[HISTORY: Adopted by the Board of Supervisors of Lower Frederick Township 2-7-2006 by Ord. No. 06-02. Amendments noted where applicable.]
There is hereby established in Lower Frederick Township, Montgomery County, Pennsylvania, a police pension fund to be maintained by a charge against each full-time member of the police participating in the fund, by annual appropriations made by the municipality, by payments made by the State Treasurer to the municipality from moneys received from taxes paid upon premiums by foreign casualty insurance companies for the purposes of pension retirement for policemen and by gifts, grants, devises or bequests granted to the pension and pursuant to § 17-4 hereof.
Such fund shall be under the direction of the Board and shall be applied for the benefit of such contributing members of the police force as shall receive honorable discharge therefrom by reason of age and service and for death and disability benefits as hereinafter provided.
The following terms, whenever used or referred to, shall have the following meaning. except in those instances where the context indicates otherwise:
- ACCRUED BENEFITS
- As of any given date, the benefit determined under § 17-8B, multiplied by a fraction, the numerator of which shall be the participant's total police service determined as of such date and the denominator of which shall be the total police service which would be credited to the participant as of his normal retirement date if he were to continue to be employed as a full-time permanent police officer with the employer until such date.
- The Municipal Pension Plan Funding Standard and Recovery Act, enacted as P.L. 1005, (Act 205 of 1984), as amended.
- An "approved actuary," as defined in the Act.
- ANNIVERSARY DATE
- January 1.
- AUTHORIZED LEAVE OF ABSENCE
- An unpaid, temporary cessation from active employment with the employer pursuant to an established nondiscriminatory policy, whether occasioned by illness, military service, or any other reason.
- The person to whom the share of a deceased participant's benefit is payable, subject to the restrictions of § 17-10.
- The Board of Supervisors of Lower Frederick Township, Montgomery County, Pennsylvania.
- BREAK IN SERVICE
- A plan year during which an employee has not completed more than 500 hours of service with the employer. An employee shall not incur a break in service for the plan year in which he becomes a participant, dies, retires or suffers total and permanent disability. Further, solely for the purpose of determining whether a participant has incurred a break in service, hours of service shall be recognized for authorized leaves of absence and maternity and paternity leaves of absence.
- CHIEF ADMINISTRATIVE OFFICER
- A person designated by motion of the Board of Supervisors.
- The Internal Revenue Code of 1986 and amendments thereto.
- With respect to any participant, means actual W-2 income from the employer for a plan year, including base pay, court pay, holiday pay, overtime pay, and any other remuneration.
- DEATH BENEFITS
- The benefit paid from the pension fund to the families of such members of the Police Department as may be killed in service, the amount and the commencement of the payments as outlined in § 17-10.
- The Township of Lower Frederick Township, Montgomery County, Pennsylvania.
- FORMER PARTICIPANT
- A person who has been a participant but who has ceased to be a participant for any reason.
- HOUR OF SERVICE
- Each hour for which an employee is paid, or entitled to payment, for the performance of duties.
- INSURER or INSURANCE COMPANY
- A legal reserve life insurance company, licensed in the Commonwealth of Pennsylvania, which shall issue a policy or contract under this plan.
- LIFE ANNUITY
- A series of payments under which payments, once begun, continue throughout the remaining lifetime of the annuitant.
- MONTHLY AVERAGE SALARY
- The average monthly salary earned by the participant and paid by the employer during the final 36 months immediately preceding retirement, which are included in the averaging period.
- Lower Frederick Township, Montgomery County, Pennsylvania.
- NORMAL RETIREMENT AGE
- The age at which each participant shall be entitled to his normal retirement benefit provided he retires on or after his normal retirement date.
- NORMAL RETIREMENT BENEFIT
- The benefit paid from the pension fund to members of the Police Department as shall receive honorable discharge, provided he retires on or after his normal retirement date.
- Any eligible employee who has become a member of the plan by satisfying § 17-6, and has not for any reason become ineligible to participate further in the plan.
