(a) Normal Retirement. Each participant shall be entitled to normal retirement benefits after retirement on or after the participant has attained normal retirement age.
(b) Normal Retirement Benefit. Each participant who becomes entitled to a benefit pursuant to subsection (a) hereof shall receive a benefit paid monthly in an amount equal to fifty percent of the participant's final monthly average salary, as determined herein.
(c) Late Retirement. A participant may continue to work 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 subsection (a) hereof continues to work beyond normal retirement age, there shall be no retirement benefits paid until employment ceases and retirement begins. The retirement benefit of a participant who retires after the attainment of normal retirement age shall be calculated in accordance with subsection (b) hereof on the basis of the final monthly average salary as of such participant's actual retirement date.
(d) Service Increment. Notwithstanding anything contained herein to the contrary, a participant who retires after completion of at least twenty-six years of aggregate service may be entitled to receive a monthly service increment benefit, provided, however, that the participant shall have accrued sufficient service credit pursuant to this subsection. Such service increment shall only be available to a participant who retires on a retirement date after the attainment of normal retirement age and whose aggregate service, for purposes of this subsection, shall only include periods of time when the participant actively renders service in employment and shall not include any period of time during which the participant received a disability benefit under the terms of this Plan or was not otherwise in active employment. Such service increment shall be an amount equal to one hundred dollars ($100.00) for each completed year of aggregate service in excess of twenty-five years, but shall not exceed one hundred dollars ($100.00), and shall be paid monthly in addition to the amount of normal retirement benefit calculated pursuant to subsection (b) hereof.
(e) Payment of Benefits. Retirement benefit payments shall be payable as of the first day of the month coincident with or next following the participant's retirement date and the first day of each month thereafter during the participant's lifetime. A participant must complete an application for benefit, in the manner prescribed by the Plan Administrator, and deliver such application to the Plan Administrator at least thirty days prior to the date on which benefit payments shall commence. Notwithstanding anything contained herein to the contrary, no retirement benefit payments nor any other payments shall be due or payable on or before the first day of the month coincident with or next following the date that is thirty days after the date the Plan Administrator receives the application for benefits. Payment of benefits hereunder shall cease as of the date of death of the participant.
(f) Cost-of-Living Adjustments.
(1) Each participant who has retired or who shall retire after December 31, 1987, and who receives a retirement benefit determined pursuant to subsection (b) hereof, shall be entitled to receive a cost-of-living adjustment to the amount of benefit payable to such participant under subsections (b) and (d) hereof. Such cost-of-living adjustment shall be determined by Council and shall not exceed the percentage increase in the Consumer Price Index for the year in which the participant was last employed as an employee of the employer. Further, the total retirement benefits payable under this Plan shall not exceed seventy-five percent of the participant's final monthly average salary; the total cost-of-living increase shall not exceed thirty percent; and the cost-of-living adjustment shall not impair the actuarial soundness of the Pension Fund.
(2) Act 64 of 2002 - ad hoc benefit adjustment. Act 64 of 2002, which amends Act 147 of 1988, was signed into law June 19, 2002. This law requires that pension plans covering police provide an ad hoc benefit adjustment for retirees whose benefits began before January 1, 1996. The increase is the sum of the following:
A. Base adjustment of fifteen cents ($0.15) times the number of whole years of active service times the number of whole years retired (as of January 1, 2001); and
B. Longevity adjustment equal to the base adjustment times the longevity factor. The longevity factor is .025 times the number of whole years retired (as of January 1, 2001) plus .05 times the number of whole years retired (as of January 1, 2001).
(Ord. 2306. Passed 9-16-02.)
(g) Maximum Benefit Limitations.
