Township of Warminster, PA Part 5 Police Pension Plan

§ 1-501 Definitions; word usage.

[Ord. 631, 7/28/2005, Art. I]

1. As used in this Part 5, the following terms shall have the meanings indicated:

AGE

The age attained by the employee at his or her last birthday.

ANNIVERSARY DATE

Any January 1 after the effective date.

AVERAGE APPLICABLE COMPENSATION

The average monthly earnings of the member at any time of reference computed over the last 36 months (or such shorter period as represents the member's total period of continuous employment by the Township) of his continuous employment by the Township prior to such date of reference. For purposes of computing average applicable compensation, actual monthly earnings shall include base wage pay or salary, overtime pay, vacation pay, longevity increment pay, shift differential, holiday pay, educational increment pay, sick pay, incentive pay, court time and on-call pay as well as any other direct monetary compensation, excluding, however, reimbursed expenses, nonmonetary compensation such as fringe benefits paid by the Township and other payments made in lieu of expenses.

[Amended by Ord. 732, 8/18/2016; Ord. 734, 10/16/2016]

Board

The Board of Supervisors of the Township of Warminster.

CHIEF ADMINISTRATIVE OFFICER

The person who has primary responsibility for the execution of the administrative affairs of this pension plan, or the designee of that person.

COMPENSATION

Includes base wage pay or salary, overtime pay, vacation pay, longevity increment pay, shift differential, holiday pay, court time and on-call pay, as well as any other direct monetary compensation, excluding, however, reimbursed expenses, nonmonetary compensation such as fringe benefits paid by the Township, and other payments made in lieu of expenses.

EARLY RETIREMENT DATE

The first day following the date on which the member completes 20 years of service.

EFFECTIVE DATE

The effective date of this Part 5 shall be January 1, 2005.

EMPLOYEE

Any sworn police officer in the full-time employ of the Township Police Department whose customary employment is for not less than 40 hours a week.

FUND

All assets held by the trust under the trust agreement relating to this Police Pension Plan.

MEMBER

Any sworn police officer in the full-time employ of the Township Police Department who has satisfied the eligibility requirements established in § 1-502 hereof and who is, at the time of reference, or has, prior to their elimination, been making such contributions as may be required pursuant to § 1-503, Subsection 1, hereof.

NORMAL RETIREMENT DATE

For members hired before January 1, 2016, the first day following the date on which the member completes 25 years of service, and the date on which the member attains the age of 50. For members hired on or after January 1, 2016, "normal retirement date" shall mean the first day following the date on which the member completes 25 years of service, and the date on which the member attains the age of 54.

[Amended by Ord. 732, 8/18/2016]

PLAN

The Police Pension Plan for the Township of Warminster, as herein set forth and as the same may hereafter be amended.

PLAN YEAR

A period of 12 consecutive months commencing on any January 1 and ending on the following December 31.

SERVICE

The aggregate of a member's total periods of employment as a full-time employee of the Township. If a member enters military service, either voluntarily or by conscription, after he has been employed for at least six months, such time spent in the Armed Forces of the United States during a period of wartime or general military conflict shall be counted as service for purposes of the plan, provided that such member returns to police service with the Township within six months after his discharge or release from such active duty in the Armed Forces of the United States. The time spent in military service due to voluntary extension of such military service during a period of peacetime shall not be included as service for the purposes of this plan. Time spent on Reserve or National Guard training shall be included as service for purposes of this plan.

TOTAL AND PERMANENT DISABILITY

Any condition arising from service-connected illness or injury which precludes an employee from performing the duties associated with the normal occupational requirements of a police officer as certified by a physician designated by the Township.

TOWNSHIP

The Township of Warminster, Bucks County, Commonwealth of Pennsylvania.

TRUSTEE

The Board of Supervisors of the Township of Warminster or any other agency or person appointed by such to serve in that capacity as set forth in the trust agreement.

2. Wherever applicable as used herein, unless the context specifically provides otherwise, the singular and plural shall be interchangeable, and the masculine and feminine pronoun shall include either sex.

§ 1-502 Eligibility.

