§ 22-306. Retirement and Survivorship Benefit Options.

   (1)   Election of options. 86 Any member may at any time prior to retirement elect in writing one of the following options pursuant to which retirement benefits and survivorship benefits will be paid.

      Option 1 – The retired member will receive retirement benefits in the form of an annuity for life. If the retired member dies before having received retirement benefits equal to the amount of the retired member's total contributions, the balance of the member's contributions will be paid to the member's designated survivor as a survivorship benefit.

      Option 2 – The retired member will receive an actuarially reduced retirement benefit in the form of an annuity for life. If the retired member predeceases the member's designated survivor, a survivorship benefit which equals the member's retirement benefit will be paid to the member's designated survivor for the remainder of the survivor's life. Option 2 benefits shall be calculated so that the present value of Option 2 shall equal the present value of Option 1.

      Option 3 – The retired member will receive an actuarially reduced retirement benefit in the form of an annuity for life. If the retired member predeceases the member's designated survivor, a survivorship benefit which equals one-half (1/2) of the member's retirement benefit will be paid to the member's designated survivor for the remainder of the survivor's life. Option 3 benefits shall be calculated so that the present value of Option 3 shall equal the present value of Option 1.

      Option 4 – With respect to a member of Plan D, Plan J, Plan A, Plan B or Plan X and police and fire members of Plan '10 only, the retired member will receive retirement benefits in the form of an annuity for life. If the retired member elected this option or dies without having elected any option, one-half of the amount of the member's retirement benefit, without reduction, shall be paid to the member's surviving spouse or surviving Life Partner, provided that they were married or Life Partners at least two (2) years before retirement or the date on which a separated member became eligible to apply for retirement benefits. 87

      Option 5 – Under this option, the member shall choose one of Options 1 through 3 (or, if eligible, Option 4), and in addition, the member shall receive a partial lump sum benefit under the provisions of Section 22-312. The member's retirement benefits shall be governed by Section 22-312. This Option shall not be available to a member who at any time has elected to participate in the Deferred Retirement Option Plan under Section 22-310. A member who elected Option 5 and is subsequently rehired shall not, after such rehire, be eligible to elect Option 5 again, nor be eligible to participate in the Deferred Retirement Option Plan. 88

      Upon the death of the surviving spouse or surviving Life Partner, or if there is no surviving spouse or surviving Life Partner who qualifies under the previous paragraph, the retirement benefit shall be paid to the dependent children, either natural or adopted, of the deceased member; and to the dependent grandchildren, either natural or adopted, of the deceased member, if the deceased had court ordered or court sanctioned physical and legal custody of the dependent grandchild, until each child or grandchild attains age eighteen (18) or, if any such child or grandchild remains dependent because of physical or mental infirmity, the duration of the infirmity. If there is no eligible child or eligible grandchild, the retirement benefit shall be paid to the dependent parent or parents of the deceased. Upon election of the member at any time during the member's life, any benefit otherwise payable after the member's death to a child or eligible grandchild who remains dependent at the time of the member's death because of physical or mental infirmity may instead be paid to a trust for the benefit of that child or eligible grandchild, so long as the trust meets the following conditions:

         (a)   The beneficiary of the trust shall be irrevocable no later than the date of the election or death of the member, whichever occurs first;

         (b)   The trust must be a valid trust under Pennsylvania law or would be but for the fact that there is no trust corpus;

         (c)   The trust must be irrevocable;

         (d)   The beneficiaries of the trust must be identifiable from the trust instrument;

         (e)   A copy of the trust must be provided to the Pension Board within thirty (30) days of the date of the member's submission of the document designating the trust as a survivor; and

         (f)   In the case of an annual benefit to be paid monthly "for life" under this Ordinance, the determining life shall be the lifetime of the irrevocable beneficiaries of the trust.

      If there is no surviving spouse, surviving Life Partner, dependent child or eligible grandchild or parent who qualifies, and the member dies before receiving retirement benefits equal to his or her member contributions, the balance shall be paid to the member's beneficiary.

