[Adopted 9-23-2020 by Ord. No. 2020-03]
As used in this article, the following terms shall have the
meanings indicated:
Deferred Retirement Option Plan.
An account established for the purpose of accepting DROP
participants' monthly pension checks which will remain in the
Pension Trust Fund.
Effective January 1, 2020, members of Silver Spring Township
Police Department who have not retired prior to the implementation
of the DROP program may enter into DROP on the first day of any month
following the date on which the officer reaches his normal retirement
date. An eligible employee must enter the DROP within 365 days of
the first day of eligibility for the DROP and, if he fails to enter
the DROP within that time period, then he shall not be eligible for
the DROP following the 366th-day after his first day of eligibility
for the DROP. The length of DROP participation shall be a maximum
of 24 months.
A.
To participate in DROP, the officer must identify a date certain in the future ("termination date") on which he will cease employment. The termination date can be no sooner than 12 months from the date DROP participation begins, and no later than 24 months from the date DROP participation begins (unless the DROP period is shortened per § 49-39, above). Election to participate in DROP is irrevocable, and, therefore, once an officer elects to participate in DROP, the officer cannot thereafter leave DROP and resume participation in the Township's Pension Plan. However, the officer may cease employment at any time during DROP participation, but in no event shall the officer's employment continue after the identified termination date.
B.
The officer shall make the election to participate in DROP by using
forms and procedures as prescribed by the Plan Trustee. Such election
shall be made at least 31 days in advance of the officer's effective
date of participation in the DROP. The documentation that must be
executed before an officer may participate in the DROP program shall
include a provision releasing the Township from any liability with
regard to investment and other losses (subject to the guaranteed rate
of return set forth herein). As a condition precedent to participation
in DROP, the officer must also acknowledge and agree to hold the Township
harmless for any consequences flowing from the officer's decision
to participate in DROP, including, but not limited to, any tax consequences
or other financial or other implications of DROP participation.
C.
In addition, all retirement documents required by the Police Pension
Board Administrator must be filed and presented to the Township for
acceptance and approval of retirement and payment of pension. Once
a retirement application has been approved by Silver Spring Township,
it is irrevocable.
As of the effective date of DROP participation, the officer
shall no longer earn or accrue additional years of continuous service
for pension purposes, and the officer shall no longer make any required
contributions to the Township's Police Pension Fund.
For all Township Police Pension Fund purposes, continuous service
of an officer participating in DROP shall remain as it existed on
the day prior to the effective date of commencement of participation
in DROP (the "effective retirement date"). Service thereafter shall
not be recognized or used for the calculation or determination of
any benefits payable by the Silver Spring Township Pension Fund. The
officer's pension benefit shall remain as it existed on the effective
retirement date. Earnings or increases in earnings thereafter shall
not be recognized or used for the calculation or determination of
any benefits payable by the Township Police Pension Fund. The pension
benefit payable to the officer shall increase only as a result of
cost of living adjustments in effect on the effective retirement date
or by applicable cost of living adjustments granted thereafter. Entry
into the DROP shall be construed as "retirement" for the purposes
of leave sell-back. At the time of entry into the DROP, the participant
shall be permitted to sell back leave as if he or she had retired
pursuant to the collective bargaining agreement, and the calculation
of leave into the pension shall be handled in accordance with the
language of the Plan.
The monthly retirement benefits that would have been payable
had the officer elected to cease employment and receive a normal retirement
benefit instead of entering DROP shall, upon the officer commencing
participation in DROP, be paid into the DROP account. Payments to
the DROP account shall be made only while the member is a participant
in the DROP program. Upon entry into the DROP, an amount equal to
the member's monthly retirement benefit shall be transferred
to Silver Spring Township to be held in an interest-bearing ledger
account in its Pension Trust Fund. The interest shall be compounded
and credited monthly at the actual rate earned by the DROP participant
account that shall not be less than 0% nor more than 4 1/2%.
The DROP shall at all times comply with the annual benefit limitations
of Internal Revenue Code § 415 and the regulations thereunder.
After an 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 Township's Police Pension
Plan and the buyback of any qualifying accrued but unused leave time.
An officer may utilize leave time during the DROP period, but the
Township shall not be required to buy back any such unused leave time
at the end of the DROP period.
A.