(1) Notwithstanding any provision of this Plan to the contrary, no benefit provided under this Plan attributable to contributions of the employer shall exceed, as an annual amount, the lesser of:
A. The amount specified in Code Section 415(b)(1)(A), as adjusted pursuant to Code Section 415(d), which amount shall be one hundred twelve thousand, two hundred twenty-one dollars ($112,221) as of the restatement date of this Plan, assuming the form of benefit shall be a straight life annuity (with no ancillary benefits); or
B. One hundred percent of the participant's average compensation for the participant's high three years.
(2) The limitations described in paragraph (g)(1) hereof shall be governed by the following conditions and definitions:
2003 Replacement
A. "Compensation" shall include the participant's wages, salaries and fees for personal services actually rendered in employment, to the extent the amounts are includable in gross income, and shall exclude contributions made by the employer to a plan of deferred compensation, to the extent that, before the application of Code Section 415 limitations to that plan, the contributions are not includable in the gross income of the employee for the taxable year in which contributed; exclude distributions from a qualified plan of deferred compensation; and exclude other amounts which receive special tax benefits, such as premiums for group term life insurance, to the extent not includable in the gross income of the employee, or contributions made by the employer (whether made under a salary reduction agreement or not) to the purchase of an annuity contract pursuant to Code Section 403(b).
B. Benefits paid or payable in a form other than a straight life annuity (with no ancillary benefits), or where the employee contributes to the Plan or makes rollover contributions, shall be adjusted on an actuarially equivalent basis to determine the limitation contained herein.
C. In the case of a benefit which commences prior to the attainment of age sixty-two by the participant, the limitation set forth in paragraph (g)(1)A. hereof shall be adjusted on an actuarially equivalent basis to the amount determined pursuant to paragraph (g)(1)A. hereof commencing at age sixty-two. However, the reduction shall not reduce the limitation below seventy-five thousand dollars ($75,000) for a benefit commencing at or after age fifty-five, or, if the benefit commences prior to the attainment of age fifty-five, the amount which is actuarially equivalent to a benefit of seventy-five thousand dollars ($75,000) commencing at age fifty-five. However, in the case of a qualified participant (a participant with respect to whom a period of at least fifteen years of service, including applicable military service, as a full-time employee of a police or fire department, is taken into account in determining the amount of benefit), the limitation contained herein shall not reduce the limitation set forth in paragraph (g)(1)A. hereof to an amount less than sixty-two thousand, three hundred forty-five dollars ($62,345) as of the restatement date of this Plan, and such amount shall be adjusted pursuant to Code Section 415(d);
D. In the case of a benefit which commences after the attainment of age sixty-five by the participant, the limitation set forth in paragraph (g)(1)A. hereof shall be adjusted on an actuarially equivalent basis to the amount determined pursuant to paragraph (g)(1)A. hereof commencing at age sixty-five.
E. Benefits paid to a participant which total less than ten thousand dollars ($10,000) from all defined benefit plans maintained by the employer, expressed as an annual benefit, shall be deemed not to exceed the limitation of this paragraph, provided that the employer has not, at any time, maintained a defined contribution plan in which the participant has participated. However, in the case of a participant with fewer than ten years of participation, the limitation expressed in this paragraph shall be reduced by one-tenth for each year of participation less than ten, but in no event shall this limitation be less than one thousand dollars ($1,000).
F. The limitations expressed herein shall be based upon Plan years for calculation purposes, shall be applied to all defined benefit plans maintained by the employer as one defined benefit plan and to all defined contribution plans maintained by the employer as one defined contribution plan, and shall be applied and interpreted, consistent with Code Section 415 and regulations thereunder, as applicable to government plans in general and this Plan in particular.
(h) Deferred Retirement Option Plan (DROP).
(1) Eligibility. Effective October 22, 2007, members of the Ellwood City Borough Police Department who have not retired prior to the implementation of the DROP may enter into DROP on the first day of any month following completion of 25 years of credited service and attaining the age of 50. Those members of the Ellwood City Borough Police Department hired after September 19, 2018, may enter into DROP on the first day of any month following completion of 25 years of credited service and attaining the age of 55.
