This chapter shall be known and may be cited as the "Hazleton City Non-Uniformed Pension."
[HISTORY: Adopted by the City Council of the City of Hazleton 12-17-2024 by Ord. No. 2024-21. Amendments noted where applicable.]
The purpose of this chapter is to consolidate and confirm the pension benefits payable to non-uniformed employees of the City of Hazleton.
Unless a different meaning is clearly required by the Third Class City Code, the meaning of the terms used in this chapter shall be as follows:
Shall mean, as of any given date, the participant's benefit determined under § 90-6B, calculated on the basis of the participant's average compensation determined as of such date and multiplied by a fraction, the numerator of which shall be the participant's completed years of credited service as of such date and the denominator of which shall be the number of years of credited service which are required to be completed by the participant to attain normal retirement age under the plan. Notwithstanding anything contained herein to the contrary, in no event shall the fraction exceed 1.0. In no event, however shall the accrued benefit exceed the maximum limitation, determined as of the date of computation, provided under § 90-6B. All accrued benefits are subject to all applicable limitations, reductions, offsets and actuarial adjustments provided by the plan prior to the actual payment thereof and no accrued benefits shall be paid unless the participant satisfies all requirements hereunder for entitlement to receive such benefit.
Shall mean the total amount contributed by any participant to this plan or its predecessor by way of payroll deduction or otherwise. There shall be no additional interest after the restatement date credited to this amount.
Shall mean the Municipal Pension Plan Funding Standard and Recovery Act (enacted as Act 205 of 1984), as amended, 53 P.S. § 895.101 et seq.
Shall mean two forms of payment of equal actuarial present value on a specified date. The factors to be used in determining actuarial equivalents shall be 7% interest, and UP-1984 Mortality Table rates. For purposes of Section 415 of the Code, effective for the first limitation year beginning after December 31, 1994, see § 90-12B hereof.
Shall mean the person, partnership, association, or corporation, which at any given time is serving as actuary; provided that such actuary must be an "approved actuary" as defined in the Act.
Shall mean any leave of absence granted in writing by the employer for reasons including, but not limited to, accident, sickness, pregnancy or temporary disability, education, training, jury duty, or such other reasons as may necessitate authorized leave from active employment.
Shall mean the average of the monthly compensation of the participant during any five years of credited service prior to termination of employment which provides the highest average or which would be determined by the rate of monthly pay at the date of retirement, whichever is the higher.
Shall mean the estate of the participant.
Shall mean any period of time after employment has commenced during which an employee fails to maintain a continuous period of employment.
Shall mean the person designated by the employer who has primary responsibility for the execution of the administrative affairs of the plan.
Shall mean the Internal Revenue Code of 1986, as amended.
Shall mean the Commonwealth of Pennsylvania.
Shall mean the base remuneration plus longevity payments whether salary or hourly wages paid to an employee by the employer with respect to personal services rendered as an employee. Compensation shall exclude extra or additional forms of remuneration such as overtime, amounts paid as allowance or reimbursement for expenses, payments made by the employer to this or any other employee welfare or benefit plans on behalf of its employees (other than deductions from the employee's remuneration which is reclassified as an employer payment), and amounts paid as sums for sick pay, back-pay damage awards or settlements or the like. Compensation shall be limited on an annual basis for purposes of this plan to the amount specified in accordance with Code Section 401(a)(17) for government plans, as adjusted under Code Section 415(d).
Shall mean any insurance or annuity contract issued by an insurance company in accordance with the requirements of the plan.
Shall mean the City Council of the City of Hazleton, Pennsylvania.
Shall mean the first day of the month coincident with or next following the date when a participant who has completed at least 15 years of credited service terminates employment due to a total and permanent disability.
Shall mean any person who is employed as an employee by the employer on or after January 4, 2004, and who is not otherwise participating in a pension plan or retirement program sponsored by the employer which recognizes credit for the same period of service to the employer. Employees shall include any elected or appointed official compensated at a stated salary for services rendered.
Shall mean the City of Hazleton, Pennsylvania, a political subdivision of the commonwealth.
Shall mean the time for which an employee is directly or indirectly compensated or entitled to compensation by the employer for the performance of duties as an employee. Employment may include, for the purpose of determining years of credited service, an authorized leave of absence to the extent it is specifically granted in writing by the Council and permitted pursuant to applicable law.
Shall mean any legal reserve life insurance company licensed to do business in one or more states of the United States.
Shall mean the first day of the month coincident with or next following the date when a participant retires which is subsequent to the participant's normal retirement date.
Shall mean the minimum annual obligation of the municipality as determined pursuant to the reports and calculations of the actuary and certified by the Chief Administrative Officer pursuant to the provisions of the Act.
Shall mean the later of attainment of age 60 or completion of 20 years of credited service.
Shall mean the first day of the month coincident with or next following the date when an employee attains normal retirement age.
Shall mean a written document prepared in the form specified by the Plan Administrator and delivered as follows: if such notice or election is to be provided by the employer or Plan Administrator, it shall be mailed in a properly addressed envelope, postage prepaid, to the last known address of the person entitled thereto, on or before the last day of the specified notice or election period; or, if such notice or election is to be provided to the employer or the Plan Administrator, it must be received by the recipient on or before the last day of the specified notice or election period.
Shall mean an employee who has commenced participation in this plan in accordance with § 90-4A and has not for any reason ceased to participate hereunder.
Shall mean the assets of the plan, which shall be accounted for separately from the assets of any other plans maintained by the employer, and which shall be administered under the supervision of the employer in accordance with the terms of the plan.
Shall mean the board appointed pursuant to the provisions of applicable law to administer the plan as more fully described herein under § 90-13B.
Shall mean the City of Hazleton Non-Uniformed Employees' Pension Plan.
Shall mean the Pension Plan Board. In the event no such board is appointed, the Plan Administrator shall be the Council.
Shall mean the 12-month period beginning on January 1 and ending on December 31.
Shall mean January 1, 2004, the effective date of this amended and restated plan.
Shall mean a condition of physical or mental impairment due to which a participant is permanently unable to perform the duties of his position or office with the employer. The Plan Administrator shall determine whether a participant has incurred a total and permanent disability based upon the results of an examination by three physicians designated by the Plan Administrator.
Shall refer to any 12-month period during which a participant is employed in employment. Each year of credited service shall be determined from the date on which participation in the plan shall commence and annual anniversaries thereof and/or the date that reemployment of a participant shall commence and anniversaries thereof, provided that the employee has authorized the payment of employee contributions to the plan. Year of credited service shall include any time not exceeding six years spent by the employee on active duty with the armed forces of the United States, providing that he received an honorable discharge or a certificate of satisfactory service and he pays to the Board an amount equal to 3% of his last monthly salary or wage prior to entering on active duty for each month he is not employed by the City because of his active duty with the armed forces.
A.
Eligibility for participation. Each employee who first became an employee after the adoption of this amended and restated plan shall be eligible to participate in the plan as of the first day of employment provided that all administrative prerequisites such as authorizing the payment of employee contributions via payroll deduction have been fulfilled. Each employee who was a participant in the plan on the day prior to the restatement date shall continue to be a participant on and after the restatement date subject to the terms and conditions of the plan as set forth herein. Each employee who first became an employee prior to the adoption of this amended and restated plan but who was not a participant in the plan shall be a participant subject to the terms and conditions of the plan as set forth herein as of the adoption of this amended and restated plan. Each such employee shall only accrue benefits hereunder from the date of participation in the plan.
B.
Participation requirements. Each participant hereunder shall be required to make contributions to the plan, as provided in § 90-5A hereof, and shall execute and complete any enrollment or application forms as required by the Plan Administrator.
C.
Reemployment. Each employee who had previously been employed by the employer and incurred a break in service shall, upon reemployment, have prior years of credited service recredited for all purposes under the plan upon repayment to the plan of any amounts of accumulated contributions which had been distributed pursuant to § 90-10B.
D.
Change in status. A participant who remains in the service of the employer but ceases to be an employee eligible for participation hereunder or ceases or fails to make any contributions which are required as a condition of participation hereunder, shall have no further benefit accruals occur until the individual again qualifies as a participant hereunder eligible to resume such accrual of benefits.
E.
