[Adopted 5-29-2008 by Ord. No. 2008-7]
The following definitions apply when used in
this article:
Deferred retirement option plan.
Separate accounts created for the exclusive purpose of accepting
monthly pension checks of DROP participants while they are participating
in the DROP program.
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.
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.
A duly-sworn full-time police officer employed by the Township.
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.
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.
