(A) This section creates a benefit known as the planned retirement benefit. Any member who retired or entered DROP prior to July 3, 2013 is not eligible for this benefit. Effective May 2, 2018, there is hereby created a benefit to be known as the reformed planned retirement benefit. Any member who retired or entered DROP prior to May 2, 2018 is not eligible for the benefit. Any member who on or after May 2, 2018 becomes eligible for DROP due to an amendment to the plan and affirmatively elects participation in the reformed planned retirement benefit in lieu of DROP shall be permitted to participate in that benefit.
(B) In order to be eligible for the planned retirement benefit, a member must have submitted a form created for this purpose declaring the member's intent to participate at any time on or after reaching the member's normal retirement date but no later than May 1, 2018. After that date, to be eligible for the reformed planned retirement benefit, a member must have submitted a form created for that purpose declaring the member's intent to participate at any time on or after reaching the member's normal retirement date. The form will identify the maximum number of years the member may participate in planned retirement benefit or the reformed planned retirement benefit and the member's latest employment termination date based on the maximum number of years identified. The form to participate in the reformed planned retirement benefit will also require the member to make an irrevocable election of one of the following two options:
(1) During the period of participation in the reformed planned retirement benefit, continuation of contributions equal to 8% or 9.5%, as applicable, of the
member's compensation until termination of employment and, upon termination of employment, election of one of the distribution options set forth in this section for the planned retirement benefit; or
(2) During the period of participation in the reformed planned retirement benefit, contribution of 0.5% of the member's compensation until termination of employment, and upon termination, taking a lump sum that would be valued based on the number of years the member worked after electing the planned retirement benefit, the reformed planned retirement benefit, or combination of both.
(C) Effective May 2, 2018, members participating in the planned retirement benefit were deemed for all purposes to be participating in the reformed planned retirement benefit. No later than August 19, 2018, all such members shall have made the election described in division (B) of this section. Any member electing option (B)(2) shall also make an irrevocable election by that date of one of the three optional forms of distribution. If any member elected to take any portion of the planned retirement benefit as a lump sum upon termination, the member shall receive a refund equal to 7.5% or 9.0%, as applicable, of compensation and any contributions after the second full pay period following August 19, 2018 shall be at the rate of 0.5% of compensation.
(D) A member who elects to participate in the planned retirement benefit or the reformed planned retirement benefit shall not exceed 33 years of service with the city, including any time participating in the planned retirement benefit and the reformed planned retirement benefit, or a combination of the two benefits. A member may terminate employment any time prior to reaching the earlier of (i) the maximum participation period of eight years for the planned retirement benefit and the reformed planned retirement benefit, or a combination of the two benefits, or (ii) 33 years of service with the city.
(E) There are three methods of distribution of a member's interest in the planned retirement benefit, the reformed planned retirement, or a combination of the two benefits. The member may elect one of the following, which shall be calculated by the actuary for the plan:
(1) A maximum lump sum based on the number of years a member worked after electing the benefit; or
(2) A larger annuity based on the number of years a member worked after electing the benefit; or
(3) A combination of the two methods.
Member balances may be left in the plan until the required distribution date under the Internal Revenue Code. While they are left in the plan, gains/losses on such balances shall be calculated as provided in division (I) below.
(F) While participating in either the planned retirement benefit, the reformed planned retirement benefit, or a combination of the two benefits, the member shall continue to pay the applicable employee contribution until termination of employment.
(G) Members who have reached normal retirement eligibility and have submitted the required election form shall have the right to participate in the planned retirement benefit or the reformed planned retirement benefit, or a combination of both benefits, until the maximum period prescribed. This maximum period of participation may not be diminished or impaired.
(H) If a lump sum benefit is elected, it shall be calculated based upon the monthly values of the member's final pension annuity benefit determined using the member's creditable service, average final compensation, and multiplier as provided in the plan as of the beginning of the planned retirement benefit or reformed planned retirement benefit participation period, together with the appropriate measure of earnings as defined in this section.