- PARTICIPANT ACCOUNT
- The total amount contributed by a participant to this plan or its predecessor, plus interest credited at a uniform rate determined by the municipality.
- PENSION FUND
- The police pension fund administered under the terms of this plan and which shall include all money, property, investments, policies and contracts standing in the name of the plan.
- The Lower Frederick Township Police Pension Plan.
- PLAN ADMINISTRATOR
- The benefits counselor appointed upon motion of the Board of Supervisors to administer the provisions of the plan. In the event that no such appointment is made, the Plan Administrator shall be the Board of Supervisors.
- PLAN YEAR
- The plan's accounting year of 12 months commencing on January 1 of each year and ending the following December 31 (also applicable prior to the effective date of this plan).
- POLICE OFFICER
- A municipal employee who holds a position or an office in the Police Department of the municipality and has retirement coverage provided by the police pension plan. A full-time police officer is one who customarily works at least 40 hours in a week and 40 weeks in a year or the comparable hours as found in the police employment contract.
- Base pay, excluding overtime and other extraordinary remuneration.
- TERMINATION OF EMPLOYMENT
- Discontinuance of active employment for reasons other than death, total and permanent disability or retirement.
- TOTAL AND PERMANENT DISABILITY
- A physical or mental condition of a participant resulting from bodily injury, disease, or mental disorder which renders him incapable of continuing his usual and customary employment with the employer. A physician chosen by the employer shall make any such determination.
- TOTAL POLICE SERVICE
- The total period of continuous employment with the employer and shall be measured in terms of years of credited service and fractions thereof. For purposes of this section, a police officer's employment shall not be deemed to have been interrupted by any periods of authorized leave of absence. In the event a police officer does not return to employment within the specified period following an authorized leave of absence, termination of employment shall be deemed to have occurred when he originally left the service of the employer.
- The Board of Supervisors of Lower Frederick Township.
- UNFUNDED LIABILITY
- The present value of any participant's benefits accrued prior to the enactment of this plan by virtue of his/her prior service with the municipality.
- The portion of a participant's account that is nonforfeitable.
- YEAR OF SERVICE
- The computation period of 12 consecutive months of continuous employment during which a police officer works full time. Unless specified elsewhere, the computation period shall be the plan year.
- YEAR OF CREDITED SERVICE
- Completion of a year of service with the employer as a police officer eligible for coverage under this plan. No years of credited service shall be given for any period during which participant contributions are required as a condition of participation in this plan, unless the police officer makes such contributions in accordance with the plan. Years of credited service shall include completed years and fractions thereof.
The Board shall administer the plan established pursuant to this chapter by such regulations as shall from time to time be necessary for the effective maintenance of the plan, provided that no regulation shall be contrary to the statutes of the Commonwealth of Pennsylvania and/or applicable federal regulations.
The Board shall keep a record of all its proceedings and acts which shall relate to the plan and shall keep all such books of accounts, records, and other data as shall be necessary for the proper administration of the plan.
All such reasonable expenses incurred in the administration of the plan, including but not limited to fees for the services of specialists including actuaries, accountants, and legal counsel, shall be approved by the Board and may be paid by the pension fund, provided that no such payment shall be contrary to the statutes of the Commonwealth of Pennsylvania.
Funding. Participants shall pay into the fund monthly an amount equal to 5% of their compensation. The Township, at its sole choice and option, and expense, may elect to pay into the fund monthly the required 5% on behalf of each participant. If the Township chooses to make such payment, such payment will replace the 5% that each participant is required to pay into the fund. The Township reserves the right to terminate such payments at any time, at which point each participant will again be required to pay into the fund monthly an amount equal to 5% of their compensation. The aforesaid contributions, together with the other sources of revenue as herein provided, shall be devoted exclusively to the purposes of this plan.
[Amended 6-2-2008 by Ord. No. 08-02]
Application of state aid. Applications of General Municipal Pension System State Aid, or any other amount of state aid received in accordance with the Act, which are received by the employer and deposited into the pension fund governed by this plan, shall be used as follows:
Employer contributions. The remainder of the needed annual contributions determined by the actuary in accordance with the Act, other application of state aid and participant contributions shall become the obligation of the employer and shall be paid into the pension fund by annual appropriations.
