Borough of Beaver, PA Deferred Retirement Option Plan.

[Ord. 805, 3/10/2015, § 1]

Eligibility. Effective immediately, police officers 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 completion of 25 years of credited service and attaining the age of 50.

[Amended by Ord. No. 848, 10/13/2020]

Written Election. A police officer electing to participate in the DROP must complete and execute a "DROP Participation Election Form" prepared by the Borough, which shall evidence the member's election to participate in the DROP. The form must be signed by the police officer and be notarized and submitted to the Borough prior to the date on which the member wishes the DROP participation to commence. In no event shall the police officer participate in the DROP longer than 60 months. By entering into the DROP, the police officer agrees to provide a ninety-day notice to the Borough prior to resigning from employment while in the DROP status. This ninety-day notice may be waived by the Borough in its discretion if warranted under the particular circumstances. A police officer shall cease to work on the officer's resignation date, unless the Borough terminates or honorably discharges the officer prior to the resignation date.

[Amended by Ord. No. 848, 10/13/2020]

In addition to the above information, the DROP Participation Election Form shall also advise the employee of the following: (A) an explanation of the participant's rights and obligations while in DROP; (B) that, as a condition of DROP participation, the participant foregoes active participation in the Police Pension Plan and foregoes any recalculation of pension benefits to include salary increases occurring after DROP participation commences; and (C) that the DROP participant's service while in DROP will not count as pension service nor will it entitle a participant to any service increment benefits to which the participant was not entitled prior to commencing DROP participation. A DROP participant must also complete any and all retirement documents required by the Police Pension Plan Administrator, and such documents must be filed and presented to the Borough for approval of retirement and payment of pension. Once a DROP Participation Election Form has been approved by the Borough, it is irrevocable. Likewise, once a DROP participant enters the DROP program, the participant may not subsequently leave and then reenter the DROP, even if the employee separates from employment and subsequently begins employment with the Borough again.

Benefit Calculation. For all retirement fund purposes, continuous service of a police officer participating in the DROP shall remain as it existed on the effective date of commencement of participation in the DROP. Service thereafter shall not be recognized or used for the calculation or determination of any benefits payable by the Beaver Borough Police Pension Plan. The average monthly compensation of the police officer for pension calculation purposes shall remain, as it existed on the effective date of commencement of participation in the DROP. Earnings or increases in earnings thereafter shall not be recognized or used for the calculation or determination of any benefits payable by the Pension Plan. The pension benefit payable to the members shall increase only as a result of cost of living adjustments in effect on the effective date of the member's participation in the DROP or by applicable cost of living adjustments granted thereafter.

Payments to the DROP Account. The monthly retirement benefits that would have been payable had the police officer elected to cease employment and receive a normal retirement benefit, shall, upon the police officer commencing participation in DROP, be paid into the separate account established to receive the participant's monthly pension payments. This account shall be designated the DROP account. DROP participants shall not have the option of self-directed investment of their individual DROP accounts while in the DROP. Instead, the monies shall be invested in the PSABMRT so as to generate a rate of return of no less than 0% and no more than 4.5%.

Accrual of Non-Pension Benefits. After a police officer elects to participate in the DROP program, all other contractual benefits shall continue to accrue with the exception of those provisions relating to the Police Pension Plan.

Payout. Within 45 days of the termination date set forth in the police officer's DROP option notice or within 45 days of the date on which the Borough separates the member from employment or, upon providing the ninety-day notice set forth in this plan, the officer resigns from employment, the retirement benefits payable to the police officer or the police officer's beneficiary, if applicable, shall be paid to the police officer or beneficiary and shall no longer be paid to the participant's DROP account. The payout options available to the DROP participant shall be as follows:

The balance of the DROP participant's account, less withholding taxes, if any, remitted to the Internal Revenue Service, shall be paid to the participant or the participant's surviving beneficiary.

The balance of the DROP participant's account shall be paid directly to the custodian of an eligible retirement plan as defined by Internal Revenue Code Section 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 defined by Internal Revenue Code Section 402(c)(9).

If the DROP participant or beneficiary fails to make an election within 60 following the date of termination of DROP participation, then the Borough shall implement Subsection A above.

Service Connected Disability During DROP. If a DROP participant becomes temporarily incapacitated due to a service-connected injury during his participation in DROP, that police officer shall continue to participate in the DROP as if fully employed. The police officer shall receive disability pay in the same amount as disabled police officers that are not participating in DROP. In no event shall a police officer on temporary disability have the ability to draw from his DROP account. However, notwithstanding any other provision in this Subsection, if a police officer is disabled and has not returned to work as of the date of his required resignation, then such resignation shall take precedence over all other provisions herein and said officer shall be required to resign. Nothing contained in this plan shall be construed as conferring any legal rights upon any police officer or other person to a continuation of employment nor shall participation in the DROP supersede or limit in any way the right of the Borough honorably discharge a police officer based upon an inability to perform his or her full duties as a police officer. If a DROP participant becomes eligible for a service-connected disability pension and his employment is terminated due to an inability to continue in service on grounds that render him eligible for a service-connected disability pension, the monthly normal retirement benefit of the DROP participant shall be reclassified as being on account of a service-connected disability. In no event shall an Act 44 participant's monthly retirement benefit be recalculated. The Act 44 participant's monthly retirement benefit shall remain 50% as calculated at the time of entry into the DROP.

Death. If a DROP participant dies, the participant's eligibility for DROP shall terminate upon the date of death. In such case, if the DROP account balances have not yet been paid out, the participant's legal beneficiary shall have the same rights and options as the participant to withdraw/roll over the account balance.

Forfeiture of Benefits. Notwithstanding a police officer's status as a DROP participant, a current or former participant who is convicted or pleads guilty to engaging in criminal misconduct which constitutes a "crime related to public office or public employment," as that phrase is defined in Pennsylvania's Pension Forfeiture Act, 43 P.S. §§ 1311 — 1314, shall forfeit his right to receive a pension, including any amounts currently deposited in the DROP account. In such a case, the participant shall only be entitled to receive the contributions, if any, made by the participant to the police pension fund, without interest.

10.

Cost of Management for DROP Program. The police officers and the Borough agree that any costs or fees associated with the management of the DROP accounts shall be paid directly from the pension fund and not by the Borough.

11.

Amendment. Any amendments to the DROP ordinance shall be consistent with the provisions covering individual 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 individual retirement option accounts. The DROP plan may only be amended by a written instrument, not by any oral agreement or past practice.

12.

Effective Date. The effective date of the DROP program shall be January 1, 2015.

13.

Construal of Provisions. A police officer's election to participate in the DROP program shall in no way be construed as a limitation on the Borough's right to suspend or to terminate a police officer for just cause or to grant the police officer an honorable discharge based upon a physical or mental inability to perform his or her duties.

14.

Severability. The provisions of the DROP program shall be severable: and if any of its provisions shall be held to be unconstitutional or illegal, the validity of any of the remaining provisions of the DROP program shall not be affected thereby. It is hereby expressly declared as the intent of the Borough that the DROP program would have been adopted had such unconstitutional or illegal provision or provisions not been included herein. In the event that the DROP program is declared invalid or illegal by a court of competent jurisdiction or through an administrative determination of the Office of the Auditor General, the police officers shall have the right to bargain in accordance with Act 111 over deletion of this benefit. It is expressly understood that this shall not involve bargaining over a replacement provision.