[Adopted 5-29-2008 by Ord. No. 2008-7]
The following definitions apply when used in this article:
DROP
Deferred retirement option plan.
DROP ACCOUNTS
Separate accounts created for the exclusive purpose of accepting monthly pension checks of DROP participants while they are participating in the DROP program.
DROP NOTICE
The form prescribed by the Township and union upon which a member or officer informs the Township of his or her intent to participate in the DROP program.
DROP PROGRAM
The program implemented by the Township and union pursuant to which certain members of the Township's Police Department may establish DROP accounts as described herein.
MEMBER or OFFICER
A duly-sworn full-time police officer employed by the Township.
PARTICIPANT
A member or officer who has properly submitted a request to participate in the DROP program which has been approved by the Township's Board of Commissioners.
UNION
The Caln Township Police Officers Association, which is the duly recognized collective bargaining representative for all nonmanagerial full-time and regular part-time employees of the Caln Township Police Department.
Effective January 1, 2008, members of the Caln Township 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 requirements for receipt of a normal pension benefit, which is rendering a minimum of 25 years of service and attaining at least the age of 52.
An officer electing to participate in the DROP program must submit a notarized statement to the Caln Township Board of Commissioners at least 30 days prior to the date on which the member wishes the DROP notice to be effective. The DROP notice shall constitute an irrevocable notice to the Township that the member shall resign from employment with the Caln Township Police Department effective on a specific date ("the resignation date"). In no event shall the resignation date be more than 36 months from the execution of the DROP notice. An officer shall cease to work for the Township in any capacity as of the resignation date, unless the Township terminates or honorably discharges the officer prior to reaching the resignation date. Additionally, all necessary documents required by the Township in order to process the officer's pension must be submitted to the Township in a timely manner.
The effective date of the DROP notice shall be the date on which the officer indicates his enrolment in DROP (the "effective date"), but under no circumstances may an officer "back date" his/her enrollment form. After the effective date, the 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 officer continues to be employed by the Police Department ("DROP account").
For all retirement purposes, continuous service of a participant in the DROP program shall remain as it existed on the effective date of the DROP notice. Service thereafter shall not be recognized or used for the calculation or determination of any postretirement benefits payable by Caln Township, including but not limited to service increments. The final average salary used for all pension calculation purposes shall remain as it existed on the effective date of the DROP notice. Any and all earnings or increases in compensation thereafter shall not be recognized or used for the calculation or determination of any postretirement or pension benefits payable by the Township or its police pension plan. The pension benefit payable to an officer shall increase only as a result of cost-of-living adjustments in effect on the effective date of the member's participation in the DROP program. The foregoing shall not be construed to require the Township to provide cost-of-living increases.
While participating in the DROP program, an officer shall not contribute to the police pension, regardless of the level of contribution required to be made by officers who are not participating in DROP.
The monthly retirement benefits that would have been payable had the member elected to cease employment and receive a normal retirement benefit shall, as of the first monthly pension benefit payable after the effective date of the DROP notice, be paid into a separate account established to receive the participant's monthly pension benefits. An individual officer's DROP account shall be directed by the individual officer. Accordingly, the officer shall bear the full responsibility for obtaining appropriate investment advice, as well as for the consequences of any investment of all or part of the contents of his/her DROP account. The DROP account established for each participating officer will be considered a tax-deferred account, and, as a result, will be subject to the withdrawal restrictions established under Section 401(a) of the Internal Revenue Code. As a condition of participation in the DROP program, both the union and the individual participating officers collectively and individually acknowledge that the Township shall have no responsibility for the financial impact and/or consequences of an officer's participation in DROP, including, but not limited to, the investment of the contents of an officer's DROP account, the performance of any such investments, or any tax consequences flowing from DROP participation.
Subject to the provisions of § 40-28 above, upon the resignation date set forth in the member's DROP notice or such date as the member withdraws or is terminated from the DROP program, retirement benefits payable to the member or the member's beneficiary, if applicable, shall be paid to the member or beneficiary and shall no longer be paid to the member's DROP account. Within 30 days following an officer's resignation date, the balance in the member's DROP account shall be paid to the officer in a single lump-sum payment, or at the officer's option, in any manner permitted by law.
If a member becomes temporarily disabled during his participation in DROP, the time period while on disability counts toward the thirty-six-month participation limit. A member shall receive disability pay in the same amount as disabled police officers that are not participating in DROP. In no event shall a member on temporary disability have the ability to draw from this DROP account. However, notwithstanding any other provision in this section, if an officer is disabled and has not returned to work as of the date of his required resignation, then such resignation shall take precedence over all other provisions herein and said officer shall immediately resign. In addition, if an officer's disability becomes permanent during the DROP period, he or she shall be honorably discharged from employment immediately, regardless of where in the DROP period his or her service stands. An officer participating in the DROP program who becomes permanently disabled as the result of a work-related condition shall be eligible to receive the fifty-percent disability pension benefit in lieu of future normal pension benefit payments. Nothing hereunder shall be construed as conferring any legal rights upon any police employee 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 Township to honorably discharge a police employee based upon an inability to perform his or her full duties as a police officer.
If a DROP member dies before the DROP account balances are paid, the member's legal beneficiary shall have the same rights as the member to withdraw the account balance. If a DROP member is killed in the line of duty, the officer's survivors, as that term is utilized in Act 600, shall receive the killed-in-service benefit. However, any amounts in the member's DROP account at the time of his/her death will be returned to the pension fund and, with the exception of the killed-in-service benefit, no other pension benefit will be paid to the member's account or his/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 a maximum of 36 months 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 by this agreement.
Notwithstanding an officer's participation in the DROP program, an officer who is convicted or pleads guilty to engaging in criminal misconduct which constitutes a "crime related to public office or public employment," as that phrase is defined in Pennsylvania's Pension Forfeiture Act, 43 P.S. §§ 1311 through 1314, shall forfeit his right to receive a pension, including any amounts currently deposited in the DROP account. In such a case, the member shall only be entitled to receive the contributions, if any, made by the member to the Township's Police Pension Fund, without interest.
Any amendments to the DROP plan 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. An officer's election to participate in the DROP program shall in no way be construed as a limitation on the Township's right to suspend or terminate an officer 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 December 31, 2007.
In the event that the DROP provision is declared invalid or illegal by a court of competent jurisdiction or through an administrative determination of the Office of the Auditor General, the union shall have the right to bargain in accordance with Act 111 over deletion of this benefit. It is expressly understood that this shall not involve bargaining over a replacement provision.
The union agrees that it will indemnify and hold harmless the Township 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 Township's DROP program is invalid or not compatible with state law, the Caln Township Police Officers Association shall indemnify and hold harmless the Township 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 Township 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 Township may incur in enforcing its right to indemnification under this Section. The union acknowledges on behalf of all officers and DROP-eligible participants that the Township has made no representations regarding the manner in which DROP accounts must be treated for federal, state or local tax purposes and that the Township shall bear no responsibility, financial or otherwise, for any tax consequences to the DROP participants. It is understood by the union that any such consequences, including any fines or penalties as well as any professional tax advice which may be appropriate, shall be the sole and exclusive responsibility of each DROP participant, and the union further agrees to inform its membership of the terms set forth in this Section.