The police pension fund is hereby authorized to take by gift, grant, devise or bequest any money or property, real, personal or mixed, in trust, for the benefit of such funds, and the care, management, investment and disposal of such trust funds or property shall be vested in the Board, and the said trust fund shall be governed by regulations prescribed by the Board subject to such directions not inconsistent therewith as the donors of such funds and property may prescribe.
If an actuarial study shows that the condition of the police pension fund is such that payments into the fund by members may be reduced below the minimum percentage above prescribed, or eliminated, contributions by the municipality will not be required to keep the fund actuarially sound. The Board of Supervisors may, on an annual basis, by resolution, reduce or eliminate payments into the fund by members.
Any member who, for any reason whatsoever, shall be ineligible to receive a pension upon the termination of his employment as a police officer of the municipality after having contributed any charges to the fund established pursuant to this plan shall be entitled to a refund of all moneys paid by him into such fund plus 5% simple annual interest immediately upon the termination of such employment in the following manner:
If the termination of his employment is due to death, the face amount of any and all annuity or life insurance policies providing for death benefits shall be paid to his designated beneficiary or, in the absence thereof, to his estate, in accordance with the terms of the said policies. All annuity policies issued on his account but containing no death benefits shall be cashed forthwith and the proceeds thereof shall become a part of the general assets of the pension fund. No payments in addition to the foregoing will be made on behalf of a deceased member under this subsection except to the extent that his participant account shall exceed the face value of the annuity or life insurance policies providing for death benefits.
If the termination of his employment is due to total and permanent disability, the amount of any monthly income payments provided through disability income insurance policies, if any, shall be paid in accordance with the terms of said policies. All annuity policies issued on his account but containing no death benefits shall be cashed forthwith and the proceeds thereof shall become part of the general assets of the pension fund and used along with any insurance payments to provide the disability pension under § 17-9. No payments in addition to the foregoing will be made on behalf of a deceased member under this subsection.
If the termination of employment as a municipality police officer shall be due to any reason other than his death or total and permanent disability, all annuity or life insurance policies purchased on his account shall be cashed by the municipality. However, such former member shall, immediately upon the cashing of said policies, be paid out of the cash proceeds thereof the value of his participant account, and the balance of the cash proceeds shall become a part of the general assets of the pension fund.
[Amended 7-6-2010 by Ord. No. 10-02]
Each police officer who is full-time employee as defined by the plan shall become a participant in the plan on the effective date of this section. Any police officer who is either hired as a full-time employee or becomes a full-time employee shall become a participant in the plan on the date he or she is hired or the date his or her status is changed to full-time employee.
A participant shall have a vested interest according to the following schedule:
A participant shall be vested 100% immediately, regardless of his years of total police service, if he shall be honorably discharged from the Police Department by reason of total and permanent disability from permanent injuries incurred in-service. Vesting under this subsection occurs only if the officer receives permanent injuries while performing authorized duties in his official capacity as a police officer for Lower Frederick Township.
In order to become entitled to benefits, a participant shall have a minimum period of total police service not less than an aggregate of 25 years with the municipality Police Department and shall have attained the age of 55 years, after which he shall be eligible for retirement from active duty, and such participants as are retired shall be subject to service from time to time, as a police reserve, until unfit for such service, when they shall be finally discharged by reason of age or disability.
The basis for determining any pension payable following retirement of any participant meeting the service and age qualifications above provided shall be as follows: monthly pension or retirement benefits shall be computed at 1/2 the monthly average salary of such member during the last 36 months of employment.
Should any participant, before completing normal retirement age and service requirements but after having completed 12 years of total service, for any reason cease to be employed as a full-time police officer by the municipality, he shall be entitled to vest his accrued benefit by filing with the municipality within 90 days of the date he ceases to be a full-time police officer a written notice of his intention to vest. Upon reaching the date which would have been his normal retirement date if he had continued to be employed as a full-time police officer, he shall be paid a partial retirement allowance determined by applying the percentage his total police service bears to the total police service which he would have rendered had he continued to work until his normal retirement date to the gross pension, using, however, the monthly average salary during the appropriate thirty-six-month period prior to his termination of employment.