Leave of absence. During any leave of absence that is not an authorized leave of absence, a participant shall be deemed an active participant and shall not be given credit for years of credited service nor continue to accrue any benefits hereunder. If the employee is not reemployed by the expiration of such leave of absence, participation in the plan shall cease on the date on which such leave of absence commenced. During any authorized leave of absence, a participant shall continue to receive credit for years of credited service to the extent such credit is specifically granted in writing by Council and is permitted pursuant to applicable law provided that the participant shall make participant contributions to the plan during the authorized leave of absence based upon the participant's compensation immediately prior to leave.
F.
Record keeping. The employer shall furnish the Administrator with such information as will aid the Administrator in the administration of the plan. Such information shall include all pertinent data on employees for purposes of determining their eligibility to participate in this plan.
A.
Employee contributions. As a condition of participation hereunder, each participant shall be required to have contributions deducted from the participant's compensation of 3 1/2% of the participant's annual compensation, subject to taxation under Code Section 31O1(a) and 5% of the remainder of the participant's annual compensation except for those participants not covered by Social Security, their contribution rate shall be 3%.
B.
Employer contributions. The Chief Administrative Officer, under the Act, shall annually determine the minimum municipal obligation of the employer based upon the reports and calculations of the actuary. The employer shall pay into the Pension Fund, by annual appropriations or otherwise, the contributions necessary to satisfy the minimum municipal obligation. Notwithstanding the foregoing, nothing contained herein shall preclude the employer from contributing an amount of more than the minimum municipal obligation.
C.
State aid. General municipal pension system state aid, or any other amount of state aid received by the employer in accordance with the Act from the Commonwealth of Pennsylvania may be deposited into the Pension Fund governed by this plan and be used to retire the amount of the minimum municipal obligation of the employer.
D.
Gifts. The Council is authorized to take by gift, grant, devise, or otherwise any money or property, real or personal, for the benefit of the plan and cause the same to be held as a part of the Pension Fund. The care, management, investment, and disposal of such amounts shall be vested in the Council, its delegate, or the Plan Administrator, subject to the direction of the donor and not inconsistent with applicable laws and the terms of the plan.
E.
No reversion to the employer. At no time shall it be possible for the plan assets to be used for, or diverted to, any purpose other than for the exclusive benefit of the participants and their beneficiaries, except that contributions made by the employer may be returned to the employer if the contribution was made due to a mistake of fact and the contribution is returned within one year of the mistaken payment of the contribution or the plan is terminated, as provided in § 90-13.
F.
Laborers on per diem wage. No person holding a position in any City as a laborer, at a per diem wage, shall be compelled to pay or contribute toward the fund herein provided for, but he shall have the option or choice of so doing, and shall only, upon electing to contribute to the fund, become entitled to the compensation provided by this plan; provided, however, that he shall be required to contribute 3% of his wages and the same percentage upon any amount of compensation he receives after his retirement.
A.
Normal retirement. Each participant shall be entitled to a normal retirement benefit after retirement, on or after attainment of normal retirement age.
B.
Normal retirement benefit. Each participant who shall become entitled to a benefit pursuant to Subsection A hereof shall receive a benefit commencing on the participant's normal retirement date and paid in the normal form as provided in § 90-9A. The monthly amount of the normal retirement benefit shall be equal to 50% of the participant's average compensation.
C.
Late retirement. A participant may continue in employment beyond the attainment of normal retirement age subject to the employer's rules and regulations regarding retirement age. If a participant who has met the requirements of § 90-4A continues in employment beyond the participant's normal retirement date, there shall be no retirement benefits paid until employment has ceased and the participant's retirement actually commences. The retirement benefit of a participant described in this subsection shall be calculated in accordance with § 90-6B on the basis of average compensation as of the participant's actual retirement and shall commence on the participant's late retirement date.
D.
Early retirement. Each participant who shall have rendered at least 20 years of credited service and who retires voluntarily and who contributes until age 55 shall at age 60 be entitled to the normal retirement benefit of 50% of the participant's average compensation.
E.
Application for benefit. A participant must complete and execute an application for benefit on a form and in the manner prescribed by the Plan Administrator and deliver the said application to the Plan Administrator at least 30 days prior to the date on which benefit payments are to commence. Notwithstanding anything contained herein to the contrary, no retirement benefit payments or any other benefit payments shall be due or payable on or before the first day of the month coincident with or next following the date that is 30 days after the date the Plan Administrator receives the application for benefit.
F.
Limitation of liability. Nothing contained herein shall obligate the employer, the Plan Administrator, any fiduciary or any agent or representative of any of the foregoing, to provide any retirement or other benefit to any participant or beneficiary which is more than the Optional Retirement System for Officers and Employees for Third Class Cities (53 § 39373 et seq.), or which cannot be provided from the assets available in the Pension Fund, whether such benefits are in pay status or otherwise payable under the terms of the plan. The Council retains the right to amend or terminate this plan consistent with applicable law at any time, with or without cause and whether such action directly or indirectly results in the suspension, reduction, or termination of any benefit payable under the plan or in pay status, and without liability to any person for any such action.
G.
Mandatory retirement. All employees, except elected officers, eligible for full pension hereunder, shall retire at the age of 70 years.
H.
Special provision for restated plans. The benefit amount of any participant who retired prior to the restatement date shall not be in any way altered by the provisions of this plan, except where otherwise expressly indicated herein, and shall continue to be determined on the basis of the terms of the plan in effect on the day preceding the restatement date.
A.
Disability retirement. A participant who has completed at least 15 years of credited service and who incurs a total and permanent disability before attaining age 55 shall be entitled to a disability retirement benefit as of the disability retirement date.
B.
Disability retirement benefit. A participant who shall be entitled to a disability retirement benefit under Subsection A shall receive a benefit commencing on the participant's disability retirement date and paid semi-monthly. The amount of the disability retirement benefit shall be equal to 50% of the participant's average compensation.
C.
Payment of disability benefit. Payment of a disability retirement benefit shall be made monthly commencing on the participant's disability retirement date and ending on the earlier of the date of death of the participant, the date that the participant's total and permanent disability shall cease, or the date that the participant would attain normal retirement age if the participant had continued to accrue years of credited service to such date (such a participant shall thereafter receive a retirement benefit equal to the amount of the disability retirement benefit which will be deemed to be the normal retirement benefit). If the participant's total and permanent disability shall cease prior to the attainment of the participant's normal retirement age, the participant shall be deemed to have terminated employment as of the disability retirement date for purposes of this plan unless the participant shall resume active employment within three months following the date on which such total and permanent disability ceased. A participant who fails to resume active employment after total and permanent disability ceases shall not be entitled to a distribution of accumulated contributions pursuant to § 90-10B to the extent that the total amount of disability retirement benefits paid exceeds the value of the participant's accumulated contributions as of the disability retirement date, and shall not be entitled to any other benefits under the plan as a result of the accumulation of any years of credited service as of the disability retirement date.
D.
Verification of disability. The Plan Administrator shall determine whether a participant shall have incurred total and permanent disability. Proof of total and permanent disability shall consist of the sworn statement of three practicing physicians, designated by the Plan Administrator, that the participant has incurred a total and permanent disability. If the Plan Administrator shall determine that a participant who is totally and permanently disabled has recovered sufficiently to resume active employment or if a participant refuses to undergo a medical examination as directed by the Plan Administrator (such a medical examination may not be required more frequently than once in any given 12-month period), the payment of disability retirement benefits shall cease.
E.
Cessation of disability. A participant who is receiving payment of disability retirement benefits under this plan must notify the Plan Administrator of any change in condition which may cause the participant's entitlement to receipt of such benefits to cease. If a participant fails to provide immediate notice to the Plan Administrator of any such change in status and thereby continues to receive payment of benefits hereunder to which the participant is not entitled, the Plan Administrator may take whatever action is necessary and permitted under applicable law to recover any amount of improper payments, including offsetting such amounts against any future payment of retirement or other benefits under the plan or legal action. The Plan Administrator may also recover the costs of any such action.
A.
Death of participant. Upon the occurrence of the death of a participant, there shall be payable benefits in accordance with the following subsections of this section.
B.
Death prior to retirement. If a participant shall die prior to the commencement of the payment of any retirement benefits under this plan, his estate shall be entitled to receive a distribution of the participant's accumulated contributions determined as of the date of death of the participant.
C.
Surviving spouse. The surviving spouse of an employee who retired on pension or is killed in the service, on or after January I, 1960, shall, during his/her lifetime or so long as he/she does not remarry, be entitled to receive a pension calculated at the rate of 50% of the pension the member was receiving or would have been entitled to had he/she been retired at the time of his/her death.