[Ord. 631, 7/28/2005, Art. II]

1. All persons who are employees (as defined in this plan) as of the effective date hereof shall be a member as of the effective date.

2. Any person who becomes an employee after the effective date hereof shall become a member on the first day of service as an employee.

§ 1-503 Contributions.

[Ord. 631, 7/28/2005, Art. III]

1. Contributions by members. Members shall pay into the fund at a rate of 5% of compensation. "Compensation" for this purpose shall be as defined in § 1-501 of the plan. The Board may, on an annual basis, by ordinance or resolution, reduce or eliminate payments into the fund by members. Individual records of contributions by members shall be maintained, including all interest credited to his individual account. Interest to be credited shall be 4% compounded annually. Interest shall be credited from the end of the plan year in which paid to the last day of the month after which a refund becomes payable.

2. Refund of member's contributions. Any member who for any reason shall be ineligible to receive a pension after having made contributions shall be entitled to a refund of his individual account balance; such refund is payable immediately upon discontinuance of his employment with the police force or within a reasonable time (not more than 45 days after discontinuance). If such discontinuance is due to death, then such refund shall be paid to his designated beneficiary or, in the absence thereof, to his estate. If the disabled or retired member is receiving a benefit by reason of disability or retirement, then the refund payable to the beneficiary is equal to the individual account balance at the date of disability or retirement, less any pension payments made to the member.

3. Deposits. Contributions by members shall be remitted to the trustee monthly.

4. State aid. The portion of the payments made by the State Treasurer to the Township and designated by the Board to be allocated to the Police Pension Fund from money received from taxes paid upon premiums by foreign casualty insurance companies for purposes of pension retirement or disability benefits for policemen shall be used as follows:

A. To reduce the unfunded liability or after such liability has been fully funded.

B. To apply against the annual obligation of the Township for future service costs or to the extent that the payment may be in excess of such obligations.

C. To reduce member contributions pursuant to Subsection 1 hereof.

5. Township contributions. Subject to the provisions and limitations set forth in other sections of this plan, the Township shall contribute the amounts certified to be necessary by the fund's actuary to provide the benefits provided by this plan.

6. Nonintervening military buyback. The plan provides for full service credit for each year of military service or fraction thereof, not to exceed five years, to a member who was not employed by the Township prior to such military service, payable by the member. The member shall pay the amount for the purchase of credit for military service other than intervening military service, which shall be computed by applying the average normal cost rate for the plan as certified by the Public Employee Retirement Study Commission, but not to exceed 10%, to the member's average annual rate of compensation over the first three years of service and multiplying the result by the number of years and fractional part of a year of creditable nonintervening military service being purchased, together with the interest at the rate of 4 3/4% compounded annually from the date of initial entry into service to the date of payment. A member of the plan shall be eligible to receive service credit for intervening or nonintervening military service, provided that he is not entitled to receive, eligible to receive then or in the future, or is receiving retirement benefits for such service under a retirement system administered and wholly or partially paid for by any other governmental agency, with the exception of a member eligible to receive or who is receiving military retirement pay earned by a combination of active duty and nonactive duty with a Reserve or National Guard component of the armed forces, which retirement pay is payable only upon the attainment of a specified age and period of service under 10 U.S.C. Ch. 1223 (relating to retired pay for nonregular service).

[Amended by Ord. 737, 1/19/2017]

7. Other contributions. The fund shall be authorized to receive, by gift, grant, devise or bequest, any money or property, real, personal or mixed, in trust for the benefit of the fund. The trustee of the fund shall be subject to such directions, not inconsistent with this plan, as the donors of such funds and property may prescribe.

§ 1-504 Retirement benefits.

[Ord. 631, 7/28/2005, Art. IV]

1. Normal retirement.

A. Each member may retire on or at any time after his normal retirement date. Any member so retiring shall be entitled to receive a monthly pension commencing as of the first day following his date of actual retirement and ending with the payment made as of the first day of the month in which his death occurs. The monthly pension to which such retired member shall be entitled to under this plan shall be equal to 50% of such member's average applicable compensation.

B. In addition to the monthly retirement benefit described above, each member who has completed 26 years of service shall receive an additional monthly pension benefit equal to a maximum of $100 per month.