Payments made under the provisions of this plan shall not be charged against any other fund in the treasury of this municipality or under its control.
Military service benefit. Any police officer employed by the municipality who has been a regularly appointed employee for a period of at least six months and who thereafter shall enter into the military service of the United States shall have credited to his employment record for purposes of determining retirement benefits under this plan all of the time spent by him in such military service, provided that such police officer returns to his employment with employer within six months after his separation from the service.
Annuity. The standard form of annuity at retirement shall be a life annuity.
In addition to the pension or retirement benefits as provided for in § 17-8, there shall be a disability pension per § 17-7B, for such members of the Police Department as shall receive honorable discharge therefrom by reason of disability, if said injury occurs during such time as they shall be in-service.
The benefit must be in conformity with a uniform scale and fixed by the plan’s governing document at no less than 50% of the member’s salary at the time the disability was incurred, reduced by the amount of Social Security disability benefits received for the same injury.
[Amended 7-6-2010 by Ord. No. 10-02]
Disability insurance in an amount necessary to cover the risk may be purchased by the Board.
Widows' and children's benefits shall be determined as follows:
In case of the death of a nonvested participant, from any cause whatsoever, during such time as he shall be actively employed as a member of the municipality Police Department, his designated beneficiary or his estate, as the case may be, shall receive such death benefits as are hereinafter prescribed by policies of life insurance and shall not be entitled to any other benefits from the police pension fund.
A lifetime survivor’s benefit must be provided to the surviving spouse (or if no spouse survives or if he or she subsequently dies, the child or children under 18 years of age or if attending college, under or attaining the age of 23) at no less than 50% of the pension the member was receiving or would have been entitled to receive had he been retired at the time of death. (“Attending college” shall mean the eligible children are registered at an accredited institution of higher learning and are carrying a minimum course load of seven credit hours per semester.)
[Amended 7-6-2010 by Ord. No. 10-02]
In case of the death of a vested participant during such time as he shall be actively employed on a full-time basis as a member of the municipality Police Department, said surviving spouse or children shall be entitled to receive the death benefits as are prescribed by policies of life insurance, if any. If a member is killed in service, the Chief of Police shall, within 90 days of the date of death, submit certification of such death to the Commonwealth of Pennsylvania to comply with the requirements of 53 P.S. § 891, and to take such other action as is necessary to allow member's beneficiaries to collect the killed-in-service benefit provided for by the Commonwealth in 53 P.S. § 891 et seq.
[Amended 11-8-2017 by Ord. No. 17-02]
The trust will consist of all funds held by the trustee, including the contributions, investments, reinvestments and proceeds thereof. The trust shall be held, managed, and administered in trust pursuant to the terms hereof. The trustee hereby accepts the trust created hereunder and agrees to perform the duties assigned to it hereunder. Except as otherwise expressly provided for, the trustee has exclusive authority and discretion to manage and control the trust assets.
The trustee shall invest and reinvest the principal and income of the fund and keep the fund invested, without distinction between principal and income, in such individual or group annuity contract, certificate of deposit, securities, and/or other investments as the trustee shall deem acceptable.
Life insurance and endowment policies. The municipality may continue to pay premiums for policies issued by an insurer prior to January 1, 1986. The municipality shall be the owner of all such policies and shall retain all rights of ownership, including but not limited to all rights of cashing, converting and electing options thereunder. All life insurance policies shall be surrendered upon a participant's retirement, and the cash surrender value proceeds thereof shall become a part of the general assets of the pension fund.
Actuarial valuations. The plan's actuary shall perform an actuarial valuation at least biennially unless the employer is applying or has applied for supplemental state assistance pursuant to Section 603 of the Act, whereupon actuarial valuation reports shall be made annually.
