[Adopted 12-6-2011 by Ord. No. 274-2011[1]]
[1]
Editor's Note: This ordinance also repealed former Art. III, Police Officers Deferred Retirement Option Plan Program, adopted 1-3-2006 by Ord. No. 224-2006.
As used in this article, the following terms shall have the meanings indicated:
DROP
The Deferred Retirement Option Plan created as an optional form of benefit under the existing Bern Township Police Pension Plan.
DROP PARTICIPANT ACCOUNT
A pension trust fund ledger account established under Section 1121(a) of Act 244 of 2009.
MEMBER
A full-time Bern Township police officer covered by the plan.
PARTICIPANT
A member who is eligible for normal retirement and who has elected to participate in the DROP program.
PLAN
The Bern Township Police Pension Plan adopted pursuant to Act 600.[1]
[1]
Editor's Note: See 53 P.S. § 767.
A. 
Eligibility. Effective January 1, 2006, members of the Bern Township Police Department who have not retired prior to the implementation of the DROP program may enter into the DROP on the first day of any month following the attainment of age 50 and the completion of 25 or more years of credit service with Bern Township.
B. 
Written election. An eligible member of the plan electing to participate in the DROP program must file a written application with the retirement system at least 30 days before the member's effective date of retirement. Upon deciding to participate in the DROP, the member shall submit forms provided and required by the retirement system which shall include:
(1) 
A binding and irrevocable letter of resignation from regular employment with the Township that discloses the member's intent to retire and specifies the member's retirement date.
(2) 
An irrevocable written election to participate in the DROP that:
(a) 
Details the DROP participant's rights and obligations under the DROP.
(b) 
Includes an agreement to forego:
[1] 
Active membership in the retirement system;
[2] 
Any growth in the salary base used for calculating the regular retirement benefits;
[3] 
Any additional benefit accrual for retirement purposes, including length of service increments.
(c) 
Specifies the effective date of the DROP participation that shall be the day after the specified retirement date.
(d) 
Specifies a DROP termination date no less than one year and no more than five years from the date of retirement.
(3) 
Any other information required by the retirement system.
(4) 
Members shall be advised to consult a tax advisor of their choice, prior to considering the DROP program, as there may be serious tax implications and / or consequences to participating in the DROP program.
C. 
Limitation on pension accrual. After the effective date of the DROP election, the participant shall no longer earn or accrue additional years of continuous service for pension purposes.
D. 
Benefit calculation. For all plan purposes, continuous service of a member participating in the DROP program shall remain as it existed on the effective date of commencement of participation in the DROP program. Service thereafter shall not be recognized or used for the calculation or determination of any benefits payable by the Bern Township Police Pension Plan. The average monthly pay of the member for pension calculation purposes shall remain as it existed on the effective date of commencement of participation in the DROP program. 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 participants shall increase only as a result of cost-of-living adjustments (COLAs), which are effective on or after the date of the member's participation in the DROP program.
E. 
Payments to DROP participant account. The monthly retirement benefits that would have been payable had the member elected to cease employment and receive a normal retirement benefit shall, upon the member commencing participation in the DROP program, be credited on the first day of each month into a separate ledger account established by the plan administrator to track and accumulate the participant's monthly pension benefits. This account shall be designated the DROP participant account. Interest shall be compounded and credited monthly at an annual rate of 2%. All interest credited to the DROP participant account shall be included in the final cash settlement.
F. 
Early termination. A participant may withdraw from the DROP program at any time, and no penalty shall be imposed for early termination of DROP participation. However, the participant shall not be permitted to make any withdrawals from the DROP account until DROP participation has ended. Upon either early or regular termination of DROP participation, the DROP participant shall be separated from employment by Bern Township.
G. 
Payment. On the effective date of the DROP participant's termination of employment with Bern Township as a DROP participant, participation in the DROP shall cease and the DROP participant shall be paid the participant's total accumulated DROP benefits in the DROP participant's subsidiary DROP participant account subject to the following provisions:
(1) 
Except as provided in Subsection G(2), the terminating DROP participant or, if deceased, the participant's survivor, or in lieu thereof, the participant's named beneficiary, shall elect on a form provided by the retirement system to receive payment of the DROP benefits in accordance with one of the following options:
(a) 
The balance in the DROP participant's subsidiary DROP participant account less withholding taxes, if any, remitted to the Internal Revenue Service shall be paid within 45 days by the retirement system from the account to the DROP participant or surviving beneficiary.
(b) 
The balance in the DROP participant's subsidiary DROP participant account shall be paid within 45 days by the retirement system from the account directly to the custodian of an eligible retirement plan as defined in Section 402 (c) (8) (b) of the Internal Revenue Code of 1986 [Public Law 99-514, 26 U.S.C. § 402 (c) (8) (b)] or, in the case of an eligible rollover distribution to the surviving spouse of a deceased DROP participant, an eligible retirement plan that is an individual retirement account or an individual retirement annuity as described in Section 402 (c) (9) of the Internal Revenue Code of 1986 [26 U.S.C. § 402 (c) (9)].
(2) 
If the DROP participant or beneficiary fails to elect a method of payment within 60 days after the participant's termination date, the retirement system shall pay the balance as a lump sum as provided in Subsection G(1).
(3) 
The form of payment selected by the DROP participant or surviving beneficiary shall comply with the minimum distribution requirements of the Internal Revenue Code.
H. 
Disability during DROP. If a participant becomes temporarily disabled during the DROP period, the participation freezes, and the time period while on temporary disability does not count towards the selected DROP participation period. Upon return to duty, the DROP period shall resume, continuing with the remaining time left in the DROP period. The participant shall receive disability pay in the same manner as disabled police officers that are not participating in DROP. In no event shall a participant on temporary disability have the ability to draw from the DROP account. However, notwithstanding any other provision in this Subsection H, if an officer is disabled and has not returned to work as of the date of the required resignation, then such resignation shall take precedence over any other provisions herein, and said officer shall be required to resign. If a DROP participant becomes eligible for a disability pension benefit due to a permanent, service-related disability under Act 600[1] and terminates employment, the monthly normal retirement benefit shall cease.
[1]
Editor's Note: See 53 P.S. § 767.
I. 
Death. A DROP participant's eligibility to participate in the DROP terminates upon the death of the DROP participant. If a DROP participant dies on or after the effective date of participation in the DROP but before the monthly retirement system benefit of the participant accruable for the month has accrued in the DROP participant's subsidiary DROP participant account, Bern Township shall pay the monthly retirement system benefits as though the participant had not elected DROP participation and had died after the member's effective date of retirement but before receipt of the retired member's first regular retirement benefit. If a participant dies before the DROP account balance is paid, the participant's beneficiary under Act 600 shall have the same rights as the participant to withdraw the DROP account balance. The monthly benefit credited to the participant's DROP account during the month of the participant's death shall be the final monthly benefit for DROP participation.
J. 
Killed-in-service survivor benefit. If a participant is killed in service, the participant's beneficiaries under Act 600 shall be entitled to apply for and receive a recalculation for payment of survivor benefits at 100% of the participant's salary, as fixed at the date of retirement.
K. 
Amendment. Any amendments to this article shall be consistent with the provisions covering deferred retirement option plans set forth in any applicable collective bargaining agreement or state or federal law and shall be binding upon all future participants and upon all participants who have balances in their DROP accounts.
L. 
Interpretation. This provision shall be interpreted to be consistent with the provisions of Act 244 of 2009 and any inconsistent provision shall be void.