2. Early retirement benefit. Each member may retire on or at any time after his early retirement date. Upon termination, the member must file with the Secretary of the Township a written notice of his intention to elect an early retirement benefit. This benefit shall become effective as of the date of the notice or the date designated in the notice, whichever is later. The amount of the early retirement benefit shall be the actuarial equivalent of a vested retirement benefit as computed in § 1-506, Subsection 1A. The actuarial equivalent of the vested retirement benefit shall be determined by actuarially reducing the vested retirement benefit to reflect that it will commence on the effective date of the early retirement rather than on the member's normal retirement date. The actuarial reduction shall be calculated using the actuarial assumptions reported in the last actuarial valuation report filed with the Public Employee Retirement Commission.

3. Postponed retirement. An employee shall be allowed to continue as an employee beyond his normal retirement date. In such case, the employee shall remain a member of the plan until he actually retires or ceases to be an employee. Any contributions required pursuant to § 1-503, Subsection 1, hereof shall continue.

4. If a member retires because of a total and permanent disability, he shall be entitled to receive a pension benefit equal to the greater of 50% of his average applicable compensation, or 50% of his salary at the time the disability was incurred. The pension benefit shall be reduced by any social security benefit received by the member for the same injury. The benefit will commence on the first day of the month following the month in which he retires. The Board reserves the right to require disabled member to present evidence of total and permanent disability and of the continuance of such permanent disability and of the continuance of such condition from time to time, and further reserves the right to require members to submit to medical examinations by practitioners selected by the Board as a precondition to the continued payment of benefits.

[Amended by Ord. 732, 8/18/2016]

5. Cost-of-living adjustment. Each March, there shall be a cost-of-living adjustment provided to a member who is retired or disabled and who has been receiving benefits for 12 months or longer, inclusive of March 1 of the year in which the increase is to be made; provided, however, that such cost-of-living increase shall not exceed 5% or the percentage increase in the All Urban Consumers CPI for the Philadelphia metropolitan area, whichever is less; provided, further, that in no case shall the total police pension benefits exceed 75% of the salary for computing retirement benefits; provided, further, that the total cost-of-living increase shall not exceed 30%. No cost-of-living increase(s) shall be granted which would impair the actuarial soundness of the plan. All adjustments shall be made in March and calculated on the twelve-month percentage change in the consumer price index as of the previous December.

§ 1-505 Death benefits.

[Ord. 631, 7/28/2005, Art. V]

1. Death benefit if no surviving spouse nor dependent children. If a member dies prior to the commencement of pension benefits, then his designated beneficiary shall be entitled to a refund of his accumulated member's contributions with credited interest. If no beneficiary survives, then the refund is payable to the member's estate.

2. Pension benefit to surviving spouse and dependent children.

A. If a member dies survived by a spouse or dependent children, after having become eligible to receive a pension benefit (i.e., he was eligible because he was already receiving a pension; he met the age and service requirements, but he had not yet retired), then a monthly pension benefit shall be provided.

B. The amount of the monthly pension benefit shall be 50% of the pension the member was receiving or would have been entitled to receive if he had been retired at the time of his death.

C. In the event a member dies after completing 12 or more years of service but was not yet eligible for normal retirement or preretirement survivor benefits, the surviving spouse shall act on behalf of the member in selecting the alternative addressed in § 1-506, Subsection 1A. If a vested benefit is selected, the surviving spouse shall receive 50% of the member's vested monthly benefit commencing on the first day of the month following the member's normal retirement date.

D. In the event a member dies after completing 20 or more years of service but was not yet eligible for normal retirement or preretirement survivor benefits, the surviving spouse shall act on behalf of the member in selecting the alternative addressed in § 1-504, Subsection 2. If an early retirement benefit is selected, the surviving spouse shall receive 50% of the member's monthly early retirement benefit commencing on the first day of the month following the election of this benefit.

E. The monthly pension benefit is payable to the surviving spouse until death, then to surviving dependent children under the age of 18 years or, if attending college, under or attaining the age of 23 years. "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. "Dependent children" shall include adopted children and any child conceived before the time of the member's death and thereafter born to the member's spouse.

