Township of Cheltenham, PA Salaried Employees

Continuous service with the employer shall not be broken in the event of:

(a)

Absence with the consent of the administrator during any period not in excess of one year, except that the administrator may consent to extend the period of leave.

(b)

Absence from work because of occupational injury or disease incurred as a result of employment with the employer, for which absence an employee shall be entitled to worker's compensation payments.

(c)

Absence in the service of the Armed Forces of the United States, provided that the employee shall reenter the employ of the employer within the statutory period during which his right of reemployment is guaranteed after he has first become eligible for discharge or separation from active duty.

In interpreting this Subsection B, the administrator will apply uniform rules in a like manner to all employees under similar circumstances.

An employee shall not receive credited service in the case of any of the periods of absence set forth in Subsection B above but shall retain credited service accrued prior to such absence. Upon return to employment after an approved absence, the employee will again accrue credited service.

Failure to return to the employ of the employer by the end of any period specified in Subsection B above shall be considered a termination of employment. Any other absence shall also be considered a termination of employment. Any employee whose employment has been terminated shall, for the purpose of this plan, be deemed a new employee upon resumption of his employment unless he is vested in accordance with § 40-28 hereof.

§ 40-23 Retirement dates.

Normal retirement date. An employee's normal retirement date shall be the first day of the month coincident with or next following his 65th anniversary of his date of birth. An employee's retirement age shall be reduced one year for each year of credited service in excess of 20 years, to a maximum reduction of 10 years.

[Amended 6-20-1989 by Ord. No. 1693]

Early retirement date. Upon written notice to the administrator, an employee may elect to terminate employment and retire on an early retirement date which may be the first day of any month within 10 years prior to his normal retirement date. For employees hired prior to December 31, 2014, the minimum age for early retirement shall be set at 55. For employees hired after December 31, 2014, the minimum age for early retirement shall be set at age 60.

[Amended 8-19-2015 by Ord. No. 2312-15]

Deferred retirement date. An employee may continue in employment beyond his normal retirement date to a deferred retirement date which may be the first day of any month subsequent to his normal retirement date.

§ 40-24 Retirement benefits.

Normal retirement benefit. The monthly amount of normal retirement benefit payable to an employee retiring on his normal retirement date shall be an amount equal to 2% of average monthly earnings for the last 36 months of the employee's earnings multiplied by the number of years credited service. For employees hired after December 31, 2014, the Township Pension Plan shall provide a benefit of 1 1/2 times years of service times the average pay in the last 36 months of the employee's earnings. The pension shall be capped at 100% of average salary.

[Amended 6-20-1989 by Ord. No. 1693; 8-19-2015 by Ord. No. 2312-15; 8-21-2019 by Ord. No. 2391-19]

Early retirement benefit.

The monthly amount of early retirement benefit payable to an employee retiring on his early retirement date shall be determined in the same manner as his normal retirement benefit, based on his credited service to his early retirement date, subject to the amount of benefit in which the employee is vested under § 40-28, Termination of employment, and reduced in accordance with the following:

	Number of Years Early Retirement Date Precedes Normal Retirement Date	Percent Reduction
	0	100.0
	1	97.5
	2	95.0
	3	92.5
	4	90.0
	5	87.5
	6	85.0
	7	82.5
	8	80.0
	9	77.5
	10	75.0

If the period between the early retirement date and normal retirement date is not an integral number of years, the percentage to be applied shall be the percentage for the next higher integral number of years, increased by a proportionate part of the difference between that percentage and the percentage for the next lower integral number of years.

Deferred retirement benefit. The monthly amount of deferred retirement benefit payable to an employee retiring on his deferred retirement date shall be determined in the same manner as his normal retirement benefit, based on his credited service and average monthly earnings to his deferred retirement date.

Minimum retirement benefit. In no event will the monthly retirement benefit payable to an employee who isn't covered on January 1, 1974, on his early, normal or deferred retirement date be less than that which he would have received under the plan as funded by the Aetna Group Annuity Contract GA-2342.

Forfeitures. No part of any forfeitures resulting from the application of any provision of this plan shall be applied to increase the benefits any employee would otherwise receive under this plan.

Retired participants will continue to receive retirement benefits in the same amount as was being paid immediately prior to the effective date of this amended and restated plan. A participant who terminated employment prior to the effective date of this amended and restated plan, who is not subsequently reemployed, shall have such retirement benefits determined in accordance with the provisions of the plan in effect as of the date of such participant's termination of employment.