A.
Normal form. The normal form for payment of retirement benefits shall be an annuity for the life of the participant paid in equal semi-monthly installments.
B.
Commencement of benefits. A participant may make an election to commence receiving distribution of retirement benefits as of the participant's normal retirement date or late retirement date, whichever is applicable, or may defer such payments to a date not later than the required date for commencement of benefits under the law.
C.
Small amounts. If the Plan Administrator determines that the value of a participant's accrued benefit is so small as to make pension payments in the normal form administratively impractical, the Plan Administrator may cause such payments to be made at such other periodic intervals as are administratively practical, but no less frequently than annually, or may make a single lump-sum payment equal to the commuted value of such accrued benefit to the extent permitted under applicable law.
D.
Nonduplication of benefit. To avoid any duplication of benefits, a participant who is receiving a retirement benefit under this plan and who shall resume employment shall have benefit payments suspended until the first day of the month coincident with or next following the date such employment shall cease. Upon resumption of benefit payments, such participant shall receive the greater of the amount of the suspended benefit or the amount of benefit based upon average compensation and years of credited service as of the date that such period of resumed employment shall cease.
E.
Personal right of participant. The right to receive any benefits under this plan is a personal right of the participant and shall expire upon the death of the participant. No heir, legatee, devisee, beneficiary, assignee or other person claiming by or through a participant shall have any interest in any benefits hereunder unless clearly and expressly so provided by the terms of this plan. A participant's election, failure to make an election or revocation of an election hereunder shall be final and binding on all persons.
A.
Rights of terminated employees. A participant who shall cease to be an employee except as otherwise hereinbefore provided shall have all interest and rights under this plan limited to those contained in the following subsections of this section.
B.
Distribution of accumulated contributions. A participant whose employment with the employer shall terminate for any reason other than death or total and permanent disability prior to attainment of normal retirement age shall be entitled to receive a distribution of accumulated contributions. Upon receipt of such accumulated contributions, said participant and beneficiary shall not be entitled to any further payments from the plan.
(1)
Deferred retirement benefit.
(a)
A participant who shall have completed at least 12 years of credited service and whose tenure in office or employment is terminated without voluntary action, other than due to death or total and permanent disability subsequent to having attained age 60, shall (upon election) be entitled to receive a deferred retirement benefit in lieu of a distribution of accumulated benefits under § 90-10B pursuant to a deferred retirement benefit under § 90-10B(2). If such election is made, the participant must continue to pay contributions to the Pension Fund on a monthly basis equal to the monthly amount due and paid under § 90-5A during the last full month of employment with such contributions to continue until the participant shall have contributed for at least 20 years. Such deferred retirement benefit shall be equal to the benefit determined pursuant to § 90-10B(2) hereof and shall commence as soon as administratively feasible after termination of office or employment. (Restated by Ord. No. 2004-4)
(b)
A participant who shall have completed at least 20 years of credited service and whose tenure of office or employment is terminated without voluntary action, other than due to death or total and permanent disability prior to attainment of normal retirement age, shall be entitled to elect to receive a deferred retirement benefit in lieu of a distribution of accumulated contributions under subsection 8.02 and pursuant to a deferred vested benefit under § 90-10B(2). If such election is made, the participant must continue to pay contributions into the Pension Fund on a monthly basis equal, to the monthly amount due and paid under § 90-5A during the last full month of employment with such contributions to continue until the participant attains 55 years of age. Such deferred retirement benefit shall be equal to the benefit determined pursuant to § 90-10B(2) hereof and shall commence after application under § 90-10B(2) not earlier than when the participant attains 55 years of age.
(2)
Deferred vested benefit. Should a participant terminate employment before reaching the date which would have been the participant's earliest retirement date had the participant continued employment by meeting the minimum age and minimum period of service requirements but after having completed the requirements of § 90-10B(1), the participant shall be entitled to vest his or her retirement benefits subject to the following conditions:
(a)
The participant must file with the Pension Plan Board of the Pension Fund a written notice of his or her intention to vest;
(b)
The participant must include in the notice the date the member intends to terminate his or her service as an employee;
(c)
The termination date shall be at least 30 days later than the date of notice to vest;
(d)
The participant must be in good standing with the employer on the date of notice to vest; and
(e)
The Pension Plan Board shall indicate on the notice to vest the rate of monthly pay of the participant as of the date of said notice to vest or the highest average annual salary which the participant received during any five years of service preceding said date, whichever is the higher.
C.
Upon reaching the date which would have been the participant's retirement date had the participant continued his or her employment with the employer, the participant shall notify the Pension Plan Board, in writing, that the participant desires to collect his or her pension. The amount of retirement benefits the participant is entitled to receive under this section shall be computed as follows and shall be in lieu of any other benefit under the plan:
(1)
The initial determination of the participant's base retirement benefits shall be computed on the salary indicated on the notice to vest; and
(2)
The portion of the base retirement benefits due the participant shall be determined by applying to the base amount the percentage that his or her years of service actually rendered bears to the years of service which would have been rendered had the participant continued to be employed by the employer until he or she would have had 20 years of credited service.
D.
Required contributions. As required by § 90-10B(1) and (2), if benefits are paid or payable under § 90-10B(1) or (2) of the plan to any participant who has not been a contributor to the plan for an aggregate period of at least 20 years, such participant shall be required to pay monthly, the amount due under § 90-5A during the last full month of employment with such contributions to continue until the participant shall have contributed for at least 20 years. (Restated by Ord. No. 2005-2)
A.
Social Security reduction.
(1) JOINT COVERAGE MEMBER (of the retirement system) SINGLE COVERAGE MEMBER (of the retirement system)
Definitions.
Shall mean an employee who shall have become a member of the retirement system subsequent to the last date permitted by the employer for statement of preference concerning Social Security coverage, or who, having become a member on or before such date, shall have filed with the Board a written statement that he or she elects Social Security coverage under an agreement with the Federal Secretary of Health, Education and Welfare entered into by the commonwealth.
Shall mean an employee who shall have become a member of the retirement system on or before the last date permitted by the employer for statement of preference concerning Social Security coverage and who either shall have filed with the Board a written statement that he or she does not elect Social Security coverage under any agreement with the Federal Secretary of Health, Education and Welfare entered into by the commonwealth, or shall not have filed with the Board any written statement.
(2)
The employer, having entered into an agreement with the commonwealth to place certain employees under the Federal Social Security Act,[1] the pensions to be paid joint coverage members according to the provisions of this chapter payable after the age and upon that portion of annual compensation on which Social Security benefits are payable, shall be reduced by an amount equal to 40% of the primary insurance amount of Social Security paid or payable to the member. Such reduction shall be subject to the following provisions:
(a)
Upon attainment of the age at which Social Security benefits are payable to a beneficiary receiving a pension or upon retirement of a contributor after attaining that age, his eligibility to the old age insurance benefit and the primary insurance amount of Social Security upon which the reduction in the pension shall be based, shall be computed by the Board in the manner specified in the Federal Social Security Act, except that in determining such eligibility in such amount only wages or compensation for services performed in the employ of the City shall be included.
(b)
The reduction shall not apply to a pension for total and permanent disability.
(c)
Whenever the amount of the reduction from the pension shall have been once determined, it shall remain fixed for the duration of the pension, except that any decrease in the primary insurance amount under the Social Security Act shall result in a corresponding decrease in the amount of the reduction from the pension.
(d)
The total sum, including Social Security benefits, to be received upon retirement by an employee who is a member of the system at the time of the agreement shall not be less than the allowance that would be paid by the retirement system in the absence of the agreement.
[1]
Editor's Note: See 42 U.S.C.A. § 1305 et seq.
B.
Payment to fund. Upon the employer entering into an agreement with the commonwealth to place certain employees under the Federal Social Security Act, the Board may authorize any joint coverage member of the retirement system to elect according to the provisions of this section to receive compensation without the reduction provided for in § 90-11A provided he shall make a lump sum payment to the Board or installment payments as may be approved by the Board, equal to the difference between the amount of the accumulated fund to his credit in the fund as of the last date for which salary or wages was paid and the amount which would have been to his credit in such fund if contributions had been made on that portion of his salary or wages on which wages or Social Security allowances are payable, at the same rate as made on that portion of his salary or wages in excess thereof, from the time that such salary or wages became subject to Social Security coverage. Such election shall be made, in writing, in the form prescribed by the Board, and shall be accompanied by the lump sum payment. The Board may authorize any such member to make the election herein provided at any time, and if made prior to retirement, such member shall, in addition to any lump sum or installment payments required, pay to the Board contributions on his entire salary or wages thereafter received at the rate provided in this plan for monthly salary or wages in excess of that on which Social Security allowances are payable.