3. Preretirement survivor benefit. In the event a member is killed in service, the Township shall submit a certification of such death to the Commonwealth within 90 days of such death. The member's family shall receive the benefits provided for and subject to the terms of Act 51 of 2009, which benefits are paid exclusively by the Commonwealth of Pennsylvania with the exception of any pension befit to which the member was entitled prior to the police employee's death, solely by virtue of the member's service with the Township (i.e., either a normal, early or vested pension benefit). It is understood that "family" shall refer to the surviving spouse and dependent children. The benefit is payable to the surviving spouse until death then to the surviving dependent children under the age of 18 years, or if attending college, under or attaining the age of 23 years.

[Amended by Ord. 732, 8/18/2016]

§ 1-506 Severance of employment.

[Ord. 631, 7/28/2005, Art. VI]

1. If a member leaves the employ of the Township or ceases to be a member, whether by reason of his transfer, resignation or discharge or by reason of disability or retirement other than after becoming eligible for benefits pursuant to §§ 1-504 and 1-505 of this plan, he shall be entitled to a refund of all contributions made by him and then on deposit in the fund, plus interest thereon, computed at the rate described in § 1-503, Subsection 1. However, a member who has completed 12 or more years of service may elect either Subsection 1A or B as described below:

A. Upon reaching the date which would have been his superannuation retirement date if he had continued to be employed as a full-time police officer, a member may elect to be paid a partial superannuation retirement allowance determined by applying the percentage his years of service bears to the years of service which he would have rendered had he continued to work until his superannuation retirement date to the gross pension, using the monthly average salary during the thirty-six-month period prior to his termination of employment.

[Amended by Ord. 732, 8/18/2016]

B. He may elect to receive a refund of all contributions made by him and then on deposit in the trust fund, plus interest thereon, computed at the rate described in § 1-503, Subsection 1. If he elects to receive the refund of his contributions, plus interest, he would forfeit the pension benefit outlined in Subsection 1A.

§ 1-507 Distribution of benefits.

[Ord. 631, 7/28/2005, Art. VII]

1. Refund benefits becoming distributable pursuant to § 1-506, Subsection 1, and death benefits becoming distributable pursuant to the provisions of § 1-505, Subsection 1, shall be paid in the form of a lump-sum distribution.

2. The normal form of all benefits payable hereunder shall be a pension for the life of the member commencing on the date specified and ending with a payment made on the first day of the month in which the member dies; subject, however, to the payment of a death benefit calculated pursuant to § 1-505, Subsection 2.

§ 1-508 Management of fund.

[Ord. 631, 7/28/2005, Art. VIII]

1. It is the duty of the trustee to pay the benefits to members and their beneficiaries, as provided in §§ 1-504, 1-505 and 1-506, in accordance with the instructions received from the Board; provided, however, that the duty of the trustee to make such payments is wholly contingent upon the sufficiency of the fund for such purposes.

2. The Board may employ an actuary, investment advisors, counsel, or other professional consultants from time to time in connection with the operation of the fund or of this plan. Such persons or entities shall be compensated by the Township at such rates as may be agreed upon by the Board. Such compensation may be paid from the fund.

3. The Board may, by an instrument in writing, appoint one or more persons as an investment manager and may delegate to an investment manager, from time to time, the power to manage and control the investment of any plan asset.

A. Each person appointed shall be:

(1) An investment advisor registered under the Investment Advisors Act of 1940;[1]

[1] Editor's Note: See 15 U.S.C. § 80b-1 et seq.

(2) A bank as defined in that Act; or

(3) An insurance company qualified to manage, acquire or dispose of any asset of the plan under the laws of more than one state.

B. Each investment manager shall acknowledge, in writing, that it is a fiduciary with respect to the plan. The Board shall enter into an agreement with each investment manager specifying the duties and compensation of such investment manager and other terms and conditions under which such investment manager shall be retained. The Board shall not be liable for any act or omission of any investment manager and shall not be liable for following the advice of any investment manager with respect to any duties delegated to the investment manager.