§ 40-25 Form and payment of benefits.

Normal form of retirement benefit; life annuity; modified cash refund.

A retired employee's retirement benefit shall normally be payable in the form of a monthly life annuity commencing on his actual retirement date and ceasing with the last payment due immediately preceding the retired employee's death.

At the time of the retired employee's death, his designated beneficiary shall become entitled to a cash refund equal to the excess, if any, of the total contributions made by the employee to this plan, plus interest thereon, over the total of all benefits which had been paid to the retired employee at the time of his death.

Contingent annuitant option.

In lieu of the normal form of retirement benefit described in Subsection A above, an employee may elect a contingent annuitant option which provides for an actuarially reduced benefit payable to the retired employee during his lifetime and for the continuance of such retirement benefit payments in either the same or a percentage of such reduced amount of a contingent annuitant, if living, after the retired employee's death.

If the contingent annuitant is the spouse of the retired employee or if the contingent annuitant is any other person not more than 50 years younger than the retired employee, the benefit payable under this option is payable without restriction. If, however, the contingent annuitant is a person other than a spouse of the retired employee and is more than 30 years younger than the retired employee, the benefit otherwise payable under this option to the contingent annuitant shall be limited so that the value of the annuity payable to the contingent annuitant shall be less than 50% of the value of the retired employee's total original benefit, both calculated as of the retired employee's actual retirement date.

The monthly payment to the contingent annuitant shall commence on the first day of the month following the month in which the retired employee dies, if the contingent annuitant is then living, and shall continue monthly with the last payment due for the month in which the contingent annuitant's death occurs.

If a contingent annuitant dies before the employee's actual retirement date, the normal form of retirement benefit will automatically become payable (unless the employee names another contingent annuitant before his actual retirement date) as if a contingent annuitant option had not been elected. If the contingent annuitant predeceases the retired employee after retirement, the retirement benefit payments will cease upon the retired employee's death. No monthly benefit will be payable to a contingent annuitant if the employee dies before his first retirement benefit payment becomes due.

(5)

If an employee who has elected this option should die after his normal retirement date and prior to his deferred retirement date, the contingent annuitant, if living, shall become a survivor annuitant and shall be entitled to benefits, payable for such survivor annuitant's further lifetime, in a monthly amount equal to the amount which would have been payable to the contingent annuitant had the employee retired on the date of his death with the contingent annuitant option operative.

(6)

Notwithstanding any of the provisions outlined above, the minimum total of all benefits payable under this option shall be an amount not less than the total of all the retired employee's contributions hereunder with credited interest to his annuity commencement date.

Option for life annuity with 120 payments guaranteed.

In lieu of the normal form of retirement benefit described in Subsection A above, an employee may elect an option for life annuity with 120 payments guaranteed which provides for an actuarially reduced retirement benefit payable to the retired employee during his lifetime with the guaranty that not less than a total of 120 monthly retirement benefit payments will be made to the retired employee and his named beneficiary.

If this option is elected and the retired employee dies prior to the receipt of the 120 guaranteed monthly payments, the balance of the guaranteed monthly payments will be paid to the retired employee's named beneficiary until a total of 120 monthly payments has been made to the retired employee and his named beneficiary. The first such payment to the beneficiary shall be due and payable as of the first day of the month following the retired employee's death.

In the event that there is no named beneficiary living at the death of the retired employee, the balance of the 120 guaranteed monthly payments, which would otherwise have become payable to the retired employee's beneficiary, shall be commuted to a single sum and shall be paid to the retired employee's executors or administrators.

If the beneficiary of a deceased retired employee should die prior to receiving the balance of the 120 monthly payments, the balance of the 120 monthly payments which would otherwise have become payable to the retired employee's beneficiary shall be commuted to a single sum and shall be paid to the beneficiary's executors or administrators.

(5)

If an employee who has elected this option should die after his normal retirement date and prior to his deferred retirement date, his beneficiary shall become a beneficiary annuitant and shall be entitled to benefits payable for 120 months in an amount equal to the amount which would have been payable to the employee had the employee retired on the date of his death with the option for life annuity with 120 payments guaranteed operative.

(6)

Social security option.