Such actuarial valuation shall be prepared and certified by an approved actuary, as such term is defined in the Act.
The expenses attributable to the preparation of any actuarial valuation report or experience investigation required by the Act or any other reasonable expense which is permissible under the terms of the Act and which directly associate with administration of the plan shall be an allowable administrative expense payable from the assets of the pension fund.
Duties of Chief Administrative Officer. Such actuarial reports shall be prepared and filed under the supervision of the Chief Administrative Officer.
Benefit plan modifications. Prior to the adoption of any benefit plan modification by the employer, the Chief Administrative Officer of the plan shall provide to the Board of Supervisors a cost estimate of the proposed benefit plan modification. Such estimate shall be prepared by an approved actuary, which estimate shall disclose to the Board the impact of the proposed benefit plan modification on the future financial requirements of the plan and the future minimum obligation of the employer with respect to the plan.
Intent and interpretation. The pension plan is created for the exclusive benefit of the police employees of the municipality and shall be interpreted in a manner consistent with it being an employees' trust.
Construction. The plan is not to be construed as creating or changing any contract of employment between the municipality and its employees, and the municipality retains the right to deal with its employees and to terminate their employment at any time to the same extent as though these plans had not been created. Nothing in this plan shall be construed as limiting the right of the municipality to change the compensation of any employee at any time.
Severability. If any section, subsection, sentence, clause, phrase or portion of this plan is for any reason held invalid or unconstitutional by any court of competent jurisdiction, such portion shall be deemed a separate, distinct and independent provision and such holdings shall not affect the validity of the remaining portions hereof.
Nonassignability of pension payments. The pension payments herein provided for shall not be subject to attachment, execution, levy, garnishment or other legal process and shall be payable only to the member or his designated beneficiary and shall not be subject to assignment or transfer.
Nondeprivation of participation rights. No person participating in the police pension plan, who becomes entitled to receive a benefit therefrom shall be deprived of his right to an equal proportionate share therein upon the basis upon which he first became entitled thereto.
Appointment of actuary. The Board may, upon motion, appoint an actuary to examine the fund from time to time for compiling a report for submission to any agency of the commonwealth and shall fix his/her compensation to be paid from this pension fund.
Amendment of the plan. The municipality may amend this plan at any time or from time to time by an instrument in writing, executed in the name of the municipality by officers duly authorized to execute such instrument; provided, however:
That no amendment shall deprive any participant or any beneficiary of a deceased participant of any of the benefits to which he is entitled under this pension plan with respect to contributions previously made;
That no amendment shall provide for the use of funds or assets held under this pension plan other than for the benefit of employees and no funds contributed to this pension plan or assets of this pension plan shall, except as may be allowed by the Act, ever revert to or be used or enjoyed by the employer; and
That no amendment to the pension plan that provides for a benefit modification shall be made unless the cost estimate has been prepared and presented to the Board of Supervisors in accordance with the Act.
Termination of the plan. The employer shall have the power to terminate this pension plan in its entirety at any time by an instrument in writing, executed in the name of the municipality by officers duly authorized to execute such instrument, and shall be done in accordance with the provisions of Act 205 and any other applicable laws and/or statutes. In the event of the termination of the plan, all amounts of vested benefits accrued by the affected participants as of the date of such termination, to the extent funded on such date, shall be nonforfeitable herein.
Transfer of assets. The assets of the Township Pension Fund already contributed by and/or on behalf of eligible participants, as defined hereinabove, shall be convened to cash or transferred in kind to be rolled over to become a part of the general assets of the Police Pension Fund established herein. Such assets will be available to the eligible participants to the extent and on the terms as herein stated and allowed under Act 600 or according to the amounts already vested up to the time of this chapter and the terms herein; if there is any difference between return due to the officer, the officer may elect such terms which are more favorable to the officer within 30 days of the termination of said officer's employ. This shall be at the election of the officer; otherwise all disbursements to eligible participants shall be as required by Act 600 and as authorized in this chapter. The eligible participants shall lose no previously vested rights but shall proceed under Act 600 henceforth.