C. The Board shall have the power to determine the amount of fund assets to be invested pursuant to the direction of a designated investment manager and to set investment objectives and guidelines for the investment manager.

4. The trustee shall make an annual determination of the fair market value of the fund as of the anniversary date and as of such additional dates as the Board may direct. The fair market value of the fund shall be reported to the actuary, who shall calculate the amount to be contributed to the fund by the Township with respect to each plan year in accordance with the assumptions most recently adopted by the Board for the purpose of such computations; provided, however, that the liability of the Township to make such contributions is subject to all of the conditions and limitations set forth elsewhere in this plan.

§ 1-509 Administration of plan.

[Ord. 631, 7/28/2008, Art. IX]

1. The plan shall be administered by the Board of the Township of Warminster. The Board shall make and adopt rules and regulations for the efficient administration of the plan.

2. The Board shall keep all data, records and documents pertaining to the administration of the plan and shall execute all documents necessary to carry out the provisions of the plan and shall provide all such data, records and documents to the professionals whose services are employed pursuant to § 1-508, Subsection 2, of this plan.

3. The Board shall construe the plan, shall determine any questions of fact arising under the plan and shall make all decisions required of it under the plan. Decisions and actions taken thereon in good faith shall be final and conclusive. It may correct any defect or supply any omission or reconcile any inconsistency in such manner and to such extent as it shall deem expedient to carry the plan into effect, and it shall be the sole judge of such expediency. The Board shall act uniformly with respect to matters coming before it concerning employees in similar circumstances.

4. The members of the Board, and each of them, shall be free of all liability for any act or omission, except by willful misconduct or gross negligence, and each of them shall be fully indemnified by the Township against all judgments not involving findings of their respective personal or collective willful misconduct or gross negligence and against all costs, including counsel fees, incurred in defense of actions brought against them.

5. The Board shall make available to members, retired members and terminated members, and to their beneficiaries, for examination during business hours, such records as to pertain to the person examining.

6. To enable the Board to perform its function, the Township administration shall supply full and timely information to it on all matters relating to the pay of all members, their retirement, death, termination of employment and such other pertinent facts as the Board may require.

7. The Board shall enact such rules and regulations for the conduct of its business and for the administration of the plan as it may consider desirable, provided the same shall not be in conflict with any of the provisions of the plan. All actions of the Board shall be taken at meetings at which at least three members shall be present, or by written resolutions concurred in by not less than three of its members. Written minutes shall be kept of the meetings and action of the Board.

8. The Secretary, acting on behalf of the Board, shall have the power to execute all documents necessary to carry out the actions of the Board, and any person, partnership, corporation or government agency shall accept such documents over such signature or signatures as if executed by the Board.

§ 1-510 Township obligations and responsibilities.

[Ord. 631, 7/28/2005, Art. X]

1. It is the expectation of the Township that it will continue this pension plan indefinitely and will, from time to time, contribute to the fund such amounts as may be needed to provide the benefits set forth in the plan.

2. The provisions of any ordinance establishing, amending, or maintaining the plan shall not be a charge on any other fund in the treasury of the Township or under its control, save the Uniformed Employee's Pension Fund herein provided for.

3. Nothing contained in the plan shall be held or construed as a contract or guarantee of employment nor to create any liability upon the Township to retain any person in its service. The Township reserves the full right to discontinue the service of any person without any liability, except for salary or wages that may be due and paid, whenever, in its judgment, its best interests so require, and such discontinuance shall be without regard to this plan.

§ 1-511 Termination or amendment of plan.

[Ord. 631, 7/28/2005, Art. XI]

1. The Township may amend this plan from time to time as is necessary to maintain its actuarial soundness and to incorporate changes in plan benefits or entitlements. However, no amendment shall be made which will, in any manner, divert any part of the fund to any purpose other than the exclusive benefit of members or their beneficiaries (except that, upon termination, such diversion may be made after all of the fixed and contingent liabilities to members and their beneficiaries have been met), nor shall any amendment be made at any time which will in any manner divest any benefit then vested in a member or reduce or eliminate a benefit to which a member has been given an expectation by virtue of pension ordinance or pension calculations for retiring officers who retired during the member's participation in this plan.

