[HISTORY: Adopted by the Council of the Borough of Lansdale
as indicated in article histories. Amendments noted where applicable.]
[Ordinance No. 1772, adopted 1-7-2009 (Ch. 27, Art. I, of the 1972 Code, by reference only), amended and restated the Borough of Lansdale Police Pension Plan in order to continue its compliance with the tax-exempt requirements of Internal Revenue Code of 1986, Section 401(a). The current version of the Police Pension Plan, and any subsequent amendments thereto, is on file in the Borough offices.]
[Adopted 10-21-2020 by Ord. No. 2020-1945]
The following definitions apply when used in this article:
The Borough of Lansdale.
Deferred retirement option plan.
Separate accounts created for the exclusive purpose of accepting
monthly pension checks of DROP participants while they are participating
in the DROP program.
The form prescribed by the Borough and Union upon which a
member or officer informs the Borough of his or her intent to participate
in the DROP program.
The program implemented by the Borough pursuant to which
certain members of the Borough's Police Department may establish DROP
accounts as described herein.
A police officer who has properly submitted a request to
participate in the DROP program which has been approved by the Borough
Council.
A duly-sworn full-time police officer employed by the Borough.
The Lansdale Borough Police Benevolent Association, which
is the duly recognized collective bargaining representative for all
nonmanagerial full-time and regular part-time employees of the Lansdale
Borough Police Department.
Effective as of January 1, 2015, police officers of the Lansdale
Borough Police Department that have not retired prior to the implementation
of the DROP program may enter into the DROP program on the first day
of any month following his or her satisfying the minimum age and service
requirements for a normal retirement pension benefit under the Police
Pension Plan. Police officers who have elected to receive a disability
pension prior to entering the DROP Program shall be ineligible and
deemed to have waived the option of participating in DROP. Once a
police officer commences participation in DROP, he or she may not
choose to end participation in DROP and resume contributions to the
Plan.
A.Â
A police officer electing to participate in the DROP program must
complete and file with the Borough Manager a drop option form, prepared
by the Borough, which shall evidence the officer's participation in
the DROP. The form must be signed by the police officer and notarized
and submitted to the Borough at least 30 days prior to the date on
which the officer wishes the DROP option to be effective. The submitted
DROP option form shall include an irrevocable notice to the Borough,
by the police officer, that the police officer shall resign from employment
with the Lansdale Borough Police Department effective on a specific
date ("the resignation date"). In no event shall the resignation date
be more than 24 months for officers retiring on or before December
31, 2020, and 48 months for officers retiring on or after January
1, 2021. A police officer shall cease to work for the Borough in any
capacity as of the resignation date, unless the Borough terminates
or honorably discharges the police officer prior to reaching the resignation
date.
B.Â
As a condition precedent to participation in DROP Program, a police
officer must acknowledge and agree in writing to hold the Borough
harmless for any consequences of the officer's decision to participate
in DROP, including but not limited to any tax consequences or implications
of DROP participation.
C.Â
In addition, all retirement documents required by the Police Pension
Plan and by the custodian and/or manager of DROP assets must be signed,
filed and presented to the Borough for approval of retirement and
payment of pension. Once a retirement application has been approved
by the Borough, it is irrevocable. The documentation that must be
executed before a police officer may participate in the DROP Program
shall include a provision releasing the Borough from any liability
with regard to DROP Participation and shall contain an acknowledgement
that any fees, commissions and administrative costs attributable to
DROP Program participation shall be the sole and exclusive responsibility
of the police officer.
A.Â
The effective date of the DROP notice shall be the date on which
the police officer indicates his or her enrollment in DROP (the "effective
date"), but under no circumstances may a police officer backdate his
or her enrollment form. After the effective date, the police officer
shall no longer earn or accrue additional years of continuous service
for pension purposes. A separate account shall be created to accept
the DROP participant's monthly pension check during the time period
that the police officer continues to be employed by the Lansdale Borough
Police Department ("DROP account").
