Township of East Whiteland, PA Non-Uniform Pension Plan

Deferred Retirement Option Plan (DROP). Beginning January 1, 2006, all of the Township's non-uniform employees who are represented by a collective bargaining unit may participate in a Deferred Retirement Option Plan as described in this § 32-21.

Definitions. As used in this § 32-21, the following terms shall have the meanings indicated:

DROP

The Deferred Retirement Option Plan created is an optional form of benefit under the existing East Whiteland Township Non-Uniform Employees' Pension Plan for non-uniform employees who are members represented by a collective bargaining unit.

DROP ACCOUNT

A separate ledger account created to accumulate the DROP pension benefit for a DROP participant.

ELIGIBLE MEMBER

A full-time non-uniform employee of East Whiteland Township who is represented by a collective bargaining unit who is 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 East Whiteland Township Non-Uniform Employees' Pension Plan adopted pursuant to Resolution No. 14-74 of the East Whiteland Township Board of Supervisors and as amended from time to time by subsequent resolutions.

Eligibility. Effective January 1, 2006, eligible members of the Plan that 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 64 and the completion of 10 or more years of credited service with East Whiteland Township.

Written election.

(1)

An eligible member of the Plan electing to participate in the DROP program must complete and execute a DROP election form prepared by East Whiteland Township and/or the pension plan administrator, which shall evidence the eligible member's participation in the DROP program and document the participant's rights and obligations under the DROP. The form must be signed by the eligible member and the Chief Administrative Officer of the Plan and submitted to East Whiteland Township, Chester County, Pennsylvania, not less than one year nor more than three years of the date on which the eligible member wishes the DROP election to be effective. The DROP election form shall include an irrevocable notice to the Township of East Whiteland by the eligible member that the member shall terminate from employment with the East Whiteland Township effective on a specific date not more than three years from the date upon which the eligible member first became eligible to participate in the DROP program. In addition, all retirement documents required by the Plan Administrator must be filed and presented to the East Whiteland Township Manager for approval of retirement and commencement of the monthly pension benefit. Once the retirement application has been approved, it shall become irrevocable.

(2)

After an eligible member enters the DROP program, contributions to the pension plan by the participant and the Township will cease, and the amount of monthly benefits will be frozen except for any applicable cost of-living adjustment (COLA) increases awarded to all pension recipients at some future date.

(3)

Eligible 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.

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.

Benefit calculation. For all Plan purposes, continuous service of an eligible 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 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 of 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.

Payments to DROP 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 account. Interest shall be compounded and credited monthly at an annual rate of 3%. All interest credited to the DROP account shall be included in the final cash settlement.

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 the participant has terminated employment (subject, however, to the requirement that no withdrawal shall be made earlier than one year from the date the participant entered DROP, except that such early withdrawal may be permitted should the participant terminate employment within the first year of DROP participation due to a death, serious illness or other life-changing event which occurs within the first year of DROP participation).

Payout. Upon the termination date set forth in the DROP election form or on such date as the participant withdraws or is terminated from the DROP program, if earlier, the normal retirement benefits payable to the participant or the participant's beneficiary, if applicable, shall be paid directly to the participant or beneficiary and shall no longer be credited to the DROP account. Within 30 days following the actual termination of a participant's employment with East Whiteland Township, the accumulated balance in the DROP account shall be paid to the DROP participant in a lump sum payment. Such payment shall be made either in cash, subject to any federal withholding as may be required, or as a direct rollover to an individual retirement account (IRA), or some combination as directed by the participant. If the participant selects the rollover option, he or she must also submit the appropriate paperwork from the IRA custodian within 20 days following termination.

Disability during DROP. If a participant becomes temporarily disabled during the DROP period, the participant shall receive disability pay in the same manner as disabled employees 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, if a participant is disabled and has not returned to work as of the date of the required resignation, then such resignation shall take precedence over all other provisions herein, and said participant shall be required to resign.

Death. If a participant dies before the DROP account balance is paid, the participant's beneficiary 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.