Upon the termination date established by the officer before entering
DROP, or such date that the officer terminates from employment before
the termination date or on the date the Township separates the officer
from employment, the retirement benefits payable to the officer or
officer's beneficiary, if applicable, shall be paid to the officer
or beneficiary and shall no longer be paid to the officer's DROP
account. Following termination of an officer's employment pursuant
to their participating in the DROP program, the balance in the officer's
DROP account shall be paid pursuant to one of the following options:
(1)
The balance of the officer's DROP account, less withholding
taxes, if any, remitted to the Internal Revenue Service, shall be
paid within 45 days of receipt of the election form by the Plan to
the officer or the officer's surviving beneficiary.
(2)
The balance in the officer's DROP account shall be paid within
45 days of the receipt of the election form by the Plan directly to
the custodian of an eligible retirement plan as defined by Internal
Revenue Service Code § 402(c)(8)(b), or, in the case of
an eligible rollover distribution to the surviving spouse of a deceased
DROP participant, to an eligible retirement plan that is an individual
retirement account or an individual retirement annuity as defined
by Internal Revenue Code § 402(c)(9).
B.
The form of payment selected by the officer or surviving beneficiary
shall comply with the minimum distribution requirements of the Internal
Revenue Code of 1986.
C.
As a condition of participation in DROP, the officer acknowledges
that the Township plays no role nor has any responsibility in advising
the officer regarding the appropriate payout vehicle. Accordingly,
any officer participating in DROP assumes all financial consequences
for his/her participation in DROP, including, but not limited to,
the manner in which a permitted payout from the DROP account is made.
The participating officer agrees to hold the Township harmless for
any tax or other financial consequences which flow directly or indirectly
from the officer's participation in DROP. It is strongly suggested
that officers participating in DROP obtain appropriate financial advice
and guidance.
A.
If an officer becomes temporarily disabled during his participation
in DROP, any such time lost due to disability shall be counted towards
the officer's termination date. Upon return to duty, membership
in DROP shall continue with the remaining time left until the officer's
termination date. If eligible, the officer shall receive temporary
disability pay in the same amount as disabled police officers that
are not participating in DROP. In no event shall an officer on temporary
disability have the ability to draw from his DROP account. However,
notwithstanding any other provision in this subsection, if an officer
is disabled and has not returned to work as of the termination date
identified prior to DROP participation, 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 officer or other
person to the continuation of employment, nor shall participation
in the DROP program supersede or limit in any way the right of the
Township to grant the officer an honorable discharge based upon an
inability to perform his or her full duties as a police officer.
B.
If an officer is determined to have sustained a permanent work-related
injury in the course of employment, the officer's participation
in DROP shall immediately cease. In such case, the officer shall have
the same options for the payout of the officer's DROP account
and, thereafter, shall receive a normal monthly pension benefit payment
in the same manner as an officer who completed his full participation
in DROP.
A.
If an officer participating in DROP dies, the officer's eligibility
for the DROP shall terminate upon the date of death. If such death
occurs before the DROP account balances are paid, the officer's
legal beneficiary shall have the same rights as the officer to withdraw
or roll over the account balance.
B.
Except in the case of death benefits specifically payable as a result
of death incurred in the course of performing hazardous public duty,
the only death benefits to which a DROP participant's survivor
shall be entitled are those normally payable in the death of a retired
officer.
Notwithstanding an officer's participation in DROP, an
officer 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 officer shall only
be entitled to receive the contributions, if any, made by the officer
to the Township's Police Pension Fund, without interest.
The Police Association and the Township agree that any costs
or fees associated with the management of the DROP accounts shall
be paid directly from the Police Pension Fund and not by the Township.
Any amendments to this DROP article 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 deferred retirement option accounts. The DROP
plan may only be amended by a written instrument, not by any oral
agreement or past practice.
The effective date of this agreement is September 23, 2020,
however, the implementation of the DROP program will be provided as
in this article.
An officer'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 an officer or to grant the officer an
honorable discharge based upon a physical or mental inability to perform
his or her duties.
A.
The provisions of this article 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 article shall not
be affected thereby. It is hereby expressly declared as the intent
of the Township that this article would have been adopted had such
unconstitutional or illegal provision or provisions not been included
herein.
B.
In the event that the DROP provision 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 Association
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.