B.Â
As a condition of DROP participation, the participant acknowledges
that he/she:
(1)Â
Shall be retired under the Police Pension Plan for the purpose of
calculating pension benefits and all compensation to be redeemed and/or
paid under the collective bargaining agreement upon a police officer's
retirement, but not for the purpose of employment with the Lansdale
Borough Police Department; and
(2)Â
Shall no longer earn or accrue additional years of continuous service
for pension purposes under the Police Pension Plan; and
(3)Â
Shall no longer be required to make contributions to the Police Pension
Plan; and
(4)Â
Shall not be eligible for any additional pension benefits other than the pension benefits calculated under § 68-25 below; and
(5)Â
Shall be permitted to continue to receive all other nonretirement
employee benefits and programs as set forth in the applicable collective
bargaining agreement.
For all retirement fund purposes, the length of service of a
police officer participating in the DROP shall remain as it existed
on the effective date of commencement of participation in the DROP
Program. Service thereafter shall not be recognized or used for the
calculation or determination of any benefits payable by the Police
Pension Plan. The monthly average salary of the police officer for
pension calculation purposes under the Police Pension Plan shall remain
as it existed on the effective date of commencement of participation
in the DROP Program. Earnings or increases in earnings thereafter
shall not be recognized or used for the calculation or determination
of any benefits payable by the Police Pension Plan.
While participating in the DROP program, a police officer shall
not contribute to the Police Pension Plan, regardless of the level
of contribution required to be made by officers who are not participating
in DROP.
A.Â
The monthly retirement benefits that would have been payable had
the police officer elected to cease employment and receive a normal
retirement benefit shall, upon the police officer commencing participation
in DROP, be paid into the separate account established to receive
the participant's monthly pension payments. This account shall be
designated the DROP account. An individual officer's DROP account
shall be invested, with the Borough having exclusive control over
the investment. Regardless of the investment vehicle selected by the
Borough, the Borough will guarantee a minimum rate of return of no
less than 0% and no more than 4.5%.
B.Â
By entering into the DROP, each participating officer holds the Borough
harmless for any tax, or other consequences of the DROP program or
the officer's participation therein.
Upon the resignation date set forth in the police officer's
DROP notice or such date as the Borough separates the participant
from employment, the retirement benefits payable to the police officer
or the police officer's designated beneficiary, if applicable, shall
be paid to the police officer or beneficiary and shall no longer be
paid to the police officer's DROP account. Within 30 days following
termination of a police officer's employment pursuant to his or her
participating in the DROP program, or as soon as practical thereafter,
the balance in the police officer's DROP account shall be paid to
the police officer in a single lump-sum payment or, at the police
officer's option, in any manner permitted by law. By participating
in the DROP, each officer agrees to hold the Borough harmless for
any tax or other consequences flowing from the officer's disposition
of the payout under this section.
A.Â
If a police officer becomes temporarily incapacitated during his
or her participation in DROP, that police officer shall continue to
participate in the DROP Program as if fully employed. The police officer
shall receive any disability pay to which he may be entitled in the
same amount (or not at all) as disabled police officers that are not
participating in the DROP Program. In no event shall a police officer
on temporary disability have the ability to draw from his DROP account.
B.Â
If a police officer becomes permanently disabled during the DROP
period, the officer shall be honorably discharged from employment
immediately and may obtain the contents of his DROP account. Thereafter,
if the underlying condition is the result of a work-related injury,
the police officer shall receive a disability pension benefit equal
to the pension benefit as calculated upon his entry into the DROP
Program. This disability pension benefit shall be in lieu of any other
disability pension benefit or salary continuation that may be available
to officers who have not elected to enter DROP. In addition, any DROP
payments shall cease immediately.