Prior to an employee's annuity commencement date, if such date precedes his social security commencement date, he may elect the social security option. Under this option, the amount of the retirement annuity payments payable to the employee before his social security commencement date will be increased, and the amount of the retirement annuity payments payable to the employee on and after such date will be reduced.

The yearly amount of such increased retirement annuity payments will be equal to the yearly amount of retirement annuity payments which would have been payable to the employee if this option had not been elected, plus a percentage of his social security benefit. Such percentage will be provided by the insurance company.

The yearly amount of such reduced retirement annuity payments will be equal to the increased yearly amount of retirement annuity payments payable to the employee before his social security commencement date minus his social security benefit.

This option may only be elected in conjunction with the normal form of annuity.

Any one option may be elected by the employee by written notice to the administrator at least one month before the employee's actual retirement date.

Once a choice as to a form of retirement benefit or a retirement date is made and accepted by the administrator, it cannot be rescinded by the employee without the written consent of the administrator conditioned upon satisfactory evidence of the good health of the employee and any person entitled to receive payments upon the death of the employee. In no event shall the consent of any person entitled to receive upon the death of the employee be required as a condition to the right of an employee to revoke or change any option previously elected.

Anything in this plan to the contrary notwithstanding, the employee shall not have the right prior to his retirement irrevocably to elect to have all or a part of his interest in this plan, which would otherwise become available to him during his lifetime, paid only to his beneficiary after his death.

If a retired employee is reemployed by the employer, his retirement benefit payments shall cease with the last payment date prior to his reemployment. Retirement benefit payments shall again become payable on the first day of the month following subsequent termination of employment.

An employee who is a participant in this plan must have the entire interest in his retirement benefit:

Distributed to him not later than the required beginning date; or

Distributed commencing not later than the required beginning date in accordance with Internal Revenue Service regulations:

(a)

Over the life of the participant;

(b)

Over the lives of the participant and a designated beneficiary;

(c)

Over a period not extending beyond the life expectancy of the participant; or

(d)

Over a period not extending beyond the life expectancy of the participant and a designated beneficiary.

(e)

If a participant dies after he begins to receive his retirement benefit but before the entire interest in his retirement benefit has been distributed to him, the entire interest in his retirement benefit (or the remaining part of such retirement benefit) will be distributed at least as rapidly as under the method of distribution in effect prior to his death. If the participant dies before he begins to receive his retirement benefit, the entire interest in his retirement benefit will be distributed within five years after his death unless Subsection J(1) or (2) below apply:

Any portion of the participant's retirement benefit is payable to a designated beneficiary, and the portion of the participant's retirement benefit will be distributed according to Subsection I above, and such distribution of the participant's retirement benefit begins no later than one year after the date of the participant's death; or

The designated beneficiary is the surviving spouse of the participant and the participant's interest to which the surviving spouse is entitled will be distributed according to Subsection I(2) above. If the surviving spouse dies before payments are required to begin, the entire interest in the participant's retirement benefit will be distributed within five years of the death of the surviving spouse.

A retired participant who commenced to receive retirement benefits prior to the effective date of this amended and restated plan shall have such benefits continued in the same form as such benefits were being paid to him immediately preceding the effective date of this amended and restated plan.

§ 40-26 Death benefits.

Upon the death of any employee prior to his normal retirement date, there shall be payable to his named beneficiary a single sum death benefit equal to the total of the employee's contributions under this plan, plus credited interest at the full gross rate credited to such contributions under the plan.

Upon the death of an employee on or after his normal retirement date, there shall be payable to his named beneficiary a death benefit payable in accordance with the provisions as outlined in § 40-25.

In addition to the benefit payable under Subsection B above, upon the death of any employee on or after his actual retirement date, there shall be payable to the participant's beneficiary a lump sum death benefit in the amount of $1,000.

Payment of the death benefits as outlined above shall be in lieu of all obligations of the insurance company with regard to the retired employee under this plan.

§ 40-27 Permanent and total disability.

An employee who has completed at least 10 years of credited service and is deemed to be permanently and totally disabled in accordance with the Federal Social Security Act shall be entitled to disability benefits as hereinafter outlined.