A.
Explanation. In recognition of the fact that the plan must comply in form, content, and operation with certain provisions of the Code, and in spite of the limited applicability of such provisions to the normal operation of the plan, the following sections of this chapter detail the limitations and parameters applicable to maintaining favorable tax treatment of funds contributed to the plan under federal law.
B. 415 COMPENSATION ACCRUED BENEFIT ACTUARIAL EQUIVALENT ANNUAL ADDITIONS ANNUAL BENEFIT EMPLOYEE LEASED EMPLOYEE LIMITATION YEAR PARTICIPANT'S ACCOUNT PLAN YEAR REGULATION
Definitions. The following words and phrases are hereby introduced and defined for purposes of this chapter only:
With respect to any participant shall mean such participant's wages as defined in Code Section 3401(a) and all other payments of compensation by the employer (in the course of the employer's business) for a plan year for which the employer is required to furnish the participant with a written statement under Code Sections 6041(d), 6051(a)(3) and 6052. "415 Compensation" must be determined without regard to any rules under Code Section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)). Effective for limitation years beginning after December 31, 1997, "415 Compensation" shall include: (i) any elective deferral (as defined in Code Section 402(g)(3)); and (ii) any amount that is not includible in gross income by reason of Code Section 125, 132(a)(4), or 457.
Shall mean a participant's retirement benefit exclusive of vesting.
Shall mean a form of benefit differing in time, period, or manner of payment from a specific benefit provided under the plan, but having the same value when computed using the "applicable interest rate" and "applicable mortality table" as defined in Code Section 417(e). The "applicable interest rate" shall be determined as of the second month prior to the first month of the limitation year. The "applicable mortality table" and "applicable interest rate" shall be adjusted automatically when necessary to maintain the qualified status of this plan. The applicable mortality table was found in Revenue Ruling 95-6, 1995-1 C. B. 80, and effective as of December 31, 2002, is found in Revenue Ruling 2001-62.
Shall mean the sum credited to a participant's account for any limitation year of: (1) employer contributions; (2) employee contributions; (3) forfeitures; (4) amounts allocated after March 31, 1984, to an individual medical account, as defined in Code Section 415(1)(2) which is part of a pension or annuity plan maintained by the employer; and (5) amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits allocated to the separate account of a key employee (as defined in Code Section 419A(d)(3)) under a welfare benefit plan (as defined under Code Section 419(e)) maintained by the employer. Notwithstanding the foregoing, for limitation years beginning prior to January 1, 1987, only that portion of employee contributions equal to the lesser of employee contributions in excess of 6% of "415 Compensation" or 1/2 of employee contributions shall be considered an annual addition. For years beginning after December 31, 2001, annual additions shall be calculated in conformance with the Economic Growth and Tax Relief Reconciliation Act of 2001.[1]
Shall mean the benefit payable under the terms of the plan (exclusive of any benefit not required to be considered for purposes of applying the limitations of Code Section 415 to the plan) payable in the form of a straight life annuity with no ancillary benefits. If the benefit under the plan is payable in any other form, the annual benefit shall be adjusted to the equivalent of a straight life annuity using the greater of the interest rate assumption specified in the definition of actuarial equivalent or 5%. Participant contributions are annual additions subject to § 90-12N, and any benefit attributable to participant contributions (determined using the definition of "actuarial equivalence" in Subsection B) is not included in the benefit subject to the limits of this section. [For this purpose, contributions "picked-up" under Code Section 414(h) are not participant contributions.] Effective as of January 1, 1998, if a participant makes a purchase of permissive service credit (within the meaning of Code Section 415(n)) under the plan, the benefit derived from the contributions made to purchase the service credit shall be treated as part of the benefit subject to the limitations under § 90-12C and D.
Shall mean any person who is employed by the employer, but excludes any person who is an independent contractor. Employee shall not include leased employees.
Shall mean, effective as of January 1, 1997, any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with Code Section 414(n)(6)) on a substantially full-time basis for a period of at least one year, and such services are under primary direction and control of the recipient. A leased employee shall not be considered an employee of the recipient.
Shall mean the plan year.
Shall mean the account established and maintained by the Administrator for each participant with respect to his total interest in the defined contribution plan maintained by the employer resulting from annual additions.
Shall mean the 12-month period beginning on January 1 and ending on December 31 of each year.
Shall mean the Income Tax Regulations, as amended from time to time, as promulgated by the Secretary of the Treasury or his delegate.
[1]
Editor's Note: See 26 U.S.C.A. § 1 et seq.
C.
Maximum annual benefit.
(1)
Subject to the exceptions below, the maximum annual benefit payable to a participant under this plan in any limitation year shall equal $90,000.
(2)
Notwithstanding anything in this chapter to the contrary, to the extent the plan was in existence on May 6, 1986, and had complied at all times with the requirements of Code Section 415, (including any pertinent elections) the maximum annual benefit for any individual who was a participant as of the first day of the limitation year beginning after December 31, 1986, shall not be less than the "current accrued benefit." "Current accrued benefit" shall mean a participant's accrued benefit under the plan, determined as if the participant had separated from service as of the close of the last limitation year beginning before January 1, 1987, when expressed as an annual benefit within the meaning of Code Section 415(b)(2). In determining the amount of a participant's "current accrued benefit," the following shall be disregarded: (1) any change in the terms and conditions of the plan after May 5, 1986; and (2) any adjustment for cost of living occurring after May 5, 1986.
(3)
The dollar limitation under Code Section 415(b)(1)(A) stated in Subsection C(1) above shall be adjusted periodically in accordance with changes in the law under Code Section 415(b) or cost-of-living adjustments under Code Section 415(d). The limitation for the first limitation year ending after December 31, 2001, is $160,000.
(4)
For the purpose of this chapter, all qualified defined benefit plans (whether terminated or not) ever maintained by the employer shall be treated as one defined benefit plan, and all qualified defined contribution plans (whether terminated or not) ever maintained by the employer shall be treated as one defined contribution plan.
(5)
For the purpose of this chapter, if this plan is a Code Section 413(c) plan, all employers of a participant who maintains this plan will be considered to be a single employer, namely the employer.
D.
Adjustments to annual benefit and limitations.
(1)
If the annual benefit begins before age 62, then the dollar limitation shall be reduced so that it is the actuarial equivalent of the $160,000 limitation beginning at age 62. For purposes of adjusting the dollar limitation applicable prior to age 62, the adjustment shall be made using the parameters specified in the definition of actuarial equivalent, except that the interest rate assumption shall be the greater of 5% or the rate specified in said definition and any mortality decrement shall be ignored to the extent that a forfeiture does not occur at death. In no event, however, shall the aforesaid dollar limitation be reduced to an amount less than required by the Code. The above adjustment shall not apply in the case of a survivor or disability benefit paid pursuant to the plan. This subsection does not apply to the benefit of any participant who has 15 or more years of service with the employer's Police Department or who qualifies for a disability benefit under § 907.
(2)
If the annual benefit begins after age 65, the dollar limitation shall be increased so that it is the actuarial equivalent of a $160,000 single life annuity at age 65.
(3)
For purposes of adjusting the $160,000 limitation applicable after age 65, the adjustment shall be made using the parameters specified in the definition of actuarial equivalent, except that the interest rate assumption shall be the lesser of 5% or the rate specified in said definition, and the mortality decrement shall be ignored to the extent that a forfeiture does not occur at death.
(5)
For purposes of the annual benefit, no adjustment is required for qualified joint and survivor annuity benefits, pre-retirement death benefits, and post-retirement medical benefits.
(6)
To the extent applicable, the above provisions and limitations shall be governed by Code Section 415(b)(2)(F) and Code Section 415(b)(2)(G).
E.
Annual benefit not in excess of $10,000. Subject to the provisions of any applicable state law, this plan may pay an annual benefit to any participant in excess of his or her maximum annual benefit if the annual benefit derived from employer contributions under this plan and all other defined benefit plans maintained by the employer does not in the aggregate exceed $10,000 for the limitation year or for any prior limitation year, and the employer has not at any time maintained a defined contribution plan in which the participant participated. For purposes of this paragraph, if this plan provides for voluntary or mandatory employee contributions, such contributions will not be considered a separate defined contribution plan maintained by the employer.