C.Â
Notwithstanding any other provision in this subsection, if a police officer is disabled and has not returned to work as of his required resignation date, then such resignation shall take precedence over all other provisions herein and said officer shall immediately resign. Additionally, nothing hereunder shall be construed as conferring any legal rights upon any police officer or other person to a continuation of employment, nor shall participation in the DROP program in any way supersede or limit the right of the Borough to suspend, demote or terminate an officer for just cause or to grant the officer an honorable discharge based upon a physical or mental inability to perform his or her duties as set forth in § 68-34 below.
If a DROP participant dies before the DROP account balances
are paid, the participant's designated beneficiary shall have the
same rights as the participant to withdraw or direct the account balance.
If a DROP participant is killed in the line of duty, the officer's
survivors, as that term is utilized under Act 600, shall receive the
killed-in-service benefit. However, under those circumstances, any
amounts in the participant's DROP account at the time of his or her
death shall be returned to the Borough's Police Pension Fund; and,
with the exception of the killed-in-service benefit, no other pension
benefit will be paid to the participant's account or his or her beneficiary.
For all nonpension postretirement benefits, all DROP participants
are treated the same as a nonretired police officer. Participation
in DROP shall not exceed more than 24 months for officers retiring
on or before December 31, 2020, and 48 months for officers retiring
on or after January 1, 2021, and DROP participants may withdraw from
the program at any time and terminate their employment without penalty.
DROP participants may also be terminated from employment as a police
officer for any reason that an active police officer could be terminated,
and participation in the DROP program establishes no new benefits
beyond what is specifically permitted herein.
Notwithstanding a police officer's participation in the DROP
Program, a police officer who is convicted or pleads guilty to engaging
in criminal misconduct which constitutes a "crime related to public
office or public employment," as that phrase is defined in Pennsylvania's
Pension Forfeiture Act, 43 P.S. §§ 1311 through 1314,
and interpreted thereunder, shall forfeit his right to receive a pension,
including any amounts currently deposited in the DROP account. In
such a case, the police officer shall only be entitled to receive
the contributions, if any, made by the police officer to the fund,
without interest.
Any amendments to the DROP Ordinance shall be consistent with
the provisions covering deferred retirement option plans set forth
in any applicable collective bargaining agreement and shall be binding
upon all future DROP participants and upon all DROP participants who
have balances in their deferred retirement option accounts. The DROP
Plan may only be amended by a written instrument, not by any oral
agreement or past practice.
This article shall be interpreted under the laws of the Commonwealth
of Pennsylvania. A police officer's election to participate in the
DROP Program shall in no way be construed as a limitation on the Borough's
right to suspend, demote or terminate an officer for just cause or
to grant the officer an honorable discharge based upon a physical
or mental inability to perform his or her duties. In addition, nothing
provided hereunder shall be construed as a change to the parties'
practice of calculating pensionable compensation, and, except for
the ability to establish a DROP account and participate in the DROP
program, nothing herein is intended to create new pension benefits
of any kind which did not exist as of January 1, 2015.
Participant(s) and the Union agree that it will indemnify and
hold harmless the Borough for any penalties, fines or costs imposed
or assessed by the United States Internal Revenue Service, the Pennsylvania
Department of Revenue, or any municipality or other governmental agency
or entity, which relate to the manner in which the parties have agreed
to treat DROP accounts as described herein. In the event that the
Auditor General determines that the Borough's DROP program is invalid
or not compatible with state law, the Union shall indemnify and hold
harmless the Borough from any costs, liabilities, lawsuits, etc.,
as a result of any such Auditor General determination. The Union also
agrees to pay the cost of reasonable attorneys' fees that the Borough
may incur in defending against any action instituted by a taxing authority
in connection with the payments made under the DROP program, including
the attorneys' fees that the Borough may incur in enforcing its right
to indemnification. As a condition of participation, DROP participants
acknowledge that the Borough has made no representations regarding
the manner in which DROP accounts must be treated for federal, state
or local tax purposes and that the Borough shall bear no responsibility,
financial or otherwise, for any tax consequences to the DROP participants.