"Permanent and total disability" means presumably permanent incapacity occurring after the effective date and resulting in an employee being unable to engage in any regular gainful employment or occupation by reasons of any medically demonstrable physical or mental condition; excluding, however, any incapacity which was contracted, suffered or incurred while the employee was engaged in or resulted from having engaged in a felonious enterprise or consists of chronic alcoholism or addiction to narcotics or results from an intentionally self-inflicted injury or results from service in the armed forces of any country, for which a service-connected government disability benefit is payable. Proof of disability shall be submitted to the employer. Such disability will not be considered established unless it has continued for a period of not less than five consecutive months.

The employer may require proof of continued disability. Such proof may be required from time to time but not more frequently than once every six months.

The monthly amount of disability benefit payable to an employee eligible for such benefit shall be determined in the same manner as his normal retirement benefit based on the number of years of credited service as of the date of his disability.

The disability benefit shall be payable monthly commencing with the first day of the month following establishment of disability and shall terminate with the last monthly payment due preceding the earliest of the following dates:

The date of the death of the employee.

The date the employee is deemed to be no longer permanently and totally disabled.

The employee's normal retirement date.

Upon occurrence of the earliest of the above events, the disability benefit shall cease. If such occurrence is as set forth in Subsection E(3) above, payment of the normal retirement benefit shall commence on such date in the same amount as his disability benefit.

Upon reaching his normal retirement date, a disabled employee may elect the contingent annuitant option, and the provisions of that option shall determine the amount and duration of subsequent payments.

A participant who commenced to receive disability benefit payments prior to the effective date of this amended and restated plan shall have such benefits continued in the same amount and manner as such benefits were being paid to him immediately preceding the effective date of this amended and restated plan.

§ 40-28 Termination of employment.

If an employee should terminate employment with the employer prior to his early or normal retirement date, he shall be entitled to elect either of the following two options:

[Amended 3-20-2001 by Ord. No. 1981-01[1]]

Refund option. Under this option a terminated employee will receive a lump sum cash refund equal to the total of the employee's contributions under this plan plus credited interest thereon to the date of termination. Election of this option shall be in lieu of all other benefits, which may have become due the terminated employee under this plan.

Annuity option. Under this option an employee who terminates employment with the employer prior to his early or normal retirement date shall be entitled to a retirement benefit as determined in accordance with the provisions of § 40-24A based on his average monthly earnings and his credited service on the date of his termination of employment. Such benefit is subject to the percentage and requirements indicated in the vesting schedule below and shall be payable commencing on the employee's normal retirement date.

	Years of Service	Vested Percentage
	Less than 5	0%
	5 or more	100%

[1]

Editor's Note: This ordinance also provided that it shall be effective 1-1-2001.

If an employee hired prior to December 31, 2014, should terminate his employment after age 55, he will have a vested percentage of 100%. If an employee hired after December 31, 2014, should terminate his employment after age 60, he will have a vested percentage of 100%.

[Amended 8-19-2015 by Ord. No. 2312-15]

A participant who terminated employment prior to the effective date of this amended and restated plan, who is not subsequently reemployed and who retains a nonforfeitable right to retirement benefits hereunder shall have the amount of his nonforfeitable right determined in accordance with the provisions of the plan in effect as of the date of such participant's termination of employment.

§ 40-29 Employer and employee contributions.

For the purpose of funding the retirement benefits provided for herein, the employer will enter into a group annuity contract of the deposit administration type, with the insurance company.

The employer will make periodic payments to the insurance company, determined on the basis of annual actuarial estimates furnished by a qualified actuary chosen by the administrator which shall be in such amounts as the Township deems necessary for the accumulation to be sufficient to purchase applicable retirement benefits or as mandated by Act 205.[1]

[1]

Editor's Note: See 53 P.S. § 895.101 et seq.

Effective January 1, 2015, each participating employee will be required to make regular contributions to this plan through payroll deductions equal to 5% of total annual wages. An employee's contribution shall be suspended until such time that the Commonwealth of Pennsylvania pursuant to Act 205,[2] does not provide the necessary funds to actuarially maintain this pension plan.

[Amended 6-20-1989 by Ord. No. 1693; 8-19-2015 by Ord. No. 2312-15]

[2]

Editor's Note: See 53 P.S. § 895.101 et seq.

Interest will be credited on each employee contribution at the rate of 4.5% per annum.

No part of the funds held by the plan shall be used for or diverted to purposes other than for the exclusive benefit of employees covered under this plan prior to the satisfaction of all liabilities hereunder with respect to them.

