[HISTORY: Adopted by the Borough Council of the Borough of Economy 11-10-2015 by Ord. No. 451.[1] Amendments noted where applicable.]
GENERAL REFERENCES
Police Pension Fund — See Ch. 31.
[1]
Editor's Note: This ordinance also provided for the repeal of former Ch. 23, Pension Plan for Employees, adopted 11-29-1995 by Ord. No. 354, as amended.
The Borough of Economy has established a pension plan, effective January 1, 1988, which shall be known as the "Economy Borough Nonuniform Employee Pension Plan," hereinafter called the "plan." The effective date of the restated plan shall be January 1, 1995. The provisions of the restated plan shall apply only to an employee who terminates employment after the effective date of the restated plan.
[1]
Editor's Note: Resolution No. 445 established procedures and requirements for entering into professional service contracts designed to guide the Borough in the maintenance and performance of the Uniform and Nonuniform Employee Pension Plans in accordance with Act 44 of 2009. This resolution, along with any other related procedures, is on file in the Borough offices.
As used in this chapter, the following terms shall have the meanings indicated:
ACCRUED BENEFIT
As of any given date, the participant's retirement benefit, determined in accordance with the formula provided under § 23-5A, but based on average monthly earnings and service as of the date of determination.
ACTUARIAL EQUIVALENT
Two forms of payment under §§ 23-6B and 23-7A of equal actuarial present value on a specified date. The factors used in determining actuarial equivalents shall be 6% interest and UP-1984 Mortality Table rates.
AVERAGE MONTHLY EARNINGS
The average monthly compensation of the participant paid by the employer during the highest three years paid out of the last 10 years immediately preceding retirement or termination of employment.
BENEFICIARY
Any person or legal entity designated by a participant to receive death benefits under the plan.
COMPENSATION
The total of all amounts paid to a participant by the employer for personal services as reported on the participant's federal income tax withholding statement (Form W-2) and excluding any benefits paid under the plan.
EARLY RETIREMENT DATE
The date when a participant retires or terminates employment with the employer if such date is prior to the participant's normal retirement date but on or after the later of the following dates:
A. 
The date when the participant attains age 60; and
B. 
The date when the participant completes five years of service.
ELIGIBLE SPOUSE
The spouse to whom a participant was married on the date benefit payments under the plan commenced, or if benefit payments had not so commenced, the spouse to whom the participant was married on the date of his death.
EMPLOYEE
Any person regularly employed by the employer whose customary employment is 40 hours or more in one week and for more than five months in a calendar year.
EMPLOYER
The Borough of Economy.
FUND
The fund administered under the terms of the plan and which shall include all money, property, investments, policies, and contracts standing in the name of the plan.
LATE RETIREMENT DATE
The first day of the month coincident with or next following the date when a participant retires subsequent to his normal retirement date, pursuant to the provisions of § 23-5C.
NORMAL RETIREMENT AGE
The later of:
A. 
The date when a participant attains age 65; and
B. 
The date when the participant completes five years of service.
NORMAL RETIREMENT DATE
The first of the month coincident with or next following the date when an employee attains normal retirement age.
PARTICIPANT
A person who is or has been in the employment of the employer in an eligible classification (§ 23-3A) and for whom a benefit to which he is or may become entitled under the plan has accrued under the plan on account of such employment.
PARTICIPANT ACCOUNT
The ending annuity value of the employer contribution account under the plan prior to this restatement as shown on the statement dated in 1995 from American General Life Insurance Company, accumulated at 6% interest per year from the statement date in 1995 until commencement of benefits or payment of a lump sum under the plan.
PLAN YEAR
The twelve-month period beginning on January 1 and ending on December 31.
SERVICE
That period during which an employee was employed continuously by the employer. Fractions of a year of employment will be included in computing an employee's service based on the ratio that the number of complete months of service bears to 12. Service shall include authorized leave without pay of not more than 12 months.
A. 
The class of employees who may become eligible for participation in the plan includes all employees of the employer except those law enforcement officers eligible to participate in the Economy Borough Police Pension Plan.
B. 
An employee in the above class shall be eligible for participation on the later of the effective date of the plan or the date the employee completes his probationary period.
C. 
A participant who terminates employment and is subsequently reemployed by the employer shall again participate in the plan on the date he is reemployed.
D. 
Transfers.
(1) 
For the purpose of determining eligibility to participate in the plan and service for vesting purposes, an employee transferred from an ineligible class to an eligible class shall receive recognition of his employment with the employer, provided that all such employment is determined in accordance with the provisions of the definition of "service" in § 23-2.
(2) 
If a participant is transferred to employment in an ineligible class, his participation under the plan shall be suspended; provided, however, that during the period of his employment in such ineligible position:
(a) 
Service for vesting purposes shall continue to accrue;
(b) 
He shall continue to accrue interest on his participant account under the definition of "participant account" in § 23-2; and
(c) 
Service for benefit purposes shall not accrue.