(2) Written Election. A member of the Police Department electing to participate in the DROP must complete and execute a "DROP Option Form" prepared by the Borough of Ellwood City, which shall evidence the member's participation in the DROP, and designation of the Individual DROP Account, with all applicable information necessary to enable the plan administrator to ensure payment of benefits into the Individual DROP Account. The form must be signed by the member and notarized and submitted to the Borough 30 days prior to the date on which the member wishes the DROP option to be effective. The DROP option notice shall include an irrevocable notice to the ownership, by the member, that the member shall resign from employment with the Ellwood City Police Department effective on a specific date (the "resignation date"). In no event shall the resignation date be shorter than 12 months or longer than 48 months from the execution of the DROP option form. An officer shall cease to work as an Ellwood City Borough Police Officer on the officer's resignation date, unless the employer terminates or honorably discharges the officer prior to the resignation date. In addition, all retirement documents required by the Police Pension Administrator must be filed and presented to the Borough for approval of retirement and payment of pension. Once a retirement application has been approved by the Police Pension Administrator, it is irrevocable. If DROP participant is re-employed by the Borough, participant may not re-enroll in any DROP Program.
(3) Limitation on Pension Accrual. After the effective date of the DROP option, the member shall no longer earn or accrue additional years of continuous service for pension purposes.
(4) Benefit Calculation. For all retirement Fund purposes, continuous service of a member participating in the DROP shall remain as it existed on the effective date of commencement of participation in the DROP. Service thereafter shall not be recognized or used for the calculation or determination of any benefits payable by the Borough of Ellwood City Police Pension Fund. The average applicable compensation of the member for pension calculation purposes shall remain, as it existed on the effective date of commencement of participation in the DROP. Earnings or increases in earnings thereafter shall not be recognized or used for the calculation or determination of any benefits payable by the Pension Fund. The pension benefit payable to the members 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 or by applicable cost of living adjustments granted thereafter.
(5) Payments to the DROP Account. The monthly retirement benefits that would have been payable had the member elected to cease employment and receive a normal retirement benefit, shall, upon the member commencing participation in DROP, be paid into the separate account established to receive the participant's monthly pension payments (Individual DROP Account).
(6) Accrual of Non-Pension Benefits. After an officer elects to participate in the DROP program, all other contractual benefits shall continue to accrue with the exception of those provisions relating to the Police Pension Plan and the buyback of accrued, but unused, sick, compensatory or vacation time. Prior to participating in the DROP program, an officer may request payment for any accrued but unused sick or vacation time which the employer would be obligated to buyback from the officer upon retirement. An officer may utilize leave time during the DROP period, but the employer shall not be required to buyback any such unused leave time at the end of the DROP period.
(7) Payout. Upon the termination date set forth in the member's drop option notice or such date as the employer separates the member from employment, the retirement benefits payable to the member or member's beneficiary, if applicable, shall be paid to the member or beneficiary and shall no longer be paid to the member's Individual DROP Account. Within 45 days following termination of a member's employment pursuant to their participating in the DROP program, the balance in the members' Individual DROP Account shall be paid to the member in a single lump sum payment or at the member's option, in any fashion permitted by law, including, but no limited to transfer of joint ownership of the Individual DROP Account by the employer to employee.
(8) Disability During DROP. If a member becomes temporarily disabled during his participation in DROP, his participation freezes and the time period while on disability does not count towards the 48 month participation limit. Upon return to duty, membership in DROP shall resume, continuing with the remaining time left in the 48 month membership period. The 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 his DROP account. However, notwithstanding any other provision in this paragraph, 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 be required to resign. Nothing contained in this Plan 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 supersede or limit in any way the right of the employer to honorably discharge a police employee based upon an inability to perform his or her full duties as a police officer.
(9) Death. If a DROP member dies before the DROP account balances are paid, the participant members' legal beneficiary shall have the same rights as the member to withdraw the account balance.
(10) Forfeiture of benefits. Notwithstanding an officer's participation in the DROP Plan, an officer who is convicted or pleads guilty to engaging in criminal misconduct which constitutes a "crime related to public office or public employment," as that phrase is defined in Pennsylvania's Pension Forfeiture Act, 43 P.S. §§ 1311 - 1314, shall forfeit his right to receive a pension, including any amounts currently deposited in the DROP Account. In such a case, the member shall only be entitled to receive the contributions, if any made by the member to the Fund, without interest. Remaining monies shall be returned to the Police Pension Plan in accordance with law.
(11) Account Manager. The employee shall designate the Individual DROP Account. The employer and the Police Wage and Policy Committee further agree that the employer shall not be responsible for any fees pertaining to the account, investment loss incurred in the plan or for the failure of any investment to earn a specific or expected return or to earn as much as any other opportunity, whether or not such other investment opportunity was offered or available to participants in the plan.