No person shall have any interest in or right to any of the funds contributed to or held under the plan except as expressly provided in this plan and the group annuity contract and then only to the extent that such funds have been contributed by the employer to the plan.

The plan shall pay the full administrative costs approved by Act 205[3] under this plan, and any and all other costs required for the operation of this plan shall be the obligation of the employer.

[3]

Editor's Note: See 53 P.S. § 895.101 et seq.

§ 40-30 Administration.

This plan shall be administered by the employer in accordance with this plan and the group annuity contract. All decisions of the employer with respect to the administration of this plan which are consistent in all respects with the intent and purposes of this plan shall be conclusive and binding on all concerned.

The employer shall determine the benefits payable under this plan and shall have the right to make rules as may be necessary for such administration, shall require employees to file written applications for retirement, to produce satisfactory evidence of their date of birth and furnish such other information as may from time to time be deemed necessary.

§ 40-31 Right of employer to discontinue or amend plan.

The employer intends to continue this plan and payment of contributions therefor indefinitely; but continuance of this plan is not assumed as a contractual obligation, or other obligation, of the employer, and the right is reserved by the employer to reduce, suspend or discontinue its contributions hereunder at any time. In the event of a suspension which results in a discontinuance, such discontinuance shall be retroactive to the date the last suspension of contributions commenced.

The employer shall have the right to amend this plan at any time and to any extent that it may deem advisable. No such amendment, however, shall:

Vest in the employer any interest in or control over the funds accumulated in accordance with this plan; or

Deprive any employee who has retired under this plan, prior to the date of amendment, of any retirement benefit under this plan or change the provisions thereof; provided however, that any change or modification for the purpose of conforming this plan to the requirements of the Internal Revenue Code of the United States or of any other pertinent provisions of federal or state law, or of any regulation or ruling of any duly constituted authority in connection therewith, may be made effective at any time with retroactive effect.

§ 40-32 Procedure on complete discontinuance of plan.

This plan shall be discontinued upon written notice by the employer to the employees covered hereunder and upon written notice to the insurance company of discontinuance of this plan.

In the event that this plan shall be discontinued or if contributions hereunder are discontinued permanently by the employer, no further payments shall be made to the insurance company, and any funds derived from contributions which are available for the purchase of retirement benefits for employees and former employees retaining a vested interest under this plan remaining in the hands of the insurance company shall become vested in said employees covered under this plan at the date of discontinuance in the manner hereinafter indicated.

Any funds which shall be available for distribution upon discontinuance of this plan shall be applied to purchase retirement benefits, at the date of such discontinuance, for employees eligible on that date for normal retirement hereunder in amounts to which said employees shall be entitled under this plan to the extent that sufficient funds therefor shall be available.

Any funds which shall be available for distribution after the distribution after the purchase of retirement benefits described in Subsection B(1) above shall be applied to purchase retirement benefits, at the date of such discontinuance, for persons who are receiving disability retirement benefits under this plan in amounts to which said persons were receiving to the extent that sufficient funds therefor shall be available.

Any funds which shall be available for distribution after the purchase of the retirement benefits described in Subsection B(1) and (2) above shall be applied to purchase retirement benefits, at the date of such discontinuance, for employees and former employees not included in Subsection B(1) and (2) above but who retain a vested interest in this plan in amounts to which said employees shall be entitled under this plan to the extent that sufficient funds therefor shall be available.

BENEFICIARY or BENEFICIARIES

Any funds which shall be available for distribution after the purchase of the retirement benefits described in Subsection B(1), (2) and (3) above shall be applied to purchase retirement benefits, at the date of such discontinuance, for employees and former employees not included in Subsection B(1), (2) and (3) above but who retain a vested interest in this plan in amounts to which said employees shall be entitled under this plan to the extent that sufficient funds therefor shall be available.

(5)

Any funds which shall be available for distribution after the purchase of the retirement benefits described in Subsection B(1), (2), (3) and (4) above shall be applied to purchase retirement benefits, at the date of such discontinuance for all other employees in amounts to which said employees shall be entitled under this plan to the extent that sufficient funds therefor shall be available.

Said available funds shall be used to completely purchase the retirement benefits in any one class, as described above, before being used for subsequent classes. In the event that the funds available for a class are insufficient to completely purchase the retirement benefits for such class, they shall be applied pro rata within the class to purchase such benefits to the extent that such funds are sufficient.

