for.

Nothing contained in the plan shall be held or construed as a contract or guarantee of employment nor to create any liability upon the Township to retain any person in its service. The Township reserves the full right to discontinue the service of any person without any liability except for salary or wages that may be due and paid whenever in its judgment its best interests so require, and such discontinuance shall be without regard to this plan.

§ 37-12 Termination or amendment of plan.

The Township may amend this plan from time to time as is necessary to maintain its actuarial soundness and to incorporate changes in plan benefits or entitlements. However, no amendment shall be made which will, in any manner, divert any part of the fund to any purpose other than the exclusive benefit of members or their beneficiaries (except that, upon termination, such diversion may be made after all of the fixed and contingent liabilities to members and their beneficiaries have been met); nor shall any amendment be made at any time which will in any manner divest any benefit then vested in a member or reduce or eliminate a benefit to which a member has been given an expectation by virtue of pension ordinance or pension calculations for retiring officers who retired during the member's participation in this plan.

In the event of termination of this plan, the Board shall allocate the assets then remaining in the fund as follows:

Sufficient funds shall be maintained to provide the pension benefits prescribed in § 37-3 for all members who have retired prior to termination or who are eligible for retirement at the time of the termination of this fund.

Contributions with interest at a rate established by the Board as provided in § 37-5 shall be refunded to any and all members who terminate service at the time of the termination of the fund.

Of the remaining funds, those which can be identified as municipality contributions or contributions other than from members or from the Commonwealth allocation shall be distributed as the Board sees fit, provided that such distribution is in compliance with § 37-8.

All funds in excess of the funds described in Subsection B(1), (2) and (3) above shall be returned to the Commonwealth as unused funds pursuant to the Act of May 12, 1943, P.L. 259, as amended, 72 P.S. § 2263.1 et seq.

§ 37-13 Miscellaneous provisions.

Legal indebtedness.

No benefit under this plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance, nor to seizure, attachment or other legal process for the debts of any member or member's beneficiary.