F.
Participation or service reductions. In the case of a member who is not receiving a disability benefit under the plan, if a participant has less than 10 years of participation in the plan at the time he begins to receive benefits thereunder, the limitations in § 90-12C(1) and D shall be reduced by multiplying such limitations by a fraction, the numerator of which is the number of years of participation (or part thereof) in the plan, and the denominator of which is 10; provided, however, that said fraction shall in no event be less than 1/10. The limitations of § 90-14E shall be reduced in the same manner, except the preceding sentence shall be applied with respect to years of service rather than years of participation in the plan.
G.
Multiple plan reduction. This section applies only for limitation years beginning before January 1, 2000.
(1)
If an employee is (or has been) a participant in one or more defined benefit plans and one or more defined contribution plans maintained by the employer, the sum of the defined benefit plan fraction and the defined contribution plan fraction for any limitation year may not exceed 1.0.
(2)
Defined benefit fraction. The defined benefit plan fraction for any limitation year is a fraction, the numerator of which is the sum of the participant's projected annual benefits under all the defined benefit plans (whether or not terminated) maintained by the employer, and the denominator of which is the lesser of 125% of the dollar limitation determined for the limitation year under Code Sections 415(b) and (d) or 140% of the highest average compensation, including any adjustments under Code Section 415(b). Notwithstanding the above, if the participant was a participant as of the first day of the first limitation year beginning after December 31, 1986, in one or more defined benefit plans maintained by the employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125% of the sum of the annual benefits under such plans which the participant had accrued as of the close of the last limitation year beginning before January 1, 1987, disregarding any changes in the terms and conditions of the plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and, in the aggregate, satisfied the requirements of Code Section 415 (including any applicable elections) for all limitation years beginning before January 1, 1987.
(3)
Defined contribution fraction. The defined contribution plan fraction for any limitation year is a fraction, the numerator of which is the sum of the annual additions to the participant's account under all the defined contribution plans (whether or not terminated) maintained by the employer for the current and all prior limitation years (including the annual additions attributable to the participant's nondeductible employee contributions to all defined benefit plans, whether or not terminated, maintained by the employer, and the annual additions attributable to all welfare benefit funds, as defined in Code Section 419 (e), and individual medical accounts, as defined in Code Section 415(1)(2), maintained by the employer), and the denominator of which is the sum of the maximum aggregate amounts for the current and all prior limitation years of service with the employer (regardless of whether a defined contribution plan was maintained by the employer). The maximum aggregate amount in any limitation year is the lesser of 125% of the dollar limitation determined under Code Sections 415(b) and (d) in effect under Code Section 415(c)(1)(A) or 35% of the participant's compensation for such year. If the employee was a participant as of the end of the first day of the first limitation year beginning after December 31, 1986, in one or more defined contribution plans maintained by the employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the defined benefit fraction would otherwise exceed 1.0 under the terms of this plan. Under the adjustment, an amount equal to the product of: (1) the excess of the sum of the fractions over 1.0 times (2) the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last limitation year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the plan made after May 5, 1986, but using the Code Section 415 limitation applicable to the first limitation year beginning on or after January 1, 1987. The annual addition for any limitation year beginning before January 1, 1987 shall not be recomputed to treat all employee contributions as annual additions.
(4)
If the sum of the defined benefit plan fraction and the defined contribution plan fraction shall exceed 1.0 in any limitation year for any participant in this plan, the Administrator shall limit, to the extent necessary, the annual additions to such participant's account for such limitation year. If, after limiting the annual additions to such participant's account for the limitation year, the sum of the defined benefit plan fraction and the defined contribution plan fraction still exceed 1.0, the Administrator shall then adjust the numerator of the defined benefit plan fraction so that the sum of both fractions shall not exceed 1.0 in any limitation year for such participant.
H.
Incorporation of Code Section 415 by reference. Notwithstanding anything contained in this plan or this chapter to the contrary, the limitations, adjustments, and other requirements prescribed in this chapter shall at all times comply with the provisions of Code Section 415 and the regulations thereunder (as such apply to governmental plans), the terms of which are specifically incorporated herein by reference.
I.
Required distributions.
(1)
Notwithstanding any other provision of this plan, the entire benefit of any participant who becomes entitled to benefits prior to this death shall be distributed either:
(a)
Not later than the required beginning date; or
(b)
Over a period beginning not later than the required beginning date and extending over the life of such participant or over the lives of such participant and a designated beneficiary (or over a period not extending beyond the life expectancy of such participant, or the joint life expectancies of such participant and a designated beneficiary).
If a participant who is entitled to benefits under this plan dies prior to the date when his entire interest has been distributed to him after distribution of his benefits has begun in accordance with Subsection I(1)(b) above, the remaining portion of such benefit shall be distributed at least as rapidly as under the method of distribution being used under Subsection I(1)(b) as of the date of his death.
(2)
If a participant who is entitled to benefits under this plan dies before distribution of his benefit has begun, the entire interest of such employee shall be distributed within five years of the death of such employee. However, if any portion of the employee's interest is payable to (or for the benefit of) a designated beneficiary, such portion shall be distributed over the life of such designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary), and such distributions shall begin no later than one year after the date of the employee's death or such later date as provided by regulations issued by the Secretary of the Treasury. For purposes of the five-year rule set forth above, the benefit payable to the beneficiary under the preceding sentence shall be treated as distributed on the date on which such distributions begin; provided, however, that if the designated beneficiary is the surviving spouse of the participant, then the date on which distributions are required to begin shall not be earlier than the date upon which the employee would have attained age 70 1/2 and, further, provided, if the surviving spouse dies before the distributions to such spouse begin, this subparagraph shall be applied as if the surviving spouse were the employee.
(3)
For purposes of this section, the following definitions and procedures shall apply:
(a)
"Required beginning date" shall mean April 1 of the calendar year following the later of the calendar year in which the participant attains age 70 1/2 or the calendar year in which the participant retires.
(b)
The phrase "designated beneficiary" shall mean any individual designated by the employee under this plan according to its rules.
(c)
Any amount paid to a child shall be treated as if it had been paid to the surviving spouse if such amount will become payable to the surviving spouse upon such child's reaching majority (or other designated event permitted under regulations issued by the Secretary of the Treasury).
(d)
For purposes of this section, the life expectancy of an employee and/or the employee's spouse (other than in the case of a life annuity) may be redetermined but not more frequently than annually. Life expectancies shall be determined in accordance with the 1987 proposed regulations prior to January 1, 2003, and with the final regulations (§ 1.401(a)(9)-1 through § 1.401(a)(9)-9) on or after January 1, 2003.
(4)
The time and form of a participant's distribution are governed by other provision of the plan. Nothing in this section creates any right to any optional form of distribution.
J.
Domestic relations order. All rights and benefits, including elections, provided to a participant in this plan may be subject to the rights afforded to any "alternate payee" pursuant to a domestic relations order as provided by applicable state law. In evaluating any such domestic relations order, the Plan Administrator may use as a guide, Code Section 414(p).
K.
Direct rollover.
(1)
This section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the plan to the contrary that would otherwise limit a distributee's election under this section, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.
(2)
For purposes of this section, the following definitions shall apply:
(a)
An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period often years or more; any distribution to the extent such distribution is required under Code Section 401(a)(9); and, prior to January 1, 2002, the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). Effective as of January 1, 2002, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includible in gross income. However, such portion may be paid only to an individual retirement account or annuity described in Code Section 408(a) or (b) or to a qualified defined contribution plan described in Code Section 401(a) or 403(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.
(b)
An eligible retirement plan is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(6), an annuity plan described in Code Section 403(a), or a qualified trust described in Code Section 401(a), that accepts the distributee's eligible rollover distribution. However, prior to January 1, 2002, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. Effective as of January 1, 2002, an eligible retirement plan shall also mean an annuity contract described in Code Section 403(6) and an eligible plan under Code Section 457(6) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this plan. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse, or former spouse who is the alternate payee under a qualified domestic relation order, as defined in Code Section 414(p)(11).
(c)
A distributee includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), are distributees with regard to the interest of the spouse or former spouse.