(12) Cost of Management for DROP Program. The Police Wage and Policy Committee and the employer agree that any costs or fees associated with the management of the DROP Program, with the exception of those amounts which would have been expended in connection with calculation and payment of a superannuation retirement benefit, accounts shall be paid directly from the Police Pension Fund and not by the employer. The Police Wage and Policy Committee and the Employer agree that any costs or fees associated with the management of an Individual DROP Account accounts shall be paid directly by the employee and not by the employer. The account shall bear interest from 0% to not more than 4.5% annually.
(13) Amendment. 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. The DROP Plan may only be amended by a written instrument, not by any oral agreement or past practice.
(14) Effective Date. The Effective Date of the changes in this Ordinance is January 1, 2007; however, the implementation of the DROP program will be provided as in this division.
(15) Construal of Provisions. An Officer's election to participate in the DROP program shall in no way be construed as a limitation on the Employer'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.
(16) Severability. The provisions of this division shall be severable: and if any of its provisions shall be held to be unconstitutional or illegal, the validity of any of the remaining provisions of the division shall not be affected thereby. It is hereby expressly declared as the intent of the Employer Council that this division would have been adopted had such unconstitutional or illegal provision or provisions not been included herein.
(17) Annual Report. No later than 60 days after the close of each fiscal year, the Actuary shall produce a report setting out the pension system's experience regarding the DROP through and including the most recent fiscal year. The report shall set out, on an annual basis and from inception, the number of persons enrolled in the DROP, the number of persons to have retired after entry into the DROP, the average length of enrollment in the DROP, the average lump sum payment made to such persons, the breakdown of enrollees and retirees and by years of employment with the Borough, and such other data as the Borough deems relevant to determining the efficacy of the DROP in terms of either its cost-effectiveness or as a management tool.
(18) This subsection (h) is eliminated for any/all officers hired after September 20, 2021.
(i) Required Distributions.
(1) Notwithstanding any other provision of this Plan, the entire benefit of any participant who becomes entitled to benefits prior to his or her 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 designated beneficiary).
If a participant who is entitled to benefits under this Plan dies prior to the date when his or he entire interest has been distributed to him or her after distribution of his or her benefits has begun in accordance with paragraph (h)(1)B. hereof, the remaining portion of such benefit shall be distributed at least as rapidly as under the method of distribution being used under paragraph (h)(1)B. hereof, as of the date of his or her death.
(2) If a participant who is entitled to benefits under this Plan dies before distribution of his or her benefit has begun, the entire interest of such employee shall be distributed within five years of the death of such employee, unless the following sentence is applicable: 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 begin not 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, then for purposes of the five-year rule set forth in the preceding sentence, the benefit payable to the beneficiary shall be treated as distributed on the date on which such distributions begin. However, notwithstanding the preceding sentence, 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 seventy and one-half. Further, if the surviving spouse dies before the distributions to such spouse begin, this paragraph shall be applied as if the surviving spouse were the employee.
(3) For purposes of this subsection, the following definitions and procedures shall apply:
A. "Required beginning date" means April 1 of the calendar year following the later of the calendar year in which the employee attains age seventy and one-half or the calendar year in which the employee retires.
B. "Designated beneficiary" means 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. The life expectancy of an employee and/or an employee's spouse (other than in the case of a life annuity) may be redetermined, but not more frequently than annually.
(j) Assignment of Benefits. The pension benefit payments prescribed herein shall not be subject to attachment, execution, levy, garnishment or other legal process, shall be payable only to the participant or designated beneficiary and shall not be subject to assignment or transfer.
(k) Retired Participants. Any participant who has retired prior to the restatement date shall not have the benefit altered in any way by the provisions of this amended and restated Plan, except where otherwise expressly provided herein. Such retired participants shall continue to have their benefits governed by the terms of the Plan in effect on the day preceding the restatement date.
(Ord. 2137. Passed 3-15-93; Ord. 2454. Passed 9-20-10; Ord. 2552. Passed 11-19-18; Ord. 2591. Passed 11-15-21.)