A. 
Employer contributions. The employer shall contribute to the plan an amount that is sufficient to meet the minimum funding requirements of Act 205.
B. 
Contributions by participants. Participants are not required to make any contributions under this plan.
A. 
Normal retirement. A participant who retires upon attainment of normal retirement age shall be entitled to a pension benefit, payable as a monthly annuity for life, commencing at normal retirement date in an amount equal to 1.1% as of January 1, 1998, and an amount equal to 1.2% as of January 1, 2000, of the average monthly earnings multiplied by service.
B. 
Early retirement. A participant who retires on an early retirement date shall be entitled to receive an immediate benefit commencing on his early retirement date equal to the participant's accrued benefit.
C. 
Late retirement. A participant who remains in the employ of the employer subsequent to normal retirement date shall continue to be eligible to participate hereunder. A participant who retires on a late retirement date shall be entitled to receive a benefit determined in accordance with § 23-5A, using service and average monthly earnings at the time of the participant's late retirement date or at the time of attainment of normal retirement age if the amount of the monthly benefit would be greater.
A. 
Life annuity. The automatic form of payment of monthly benefits under § 23-5A, B and C to a participant who does not have an eligible spouse shall be an immediate life annuity. At the retired participant's death, a lump sum shall be payable to the beneficiary equal to the participant account reduced by any benefits paid from the plan.
B. 
50% contingent annuity benefit. The automatic form of payment of monthly benefits under § 23-5A, B and C to a participant who has an eligible spouse shall be a 50% contingent annuity which is the actuarial equivalent of the accrued benefit, where the eligible spouse is named as the contingent annuitant unless the participant and his eligible spouse elect payment in the form of a life annuity or a lump sum. The participant and his eligible spouse may make such election on forms provided by the employer any time prior to payment of benefits. Upon the later of the death of the retired participant or the retired participant's eligible spouse, a lump sum shall be payable to the beneficiary equal to the participant account reduced by any benefits paid from the plan.
C. 
Lump sum. An employee who was a participant of the plan on December 31, 1995, may elect to receive his benefits in the form of a lump sum. Such lump sum shall be calculated based on the participant's accrued benefit and "applicable mortality table" determined under IRC 417 (e)(3)(A)(ii)(1) and the "applicable interest rate" determined under IRC 417(e)(3)(A)(ii)(11) for the month of December preceding the plan year for which the determination is made but shall in no event be less than the participant account determined in accordance with the definition of "participant account" in § 23-2. An employee who becomes a participant of the plan after December 31, 1995, shall not be entitled to receive his benefits in the form of a lump sum.
A. 
50% contingent annuity benefit. If a participant dies after becoming eligible for a vested benefit under § 23-8 and such participant has an eligible spouse, the death benefit shall be 50% of the actuarial equivalent of the accrued benefit in the form of a 50% contingent annuity where the eligible spouse is the contingent annuitant. Payment of the death benefit shall commence at the date which would have been the participant's early retirement date.
B. 
Additional provision for employees who were participants prior to January 1, 1996. If such participant dies, in lieu of the benefit in Subsection A of this section, the eligible spouse may elect to receive a benefit in the form of a lump sum, calculated in accordance with § 23-6C. If such participant dies without an eligible spouse, the beneficiary shall receive a benefit in the form of a lump sum calculated in accordance with § 23-6C.
A. 
Rights of terminated employees. If a participant ceases to be employed by the employer as an employee, his interest and right under the plan shall be determined in accordance with the following.
B. 
Vested benefits. A participant who terminates his employment for a reason other than retirement or death and who has completed five or more years of service shall be entitled to a deferred vested benefit equal to his accrued benefit determined as of the date his employment terminates; however, a participant as of December 31, 1995, who terminates his employment for a reason other than retirement or death shall be vested in his accrued benefit determined as of the date his employment terminates according to the following schedule:
Years of Service
Vested Percentage
Less than 3
0%
3 but less than 4
20%
4 but less than 5
40%
5 or more
100%
C. 
Payment of vested benefits. Payment of vested benefits under this section shall be in accordance with § 23-6 or 23-7. Payment of a deferred vested benefit shall commence at the date that would have been the former participant's early retirement date had he continued his employment.
D. 
Forfeitures. A participant who terminates his employment with the employer at a time when he is not vested in any portion of his accrued benefit shall cease to be a participant hereunder and shall not be entitled to any benefits under the plan.
E. 
Application of forfeitures. Amounts forfeited by any participant may not be used to increase the benefits which other participants would otherwise receive under the plan; they shall be used only to reduce the employer's contributions to the plan.
A. 