(d)
A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee.
(e)
Effective as of January 1, 2002, an employee may, in accordance with Code Section 457(e)(17), make a trustee-to-trustee transfer from an eligible deferred compensation plan (as defined in Code Section 457(b)) to this plan for the purpose of purchasing service credit (to the extent that such purchases are permitted under the terms of the plan) or repaying a cash-out of contributions refunded under the plan.
L.
Credit for qualified military service. Effective as of December 12, 1994, notwithstanding any provision of this plan to the contrary, contributions, benefits, and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u).
M.
Limit on compensation. Except for purposes of the limitations under Code Section 415, with respect only to an employee who becomes a participant in the plan on or after January 1, 1996, compensation is subject to the limitation under Code Section 401(a)(17), which is $200,000 for the plan year beginning in 2002. The limit is adjusted periodically for changes in the law and cost-of-living adjustments under Code Section 401(a)(17).
N.
Limit on annual additions. Effective as of January 1, 2002, the annual additions allocated to the account of a participant, including any contributions "picked-up" by the employer in accordance with Code Section 414(h) and any annual additions under any defined contribution plan of the employer, shall not exceed the lesser of:
(1)
$40,000; or
(2)
100% of the participant's 415 compensation for the limitation year.
Contributions specified in Clauses 12.020(c)(4) and (5) shall not count against the limitation of subsection (b). The dollar amount in subsection (a) is for the limitation year beginning in 2002 and is adjusted periodically in accordance with Code Sections 415(c) and (d).
O.
Vesting upon plan termination. Upon the termination of this plan, or complete discontinuance of contributions to this plan, each employee as of the date of such termination or discontinuance shall become vested to the extent that the plan is funded.
A.
Plan Administrator. The Pension Plan Board shall be the Plan Administrator and shall have the power and authority to do all acts and to execute, acknowledge and deliver all instruments necessary to implement and effectuate the purpose of this plan. The Plan Administrator may delegate authority to act on its behalf to any persons it deems appropriate. If a Plan Administrator is not appointed, the Council shall be the Plan Administrator.
B.
Pension Plan Board.
(1)
The Pension Plan Board shall consist of the Mayor, City Administrator, Director of Finance, and two participants who shall be chosen by the participants who are contributing to the Pension Fund, a retired City employee and if members of Council participate in the retirement fund, a member of Council, chosen by Council. A retired City employee receiving a City pension shall be a member of the Board appointed using the following procedure:
(a)
If the City is a strong-Mayor form of government, the appointment shall be made by the Mayor subject to confirmation by Council;
(b)
If the City is a Council-Manager form of government, the appointment shall be made by the Manager subject to confirmation by Council; or
(c)
In all other cases, Council shall, by majority vote, appoint.
(2)
Where a retired City employee association exists, nominations for appointment shall be accepted by the appointing authority. It shall be the duty of said Board to register all persons employed by the said City, and to administer the collections and distribution of the fund, herein provided for, and make such reasonable rules in the premises as such board may deem necessary to carry into effect the provisions of this act.
(3)
Each member of the Pension Plan Board shall serve in that capacity until the earliest of death, resignation, or removal. Each member, but not including the members whose term runs coincidentally with their particular term of elected or appointed office for the City of Hazleton, of the Pension Plan Board may resign by giving written notice to the Council and other members of the Pension Plan Board 30 days prior to the date of resignation. Any vacancy on the Pension Plan Board shall be filled in accordance with the provisions governing initial appointment as a member of the Pension Plan Board.
(4)
The Pension Plan Board may organize itself in any manner deemed appropriate to effectuate its purposes hereunder, provided that:
(a)
It shall act by a majority of its members at the time in office either by vote at a meeting or in writing without a meeting;
(b)
It shall appoint a Chairman, a Secretary who may, but need not be a Pension Plan Board member and such other agents as it may deem advisable;
(c)
It may authorize any one or more of its members to execute any document or documents including any application, request, certificate, notice, consent, waiver or direction and shall notify the Council, in writing, of each such member so authorized; however, if no such member is so authorized, the Chairman shall be deemed to be so authorized;
(d)
It shall meet at least one time in each plan year; and
(e)
It shall maintain and keep such records as are necessary for the efficient operation of the plan and preservation of the Pension Fund or as may be required by any applicable law, regulation or ruling, and shall provide for the preparation and filing of such forms, reports or documents as may be required to be filed with any governmental agency or department and with the participants and/or other persons entitled to benefits under the plan.
C.
Authority and duties of the Plan Administrator. The Plan Administrator shall have full power and authority to do whatever shall, in its judgment, be reasonably necessary for the proper administration and operation of the plan. The interpretation or construction placed upon any term or provision of the plan by the Plan Administrator or any action of the Plan Administrator taken in good faith shall be final and conclusive upon all parties hereto, whether employees, participants, or other persons concerned. By way of specification and not limitation and except as specifically limited hereafter, the Plan Administrator is authorized:
(1)
To construe this plan;
(2)
To determine all questions affecting the eligibility of any employee to participate herein;
(3)
To compute the amount and source of any benefit payable hereunder to any participant or beneficiary;
(4)
To authorize any and all disbursements;
(5)
To prescribe any procedure to be followed by any participant and/or other person in filing any application or election;
(6)
To prepare and distribute, in such manner as may be required by law of as the Plan Administrator deems appropriate, information explaining the plan;
(7)
To require from the employer or any participant such information as shall be necessary for the proper administration of the plan; and
(8)
To appoint and retain any individual to assist in the administration of the plan, including such legal, clerical, accounting, actuarial and investment services as may be required by any applicable law or laws.
The Plan Administrator in its capacity as Plan Administrator shall have no power to add to, subtract from or modify the terms of the plan or change or add to any benefits provided by the plan, or to waive or fail to apply any requirements of eligibility for benefits under the plan. Further, the Plan Administrator shall have no power to adopt, amend, or terminate the plan, or to determine or require any contributions to the plan, said powers being exclusively reserved to the Council in its capacity as the governing body of the employer.
D.
Plan administration expense. All reasonable expenses incident to the functioning of the Plan Administrator, including, but not limited to, fees of accountants, counsel, actuaries and other specialists and other costs of administering the plan, may be paid from the Pension Fund upon approval by the Chief Administrative Officer to the extent permitted under applicable law and not otherwise paid by the employer.
E.
Hold harmless. No member of the Council nor the Plan Administrator nor any other City of Hazleton employee involved in the administration of the plan shall be liable to any person on account of any act or failure to act which is taken or omitted to be taken in good faith in performing their respective duties under the terms of this plan. To the extent permitted by law, the employer shall, and hereby does agree to, indemnify and hold harmless the Plan Administrator and each successor and each of any such individual's heirs, executors and administrators, and the Plan Administrator's delegates and appointees (other than any person, bank, firm or corporation which is independent of the employer and which renders services to the plan for a fee) from any and all liability and expenses, including counsel fees, reasonably incurred in any action, suit or proceeding to which he is or may be made a party by reason of being or having been the Plan Administrator or a delegate or appointee of the Plan Administrator except in matters involving criminal liability, intentional or willful misconduct. If the employer purchases insurance to cover claims of a nature described above, then there shall be no right of indemnification except to the extent of any deductible amount under the insurance coverage or to the extent of the amount the claims exceed the insured amount.
F.
Approval of benefits. The Plan Administrator shall review and approve or deny any application for retirement benefits within 30 days following receipt thereof or within such longer time as may be necessary under the circumstances. Any denial of an application for retirement benefits shall be in writing and shall specify the reason for such denial.
G.
Appeal procedure. Any person whose application for retirement benefits is denied, who questions the amount of benefit paid, who believes a benefit should have commenced which did not so commence or who has some other claim arising under the plan ("claimant"), shall first seek a resolution of such claim under the procedure hereinafter set forth.
(1)
Any claimant shall file a notice of the claim (within 90 days of the event causing the claim) with the Plan Administrator which shall fully describe the nature of the claim. The Plan Administrator shall review the claim and make an initial determination approving or denying the claim.
(2)
If the claim is denied in whole or in part, the Plan Administrator shall, within 90 days (or such other period as may be established by applicable law) from the time the application is received, mail notice of such denial to the claimant. Such 90-day period may be extended by the Plan Administrator if special circumstances so require for up to 90 additional days by the Plan Administrator's delivering notice of such extension to the claimant within the first 90-day period. Any notice hereunder shall be written in a manner calculated to be understood by the claimant and, if a notice of denial, shall set forth: (i) the specific plan provisions on which the denial is based; (ii) an explanation of additional material or information, if any, necessary to perfect such claim and a statement of why such material or information is necessary; and (iii) an explanation of the review procedure.