Any funds paid by the employer to the insurance company which shall be available for distribution after the purchase in full of all the retirement benefits described in Subsection B above shall be deemed to have become available as a result of actuarial error and shall be paid in cash to the employer.

Upon the discontinuance of this plan, any funds derived from employee contributions shall remain fully vested in those employees. These funds may be applied in either of the forms outlined in § 40-28A(1) and (2) hereof.

§ 40-33 Voluntary employee contributions.

In addition to those contributions required to be made by the employer and the employee, each employee may make voluntary additional contributions in a total amount each year not to exceed 10% of his compensation. Voluntary contributions may commence at any time subsequent to an employer's entry into the plan and shall be made by means of payroll deductions. These contributions shall be invested under the group annuity contract and shall receive interest at the rate credited under the group annuity contract. Each employee's voluntary additional contribution account shall be valued annually.

The voluntary additional contributions of any employee shall be delivered by the employer to the insurance company. The employer may mingle such voluntary additional contributions with those contributions otherwise required hereunder but shall keep records of the amounts of each and shall advise the insurance company as each contribution is paid to the insurance company as to the amounts of any voluntary additional contributions included herein and the employees by whom they have been made and the requested disposition thereof.

If an employee has made any voluntary additional contributions on his own behalf, then the employee may at any time, upon 30 days' written notice to the insurance company, have distributed to him all or any portion of such contributions together with interest earnings thereon. Any balance shall be retained in the employee's voluntary additional contributions accounts. An employee may not elect such a withdrawal more frequently than once in any twelve-month period.

In determining the required benefits or interest of any employee or his beneficiary for any purpose hereunder, no account shall be taken of any amounts attributable to his voluntary additional contributions unless specific reference is made thereto, and any amounts shall be in addition to the benefits or interest of the employee or his beneficiary as otherwise determined.

An employee may elect, at any time, to change the rate of his voluntary additional contributions. Such an increase or decrease in voluntary contributions may not be elected more frequently than once in any twelve-month period.

§ 40-34 Miscellaneous.

Inclusion in this plan shall not be construed as giving an employee or participant any right to be retained in the service of the employer without its consent, nor shall it interfere with the right to the employer to discharge an employee or participant, nor shall it give an employee or participant any right, claim or interest in any retirement benefits herein described except upon fulfillment of the provisions and requirements of this plan.

Under certain circumstances, retirement benefit payments may be paid to a retired participant or the person designated by him to receive payments upon his death, if applicable, in a lump sum where such monthly benefit would be less than $10, such lump sum payment to be the actuarial equivalent of such monthly retirement benefit.

No person entitled to benefits under this plan shall have the right to assign, commute or encumber the benefits herein provided. To the maximum extent permitted by law, the benefits or payments herein provided shall not in any way be liable to attachment, garnishment or other process, or to be seized, taken, appropriated or applied by any legal or equitable process, to pay any debt or liability of such person.

All of the terms and provisions of this plan shall be as stated herein. This plan shall not be effected by any other ordinance, ruling or provision unless that ordinance, ruling or provision has been expressly incorporated into this plan.

§ 40-34.1 Deferred Retirement Option Plan.

[Added 3-17-2009 by Ord. No. 2180-09]

Definitions. As used in this section, the following terms shall have the meanings indicated:

ASSOCIATION

The Salaried Association, the duly recognized collective bargaining unit representing all eligible full-time paramedics of Cheltenham Township.

The individual or individuals identified by a DROP participant to receive the balance of such DROP participant’s DROP account in the event of the death of the DROP participant during the DROP participation period.

DROP

Deferred Retirement Option Plan.

DROP ACCOUNTS

Separate accounts created for the exclusive purpose of accepting monthly pension checks of DROP participants while they are participating in the DROP Program.

DROP NOTICE

The form prescribed by the Township and Association upon which a member or paramedic informs the Township of his or her irrevocable intent to participate in the DROP Program. Once submitted to the Township and approved by the Township, the DROP notice is irrevocable, except as otherwise provided herein.

DROP PARTICIPANT or PARTICIPANT

A member or paramedic who has properly submitted a DROP notice to participate in the DROP, and who has commenced his or her DROP participation period.