   (2)   Failure to choose option; members of plans not eligible for Option 4. If a member of Plan L, Plan Y, or Plan 16, or a member of Plan '10 who is a municipal employee or an elected official, retires without electing a retirement benefit option among Option 1, Option 2 and Option 3, the member shall receive retirement benefits without actuarial reduction except for early retirement under Section 22-303 (Optional Early Retirement Benefits). Upon the member's death, subject to the provisions of subsection (3), no further benefits will be paid. 89

   (3)   Failure to designate survivor. When a member of Plan A, Plan B, Plan L, Plan Y, Plan '10, or Plan 16 retires without designating any survivor and then dies, no further benefits will be paid; provided, however, that if such member is survived by a spouse or Life Partner to whom the member had been married or in a Life Partnership two (2) years or more, and with whom the member was either living at the time of death, or had one or more children who are under the age of eighteen (18) at the time of the member's death, the member shall be deemed to have designated such spouse or Life Partner as the survivor under Option 1. 90

   (4)   Change of option. Until retirement, a member may revoke the election of any option under this Section, and may elect any other option, except that only members of Plan D, Plan J, Plan A, Plan B, or Plan X and police and fire members of Plan '10 may elect Option 4. On retirement, subject to the provisions of Section 22-702 (Designation of Survivors), the last election of any of the foregoing options shall be irrevocable. 91

   (5)   Effect of designating impermissible survivor. Survivors shall be designated in accordance with the provisions of Section 22-702 (Designation of Survivors). If a member designates a survivor not within a permissible class, such designation shall be invalid and of no effect, and any survivor shall be determined in accordance with the provisions of Section 22-702 (Designation of Survivors). With respect to a member who had elected Option 1, any amount payable upon the death of such member shall be paid to the member's survivors, if any, in accordance with the provisions of Section 22-702. With respect to a member who had elected Option 2 or Option 3, the additional amount that would have been paid to the member during the member's lifetime, if the member had not elected Option 2 or Option 3, shall be paid to the member's survivors, if any, in accordance with the provisions of Section 22-702.

   (6)   Required minimum distribution. In no event may a member elect (or otherwise be entitled to) a form of benefit which is payable over a period that fails to satisfy the required distribution provisions of Section 401(a)(9) of the Tax Code, including the incidental benefit distribution requirements. 92

   (7)   Death benefits under USERRA. With respect to a death occurring on or after January 1, 2007, if a member dies while performing qualified military service (as defined in Section 414(u) of the Tax Code), the survivors of the member are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan as if the member had resumed and then terminated employment on account of death pursuant to Section 401(a)(37) of the Tax Code. Service credit shall include the period of a deceased member's qualified military service for purposes of determining death benefits under the Plan. This Section shall be construed in accordance with Section 401(a)(37) of the Tax Code, Internal Revenue Service Notice 2010-15 and any superseding/subsequent guidance. 93

 

Notes

86	Amended, Bill No. 060244 (approved June 8, 2006); amended, Bill No. 100007 (approved June 23, 2010).
87	Amended, Bill No. 100286 (approved June 23, 2010). See note 4 for effective date provisions. Amended, Bill No. 100780 (approved February 9, 2011). See note 4 for effective date provisions. Amended, Bill No. 130224 (approved May 8, 2013).
88	Added, Bill No. 110443 (became law September 15, 2011), effective December 14, 2011; amended, Bill No. 130224 (approved May 8, 2013).
89	Amended, Bill No. 100007 (approved June 23, 2010); amended, Bill No. 110836-A (approved December 21, 2011); amended, Bill No. 140743 (approved November 14, 2014). See note 28 for effective date provisions. Amended, Bill No. 161013 (approved December 9, 2016).
90	Amended, Bill No. 100286 (approved June 23, 2010). See note 4 for effective date provisions. Amended, Bill No. 130224 (approved May 8, 2013); amended, Bill No. 161013 (approved December 9, 2016).
91	Amended, Bill No. 100007 (approved June 23, 2010); amended, Bill No. 100286 (approved June 23, 2010). See note 4 for effective date provisions. Amended, Bill No. 100780 (approved February 9, 2011). See note 4 for effective date provisions.
92	Amended, Bill No. 150235 (approved May 20, 2015), effective January 1, 1963.
93	Amended, Bill No. 150235 (approved May 20, 2015). Section (2)(f) of Bill No. 150235 provides: "Section 22-306(7) is effective for deaths occurring on or after January 1, 2007."