(3)
Upon receipt of notice denying the claim, the claimant shall have the right to request a full and fair review by the Council of the initial determination. Such request for review must be made by notice to the Council within 60 days of receipt of such notice of denial. During such review, the claimant or a fully authorized representative shall have the right to review any pertinent documents and to submit any issues or comments in writing. The Council shall, within 60 days after receipt of the notice requesting such review, (or in special circumstances, such as where the Council in its sole discretion holds a hearing, within 120 days of receipt of such notice), submit its decision in writing to the person or persons whose claim has been denied. The decision shall be final, conclusive and binding on all parties, shall be written in a manner, calculated to be understood by the claimant and shall contain specific references to the pertinent plan provisions on which the decision is based.
(4)
Any notice of a claim questioning the amount of a benefit in pay status shall be filed within 90 days following the date of the first payment which would be adjusted if the claim is granted unless the Plan Administrator allows a later filing for good cause shown.
(5)
A claimant who does not submit a notice of a claim or a notice requesting a review of a denial of a claim within the time limitations specified above shall be deemed to have waived such claim or right to review.
A.
Operation of the Pension Fund.
(1)
The Council of the City of Hazleton is hereby authorized to hold and supervise the investment of the assets of the Pension Fund, subject to the provisions of the laws of the Commonwealth of Pennsylvania and of this plan and any amendment thereto.
(2)
The Pension Fund shall be used to pay benefits as provided in the plan and, to the extent not paid directly by the employer, to pay the expenses of administering the plan pursuant to authorization by the employer.
(3)
The employer intends the plan to be permanent and for the exclusive benefit of its employees. It expects to make the contributions to the Pension Fund required under the plan. The employer shall not be liable in any manner for any insufficiency in the Pension Fund; benefits are payable only from the Pension Fund, and only to the extent that there are monies available therein.
(4)
The Pension Fund will consist of all funds held by the employer under the plan, including contributions made pursuant to the provisions hereof and the investments, reinvestments and proceeds thereof. The Pension Fund shall be held, managed, and administered pursuant to the terms of the plan. Except as otherwise expressly provided in the plan, the employer has exclusive authority and discretion to manage and control the Pension Fund assets. The employer may, however, appoint a trustee, custodian, and/or investment manager, at its sole discretion.
B.
Powers and duties of employer. With respect to the Pension Fund, the employer shall have the following powers, rights and duties, in addition to those vested in it elsewhere in the plan or by law, unless such duties are delegated or otherwise assigned pursuant to the Optional Retirement System for Officers and Employees (53 P.S. § 39371 et seq.).
(1)
To retain in cash so much of the Pension Fund as it deems advisable and to deposit any cash so retained in any bank or similar financial institution (including any such institution which may be appointed to serve as trustee hereunder), without liability for interest thereon.
(2)
To invest and reinvest the principal and income of the fund and keep said fund invested, without distinction between principal and income, in securities which are at the time legal investments for fiduciaries under the Pennsylvania Fiduciaries Investment Act,[1] or as the same may be subsequently modified or amended.
[1]
Editor's Note: See 20 Pa.C.S.A. § 7301 et seq.
(3)
To sell property held in the fund at either public or private sale for cash or on credit at such times as it may deem appropriate; to exchange such property; to grant options for the purchase or exchange thereof.
(4)
To consent to and participate in any plan of reorganization, consolidation, merger, extension or other similar plan affecting property held in the fund; to consent to any contract, lease, mortgage, purchase, sale or other action by any corporation pursuant to any such plan.
(5)
To exercise all conversion and subscription rights pertaining to property held in the fund.
(6)
To exercise all voting rights with respect to property held in the fund and in connection therewith to grant proxies, discretionary or otherwise.
(7)
To place money at any time in a deposit bank deemed to be appropriate for the purposes of this plan no matter where situated, including in those in those cases where a bank has been appointed to serve as trustee hereunder, the savings department of its own commercial bank.
(8)
In addition to the foregoing powers, the employer shall also have all of the powers, rights, and privileges conferred upon trustees by the Pennsylvania Fiduciaries Investment Act, or as the same may be subsequently modified or amended, and the power to do all acts, take all proceedings and execute all rights and privileges, although not specifically mentioned herein, as the employer may deem necessary to administer the Pension Fund.
(9)
To maintain and invest the assets of this plan on a collective and commingled basis with the assets of other pension plans maintained by the employer, provided that the assets of each respective plan shall be accounted for and administered separately.
(10)
To invest the assets of the Pension Fund in any collective commingled trust fund maintained by a bank or trust company, including any bank or trust company which may act as a trustee hereunder. In this connection, the commingling of the assets of this plan with assets of other eligible, participating plans through such a medium is hereby specifically authorized. Any assets of the plan which may be so added to such collective trusts shall be subject to all of the provisions of the applicable declaration of trust, as amended from time to time, which declaration, if required by its terms or by applicable law, is hereby adopted as part of the plan, to the extent of the participation in such collective or commingled trust fund by the plan.
(11)
To make any payment or distribution required or advisable to carry out the provisions of the plan, provided that if a trustee is appointed by the employer, such trustee shall make such distribution only at the direction of the employer.
(12)
To compromise, contest, arbitrate, enforce or abandon claims and demands with respect to the plan.
(13)
To retain any funds or property subject to any dispute without liability for the payment of interest thereon, and to decline to make payment or delivery thereof until final adjudication is made by a court of competent jurisdiction.
(14)
To pay, and to deduct from and charge against the Pension Fund, any taxes which may be imposed thereon, whether with respect to the income, property or transfer thereof, or upon or with respect to the interest of any person therein, which the Fund is required to pay, to contest, in its discretion, the validity or amount of any tax, assessment, claim or demand which may be levied or made against or in respect of the Pension Fund, the income, property or transfer thereof, or in any matter or thing connected therewith.
(15)
To appoint any persons or firms (including but not limited to, accountants, investment advisors, counsel, actuaries, physicians, appraisers, consultants, professional Plan Administrators and other specialists), or otherwise act to secure specialized advice or assistance, as it deems necessary or desirable in connection with the management of the fund; to the extent not prohibited by applicable law, the employer shall be entitled to rely conclusively upon and shall be fully protected in any action or omission taken by it in good faith reliance upon, the advice or opinion of such persons or firms, provided such persons or firms were prudently chosen by the employer, taking into account the interests of the participants and beneficiaries and with due regard to the ability of the persons or firms to perform their assigned functions.
(16)
To retain the services of one or more persons or firms for the management of (including the power to acquire and dispose of) all or any part of the fund assets, provided that each of such persons or firms is registered as an investment advisor under the Investment Advisors Act of 1940,[2] is a bank (as defined in that act), or in an insurance company qualified to manage, acquire or dispose of pension trust assets under the laws of more than one state; in such event, the employer shall follow the directions of such investment manager or managers with respect to the acquisition and disposition of fund assets, but shall not be liable for the acts or omissions of such investment manager or managers, nor shall it be under any obligation to review or otherwise manage any fund assets which are subject to the management of such investment manager or managers. If the employer appoints a trustee, the trustee shall not be permitted to retain such an investment manager except with the express written consent of the employer.
[2]
Editor's Note: See 15 U.S.C.A. § 80b-20 et seq.
C.
Common investments. The employer shall not be required to make separate investments for individual participants or to maintain separate investments for each participant's account but may invest contributions and any profits or gains therefrom in common investments.
D.
Compensation and expenses of appointed trustee. If a trustee is appointed, the trustee shall be entitled to such reasonable compensation as shall from time to time be agreed upon by the employer and the trustee, unless such compensation is prohibited by law. Such compensation, and all expenses reasonably incurred by the trustee in carrying out his functions, shall constitute a charge upon the employer or the Pension Fund, which may be executed at any time after 30 days' written notice to the employer. The employer shall be under no obligation to pay such costs and expenses, and, in the event of its failure to do so, the trustees shall be entitled to pay the same, or to reimburse themselves for the payment thereof, from the Pension Fund.
E.