DROP PARTICIPATION PERIOD

The period of time from the commencement of the full-time paramedic’s (i.e., "participant’s") participation in the DROP as stated in the paramedic’s DROP notice, which has been approved by the Township, until the paramedic’s separation from employment as a Cheltenham Township full-time paramedic (i.e., "resignation date" as defined below), which in no event shall be less than 12 months and shall not exceed 36 months.

DROP PERIOD

The period of time during which a full-time paramedic can participate in a DROP, which in no event shall be less than 12 months or exceed more than 36 months.

DROP PROGRAM

The program implemented by the Township and Association authorizing full-time paramedics to establish DROP accounts while continuing to provide paramedic service for the Township as described herein. The DROP Program is an integral component of the plan.

MEMBER or PARAMEDIC

A full-time paramedic employed by the Township.

PLAN

The Salaried Employees Pension Plan.

RESIGNATION DATE

The date specified in the participant’s irrevocable DROP notice approved by the Township on which the member or participant shall resign from employment with Cheltenham Township, which shall be no less than 12 months and no more than 36 months from the commencement of the paramedic’s DROP participation period.

TOWNSHIP

The Township of Cheltenham, County of Montgomery, Commonwealth of Pennsylvania, including its elected and appointed officials.

Eligibility.

Any full-time paramedic who has reached his/her normal retirement date (as defined by the Salaried Employees Pension Plan) may elect to become a DROP participant on the first day of any month following satisfaction of the requirements for receipt of normal pension benefits under the plan, which is age plus years of service equal to 85, but in no event before age 55, or later than age 65. In addition, in order to be eligible to participate in the DROP, a participant must do the following:

(a)

Written DROP notice. A full-time paramedic electing to participate in the DROP must complete and execute a DROP notice and elect his or her monthly pension option. The DROP notice must be signed by the paramedic and notarized and submitted to the Township at least 45 days prior to the date on which the paramedic wishes his/her DROP participation period to commence, which shall be specified on the DROP notice. The DROP notice shall include a notice to the Township by the member that the member shall resign from employment with Cheltenham Township effective on a specific date (the “resignation date”), which shall be no less than 12 months and no more than 36 months from the commencement of the paramedic’s DROP participation period. Once approved by the Township, a paramedic’s resignation date shall be irrevocable. A paramedic shall cease to work as a paramedic on the paramedic’s resignation date, unless the Township terminates or honorably discharges the paramedic prior to the resignation date.

(b)

Finality of election and approval by Township. All retirement documents required by the Salaried Employees Pension Plan Administrator must be filed and presented to the Township for approval of retirement, participation in the DROP and payment of pension benefits.

Once the Township approves a DROP notice, it is irrevocable.

Pension contributions. After a paramedic’s DROP participation period commences, the paramedic shall not be required to make any contributions to the plan during his/her DROP participation period.

Accrual of non-pension benefits. After a paramedic elects to participate in the DROP Program, all other contractual benefits shall continue to accrue in accordance with the collective bargaining agreement, with the exception of those provisions relating to the plan.

Disability during DROP period. The Township, Association and all DROP participants all recognize the unique nature of the DROP Program and the benefits that it offers to the DROP participant and the Township. Such benefits for the Township, however, are based on the DROP participant being able to work to provide the Township with the benefit of his or her experience, as stated above. It is recognized that if the DROP participant cannot work by providing paramedic services for the Township, the Township will suffer a significant burden and the purpose and intent behind the DROP Program will not be fulfilled, to the detriment of the taxpayers of Cheltenham Township. Accordingly, if a DROP participant becomes temporarily incapacitated during his DROP participation period, as defined in the Township’s disability benefit plan, the following shall apply:

The DROP participant shall continue to participate in the DROP Program as if fully employed. Such participant shall receive disability benefits in the same amount and under the same terms as disabled paramedics who are not participating in DROP, except:

If a DROP participant is disabled and has not returned to work as of his required resignation date (as defined above), such participant shall be required to resign on his or her resignation date. Such member shall not be entitled to any other disability payment or monthly disability pension benefit from the Township or the Plan.

If a participant becomes and remains incapacitated for a period of six months during his or her DROP participation period, the participant shall be honorably discharged from employment at the end of the sixth month. At that time, such member shall receive the balance of his or her DROP account and, thereafter, commence receiving his or her frozen monthly pension benefit in the amount calculated when the paramedic became a participant in the DROP Program. Such member shall not be entitled to any other disability payment or monthly disability pension benefit from the Township or the Plan.