Establishment of fund. The employer shall create a Nonuniformed Employee Pension Fund. Such fund shall be administered by the Council of the employer and shall be applied under such regulations as the Council of the employer may, by ordinance or resolution, prescribe for the benefit of such employees of the employer. The Council of the employer shall appoint a trustee to hold, invest, reinvest, and distribute all funds or other property received pursuant hereto, in trust, for the purpose of the plan. The Council of the employer shall have the duty and responsibility as administrator to approve and sign any and all pertinent documents as shall be required in the administration of said fund.
B. 
Powers of Council. The Council shall have full power and authority by majority action, either directly or through its designated representatives, to do all acts, execute, acknowledge, and deliver all instruments and exercise for the sole benefit of participants hereunder any and all powers and discretion necessary to implement and effectuate the purpose of this section.
C. 
Administrative expenses. All reasonable expenses for the administration of the plan may be paid from the fund to the extent permitted under applicable law and not otherwise paid by the employer.
D. 
Trustee. The trustee shall be the owner of all moneys or property paid into or acquired by the fund or deposited with insurance companies under the trust or invested in mutual fund companies hereunder and the owner of all insurances, annuity, retirement income or similar contracts acquired hereunder; and no participant prior to retirement, termination, or death shall have any right or interest in any portion of said moneys, property, deposits or contracts except as and to the extent required by any applicable law.
E. 
Assignment of funds. No participant or beneficiary of a participant shall have any right to alienate, encumber, or assign any assets of the fund held by the trustee on his behalf or any of the benefits or payments or proceeds or avails of any contract or agreement purchased or acquired by the trustee. Any contract or agreement purchased or acquired by the trustee pursuant to this section shall contain provisions in substance that, to the extent provided by law, none of the benefits or payments or proceeds of such contract or agreement shall be subject to any legal process by any creditor of such participant or any beneficiary of such participant.
F. 
Prior retirement contracts. All contracts, agreements or funds held by the employer for the purpose of providing pension benefits on any employee who shall be a participant of the plan herein established shall be and hereby are transferred and assigned to the fund herein created. Any and all rights and benefits conferred by prior contracts on any employee who shall be a participant in the program herein established shall be and the same are hereby terminated, subject to the condition that any changes in said prior contracts as set forth herein constitute a reasonable enhancement of the actuarial soundness of the fund and do not affect adversely any participant's rights which existed under prior retirement contracts.
G. 
The employer reserves to itself the right to transfer or assign to any pension or other employee benefit plan or program which the employer may be required by the laws of the Commonwealth of Pennsylvania to establish for participants in the program herein established all funds, contracts, agreements or other property.
[Added 12-13-2011 by Ord. No. 432]
A. 
The purpose of these plan amendments is to comply with the Pension Protection Act of 2006 (PPA)[1] and the Heroes Earnings Assistance Relief Tax Act (HEART Act).[2] Notwithstanding anything in this plan to the contrary, this plan shall be interpreted so as to comply with the applicable required provisions of the PPA and the HEART Act.
[1]
Editor’s Note: See 29 U.S.C. § 1001 et seq.
[2]
Editor’s Note: See 26 U.S.C. § 1 et seq.
B. 
For the purposes of Code Section 415(b)(1)(A), effective as of January 1, 2008 the applicable mortality table and applicable interest rate are found in Rev. Rul. 2007-67. The applicable mortality table in Rev. Rul. 2001-62 was effective from December 31, 2002, through December 31, 2007. From January 1, 2009, through December 31, 2013, the applicable mortality table is found in IRS Notice 2008-85.
C. 
415(c) compensation. For the purposes of this section, compensation includes only those items specified in Treas. Reg. § 1.415(c)-2(b)1 or (2) and excludes all items listed in Treas. Reg. § 1.415(c)-2(c), the terms of which are specifically incorporated herein by reference. Effective as of January 1, 2009, to the extent required by the Heroes Earnings Assistance Relief Tax Act of 2008 (HEART Act), differential wage payments shall be included in compensation.
D. 
Effective as of January 1, 2007, an eligible rollover distribution shall include an eligible rollover distribution containing after-tax contributions that is transferred in a direct trustee-to-trustee transfer to a 403(b) annuity contract or a qualified trust under Code Section 401(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.
E. 
Effective as of January 1, 2008, a Roth IRA is an eligible retirement plan.
F. 
Nonspousal rollover. Effective January 1, 2007, if a beneficiary who is not a surviving spouse is entitled to receive what would otherwise be an eligible rollover distribution, the beneficiary may, in accordance with Code Section 402(c)(11), make a trustee-to-trustee transfer of that amount to an IRA or individual retirement annuity (other than an endowment contract); provided that:
(1) 
The transfer is made not later than the end of the fourth year after the year of the participant's death; and
(2) 
The account or annuity to which the amount is transferred is treated as an inherited IRA or individual retirement annuity in accordance with Code Section 408(d)(3)(C).
G. 
HEART Act. Effective for participant deaths occurring while performing qualified military service [as defined in Code Section 414(u)] on or after January 1, 2007, the plan will provide retirement benefits and service credit to the extent required by the HEART Act.