Periodic accounting. If a trustee is appointed, the Pension Fund shall be evaluated annually, or at more frequent intervals, by the trustee and a written accounting rendered as of each fiscal year end of the fund, and as of the effective date of any removal or resignation of the trustee, and such additional dates as requested by the employer, showing the condition of the Fund and all receipts, disbursements and other transactions effected by the trustee during the period covered by the accounting, based on fair market values prevailing as of such date.
F.
Value of the Pension Fund. All determinations as to the value of the assets of the Pension Fund, and as to the amount of the liabilities thereof, shall be made by the employer or its appointed trustee, whose decisions shall be final and conclusive and binding on all parties hereto, the participants and Beneficiaries and their estates. In making any such determination, the employer or trustee shall be entitled to seek and rely upon the opinion of or any information furnished by brokers, appraisers and other experts, and shall also be entitled to rely upon reports as to sales and quotations, both on security exchanges and otherwise as contained in newspapers and in financial publications.
A.
Amendment of the plan. The employer may amend this plan at any time or form time to time by an instrument in writing executed in the name of the employer under this municipal seal by officers fully authorized to execute such instrument and delivered to the Council; provided, however:
(1)
That no amendment shall deprive any participant or any beneficiary of a deceased participant of any of the benefits to which each is entitled under this plan with respect to contributions previously made;
B.
Termination of the plan. The employer shall have the power to terminate this plan in its entirety at any time by an instrument in writing executed in the name of the employer.
C.
Automatic termination of contributions. Subject to the provisions of the Act governing financially distressed municipalities, the liability of the employer to make contributions to the Pension Fund shall automatically terminate upon liquidation or dissolution of the employer, upon its adjudication as a bankrupt or upon the making of a general assignment for the benefit of its creditors.
D.
Distribution upon termination. In the event of the termination of the plan, all amounts of vested benefits accrued by the affected participants as of the date of such termination, to the extent funded on such date, shall be nonforfeitable hereunder. In the event of termination of the plan, the employer shall direct either: (1) that the Plan Administrator continue to hold the vested accrued benefits of participants in the Pension Fund in accordance with the provisions of the plan (other than those provisions related to forfeitures) without regard to such termination until all funds have been distributed in accordance with the provisions; or (2) that the Plan Administrator immediately distribute to each participant an amount equal to the vested accrued benefit to the date. If there are insufficient assets in the Pension Fund to provide for all vested accrued benefits as of the date of Plan termination, priority shall first be given to the distribution of any amounts attributable to mandatory or voluntary employee contributions before assets are applied to the distribution of any vested benefits attributable to other sources hereunder. All other assets attributable to the terminated Plan shall be distributed and disposed of in accordance with the provisions of applicable law and the terms of any instrument adopted by the employer which effects such termination.
E.
Residual assets. If all liabilities to vested participants and any others entitled to receive a benefit under the terms of the plan have been satisfied and there remain any residual assets in the Pension Fund, such residual assets remaining shall be returned to the employer insofar as such return does not contravene any provision of the law, and any remaining balance, in excess of employer contributions, shall be returned to the commonwealth.
F.
Exclusive benefit rule. In the event of the discontinuance and termination of the plan as provided herein, the employer shall dispose of the Pension Fund in accordance with the terms of the plan and applicable law; at no time prior to the satisfaction of all liabilities under the plan shall any part of the corpus or income of the Pension Fund, after deducting any administrative or other expenses properly chargeable to the Pension Fund, be used for or diverted to purposes other than for the exclusive benefit of the participants in the plan, their beneficiaries or their estates.
A.
Actuarial valuations. The plan's actuary shall perform an actuarial valuation at least biennially unless the employer is applying or has applied for supplemental state assistance pursuant to Section 603 of the Act, whereupon actuarial valuation reports shall be made annually. Such biennial actuarial valuation report shall be made as of the beginning of each plan year occurring in an odd-numbered calendar year, beginning with the year 1985. Such actuarial valuation shall be prepared and certified by an approved actuary, as such term is defined in the Act. The expenses attributable to the preparation of any actuarial valuation report or experience investigation required by the Act or any other expense which is permissible under the terms of the Act and which are directly associated with administering the plan shall be an allowable administrative expense payable from the assets of the Pension Fund. Such allowable expenses shall include, but not be limited, to the following:
(1)
Investment costs associated with obtaining authorized investments and investment management fees;
(2)
Accounting expenses;
(3)
Premiums for insurance coverage on fund assets;
(4)
Reasonable and necessary counsel fees incurred for advice or to defend the fund; and
(5)
Legitimate travel and education expense for pension plan officials; provided, however, that the municipal officials of the employer, in their fiduciary role, shall monitor the services provided to the plan to ensure that the expenses are necessary, reasonable and benefit the pension plan and, further, provided, that the Plan Administrator shall document all such expenses item by item, and where necessary, hour by hour.
B.
Duties of Chief Administrative Officer. Such actuarial reports shall be prepared and filed under the supervision of the Chief Administrative Officer. The Chief Administrative Officer of the plan shall determine the financial requirements of the plan on the basis of the most recent actuarial report and shall determine the minimum municipal obligation of the employer with respect to funding the plan for any given plan year. The Chief Administrative Officer shall submit the financial requirements of the plan and the minimum municipal obligation of the employer to the annually and shall certify the accuracy of such calculations and their conformance with the Act.
C.
Benefit modifications. Prior to the adoption of any benefit plan modification by the employer, the Chief Administrative Officer of the plan shall provide to the Council a cost estimate of the proposed benefit plan modification. Such estimate shall be prepared by an approved Actuary, which estimate shall disclose to the Council the impact of the proposed benefit plan modification on the future financial requirements of the plan and the future Minimum Municipal Obligation of the employer with respect to the plan.
[1]
Editor's Note: See 53 P.S. § 895.101 et seq.
A.
Employment rights. Participation in this plan shall not give any right to any employee to be retained in the employ of the employer nor shall it interfere with the right of the employer to discharge any employee and to deal with such employee without regard to the effect that such treatment might have upon participation in this plan.
B.
Meaning of certain words. As used herein the masculine gender shall include the feminine gender and the singular shall include the plural in all cases where such meaning would be appropriate. Headings of sections and subsections are inserted only for convenience of reference and are not to be considered in the construction of the plan.
C.
Information to be furnished by the employer. The employer shall furnish to the Plan Administrator (and where applicable, the trustee) information in the employer's possession as the Plan Administrator and the trustee shall require from time to time to perform their duties under the plan.
D.
Severability of provisions. Should any provisions of this plan be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining pats of the plan, and the plan shall be construed and enforced as if said illegal and invalid provisions had never been inserted herein.
E.
Incapacity of participant. If any participant shall be physical or mentally incapable of receiving or acknowledging receipt of any payment of pension benefits hereunder, the Plan Administrator, upon the receipt of satisfactory evidence that such participant is so incapacitated and that another person or institution is maintaining the participant and that no guardian or committee has been appointed for the participant, may provide for such payment of pension benefits hereunder to such person or institution so maintaining the participant, and any such payments so made shall be deemed for every purpose to have been made to such participant.
F.
Pension Fund for sole benefit of participants. The income and principal of the Pension Fund are for the sole use and benefit of the participants of this plan, and, to the extent permitted by law, shall be free, clear and discharged from and are not to be in any way liable for debts, contracts or agreements, now contracted or which may hereafter be contracted, and from all claims and liabilities now or hereafter incurred by any participant or beneficiary.
G.
Benefits for a deceased participant. If any benefit shall be payable under the plan to or on behalf of a participant who has died, if the plan provides that the payment of such benefits shall be made to the participant's estate, and if no administration of such participant's estate is pending in the court of proper jurisdiction, then the Plan Administrator, at its sole option, may pay such benefits to the surviving spouse of such deceased participant, or, if there be no such surviving spouse, to such participant's then living issue, per stirpes; provided, however, that nothing contained herein shall prevent the Plan Administrator from insisting upon the commencement of estate administration proceedings and the delivery of any such benefits to a duly appointed executor or administrator.
H.
Assets in Pension Fund. Nothing contained herein shall be deemed to give any participant or beneficiary any interest in any specific property of the Pension Fund or any right except to receive such distributions as are expressly provided for under the plan.
I.
Personal liability. Subject to the provisions of the Act and unless otherwise specifically required by other applicable laws, no past, present or future officer or agent of the employer or Plan Administrator shall be personally liable to any participant, beneficiary or other person under any provision of the plan.