The monthly pension benefit calculation and limitation on pension accrual. After the effective date of the DROP notice, the paramedic shall no longer earn or accrue additional years of service for pension calculation purposes under the plan. No benefit increases that may occur after a DROP participant’s commencement of participation in the DROP program, including bargained pension enhancements, mandated pension enhancements through arbitration or pension enhancements mandated by law, will apply to the DROP participant and shall not increase the DROP participant’s frozen pension under the plan, as calculated on the effective date of the DROP participation period. The average monthly compensation of the paramedic for pension calculation purposes shall remain as it existed on the effective date of the DROP participation period. Earnings or increases in earnings thereafter shall not be recognized or used for the calculation or determination of any benefits payable by the plan. The pension benefit payable to the members shall increase only as a result of cost-of-living adjustments in effect under the plan on the effective date of the member’s participation in the DROP Program or by applicable cost-of-living adjustments specifically granted to DROP participants or retirees thereafter.

Termination of employment. On the participant’s resignation date, his or her employment shall terminate automatically.

DROP pension payments. Upon entry into the DROP Program, a member’s service and average applicable compensation (as each are defined under the plan) will be frozen and his or her pension payment will be calculated as if he or she retired and ceased employment with the Township on the effective date of such paramedic’s DROP participation period. The monthly pension payment shall be transferred into the participant’s DROP account.

Individual DROP investment account. Each member shall select and direct the investments in his or her DROP account from an array of options selected by the Township. The Township may select a third party to provide mutual fund or other investment options, record-keeping and reporting to the members and the plan. All investment and administrative costs shall be charged against the participant’s DROP account. Accordingly, the paramedic shall bear the full responsibility for obtaining appropriate investment advice, as well as for the consequences of any investment of all or part of the contents of the DROP account. The DROP account established for each participant will be considered a tax-deferred account maintained as part of the plan, and, as a result, will be subject to the restrictions established under Section 401(a) of the Internal Revenue Code. As a condition of participation in the DROP Program, both the Association and the individual paramedics and participants collectively and individually acknowledge that the Township shall have no responsibility for the financial impact and/or consequences of an paramedic’s participation in the DROP Program, including, but not limited to, the investment of the balance of an paramedic’s DROP account, the performance of any such investments, or any tax consequences flowing from participation in the DROP Program.

Distribution options. Commensurate with DROP Program participation, a member must make an election on forms designated by the Township of the payout option(s) desired upon termination of the DROP period. This election may be changed at any time before the resignation date. The distribution options are as follows:

A lump sum distribution.

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

Beneficiary designation. Commensurate with DROP Program participation, a member must make an election, on forms designated by the Township, of his or her beneficiary or beneficiaries.

Revocation of DROP participation. A DROP participant who voluntarily terminates his or her employment for any reason prior to the resignation date stated in his or her DROP notice (which has been accepted by the Township) shall automatically revoke his or her DROP participation election and cease employment with the Township.

Amendment. Any amendments to the DROP plan shall be consistent with the provisions covering deferred retirement option plans set forth in any applicable collective bargaining agreement and shall be binding upon all future DROP participants and upon all DROP participants who have balances in their DROP accounts. The DROP plan may only be amended by a written instrument, signed by an authorized representative of the Township and the Association, not by any oral agreement or past practice.

Interpretation of provisions.

This section shall be interpreted under the laws of the Commonwealth of Pennsylvania. A paramedic’s election to participate in the DROP Program shall in no way be construed as a limitation on the Township’s right to suspend or terminate a paramedic for just cause or to grant the paramedic an honorable discharge based upon a physical or mental inability to perform his or her duties. Nothing provided hereunder shall be construed as a change to the parties’ practice of calculating pensionable compensation and, except for the ability to establish a DROP account and participate in the DROP Program, nothing herein is intended to create new pension benefits of any kind which did not exist as of April 1, 2009.

Nothing provided hereunder shall guarantee any paramedic or DROP participant a specific term of employment. All DROP participants shall be subject to the same terms and conditions of employment (except those relating to benefits under the plan and retiree benefits), rules and regulations and disciplinary procedures as other paramedics and members who are not DROP participants.