(I) Investment earnings attributable to the lump sum benefit shall be calculated in arrears using the net investment rate earned by the pension fund for each month of creditable service worked during the planned retirement benefit participation period or the reformed planned retirement benefit participation period. The earnings shall be applied to the prior pension annuity balance including all prior months of creditable service and further including prior monthly earnings. The investment earnings shall be compounded monthly to determine the amount to be credited during each year of the planned retirement benefit participation period or the reformed planned retirement benefit participation period. The aggregate value of the monthly investment earnings will determine the amount of investment earnings to be credited for the planned retirement benefit participation period or the reformed planned retirement benefit participation period. In the case of the planned retirement benefit only, investment earnings shall be further calculated using the formula in division (J) below.
(J) In the case of the planned retirement benefit only, there shall be the following exclusions from earnings which shall be dependent on the funded ratio of the plan. The member will share in plan losses in those years in which plan earnings are negative. While the plan has a funded ratio of less than 80%, any year in which net plan earnings are greater than 4% (applied monthly at the rate of 0.327%), the next 2% of earnings (applied at the monthly rate of 0.165%) shall be excluded from the member's lump sum payment and retained by the plan. When the plan has a funded ratio of 80% but less than 90%, the retained earnings will decline to the first 1% in excess of net earnings of 4%. When the plan reaches a funded ratio of 90%, the exclusions shall cease. In any year in which the funded ratio declines below the benchmarks in this division, the exclusion shall resume at the rate appropriate to the funding level.
(K) If an eligible member who is participating in the planned retirement benefit dies during the participation period, the surviving spouse or, in the case of no surviving spouse, the beneficiary designated in writing by the member, shall make the election provided in division (E)(1) above with respect to the planned retirement benefits earned. If an eligible member who is participating in the reformed planned retirement benefit elects option (1) (continuation of the 8% or 9% contribution, as applicable) under division (B) above and dies during the participation period, the surviving spouse or, in the case of no surviving spouse, the beneficiary designated in writing by the member, shall make the election provided in division (B)(1) above with respect to the reformed planned retirement benefits earned.
(L) In the case of any member of the plan hired on or before July 15, 2009 and who becomes eligible for DROP, the member retains the right to continue participation in the planned retirement benefit or the reformed planned retirement benefit by electing to continue participation on a form and according to the procedures and timetables adopted by the Board.
(M) For any member who reached normal retirement date between October 1, 2011 and July 17, 2013, the time such member worked between the normal retirement date (on or after October 1, 2011) and the date the member submits the planned retirement benefit election form may be included in the member's planned retirement benefit participation period, provided the member shall not exceed the maximum period of participation set forth in division (D) above.
(N) Upon reaching DROP eligibility, Tier 1 members shall be eligible to participate in the DROP plan, with the Tier 1 member to select an entry date on or after the day the member attained (or attains) age 50 or completed (or completes) 23 years of credited service subject to the existing limitation of 33 years of service with the city. Any member who attained age 50 with ten years of credited service or completed 23 years of credited service before March 20, 2019 and who was not already participating in the reformed planned retirement benefit before March 20, 2019, who wants to participate retroactively in the DROP plan, must submit his or her irrevocable written election/decision within 60 days after March 20, 2019. Any member who attained age 50 with ten years of credited service or completed 23 years of credited service before March 20, 2019 and who was already participating in the reformed planned retirement benefit before March 20, 2019 and who wants to change from the reformed planned retirement benefit to the DROP plan must submit his or her irrevocable written election/decision within 60 days after March 20, 2019. No member shall receive any benefits from both the DROP and the reformed planned retirement benefit. Participants in the reformed planned retirement benefit who transition to DROP shall receive a return of the 0.5% employee contribution, which shall be added to the participant's DROP account.
(Ord. O-2013-14, passed 7-3-13; Am. Ord. O-2018-11, passed 6-20-18; Am. Ord. O-2019-08, passed 3-20-19)