2. In the event of termination of this plan, the Board shall allocate the assets then remaining in the fund as follows:

A. Sufficient funds shall be maintained to provide the pension benefits prescribed in § 1-503 for all members who have retired prior to termination or who are eligible for retirement at the time of the termination of this fund.

B. Contributions with interest at a rate established by the Board as provided in § 1-505 shall be refunded to any and all members who terminate service at the time of the termination of the fund.

C. Of the remaining funds, those which can be identified as municipality contributions or contributions other than from members or from the commonwealth allocation shall be distributed as the Board sees fit, provided that such distribution is in compliance with § 1-508.

D. All funds in excess of the funds described in Subsection 2A, B and C above shall be returned to the commonwealth as unused funds pursuant to the Act of May 12, 1943, P.L. 259, as amended, 72 P.S. § 2263.1 et seq.

§ 1-512 Miscellaneous provisions.

[Ord. 631, 7/28/2005, Art. XII]

1. No benefit under this plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, or encumbrance, nor to seizure, attachment, or other legal process, for the debts of any member or member's beneficiary. This provision shall not apply to a qualified domestic relations order, defined in Section 414(p) of the Internal Revenue Code, and those other domestic relations orders permitted to be so treated by the Board under the provisions of the Retirement Equity Act of 1984. The Township shall establish a written procedure to determine the qualified status of domestic relations orders to administer distributions under such qualified orders. Further, to the extent provided under a qualified domestic relations order, a former spouse of a member shall be treated as the spouse or surviving spouse for all purposes under this plan.

[Amended by Ord. 737, 1/19/2017]

2. Any person dealing with the Township may rely upon a copy of this plan and any amendments thereto certified to be true and correct by the trustee.

3. In no circumstances, whether upon amendment or termination of this plan or otherwise, shall any part of the fund be used or diverted to any purpose other than the exclusive benefit of members or their beneficiaries until all of the actuarial obligations to such member or member's beneficiaries have been met.

4. If the Board deems any person incapable of receiving benefits to which he is entitled by reason of minority, illness, infirmity, or other incapacity, it may make payment directly, for the benefit of such person, to the guardian or trustee for said person, whose receipt shall be complete acquittance therefor. Such payment shall, to the extent therefor, discharge all liability of the Township or the fund.

5. Should any provision of this plan be determined to be void by any court, the plan will continue to operate and, to the extent necessary, will be deemed not to include the provision determined to be void.

6. Headings and captions provided herein are for convenience only and shall not be deemed part of the plan.

7. This plan shall be construed and applied under the laws of the Commonwealth of Pennsylvania where not in conflict with federal laws which shall prevail.

8. This Part 5 repeals all other ordinances prior to the date of its enactment.

§ 1-513 Deferred Retirement Option Plan.

[Ord. 646, 9/28/2006, § 9]

1. Definitions. As used in this section, the following terms shall have the meanings indicated:

DEFERRED RETIREMENT OPTION PLAN (DROP)

An optional retirement program in which an eligible member of the pension plan may elect to participate, deferring receipt of normal retirement benefits while continuing employment with Warminster Township without the loss of any other employee benefits.

DROP ACCOUNT

An account created to accept each DROP participant's monthly pension payments while a DROP participant.

PARTICIPANT

An eligible police employee who has elected to participate in the DROP.

2. Eligibility. Any active police employee (as that term is defined in the collective bargaining agreement ("agreement") effective February 1, 2005) who has reached the age of 50 years and has 25 years of service shall be eligible to participate in DROP at his or her option upon providing at least 30 days' written notice to the Township.

3. Entry into DROP. Election to participate by an eligible police employee shall be made on any date on which the police employee fulfills the minimum age and service requirements for normal retirement under the pension plan. Once a police employee commences participation in DROP, he or she may not choose to end participation in DROP and resume contributions to the pension plan.

4. Request to enter and enrollment forms. Election to participate shall be made by completing the required request and enrollment forms, which shall show the entry date into DROP, the deferred retirement date for the term chosen by the police employee and the calculated retirement benefit amount. The deferred retirement date shall not exceed 60 months from the date of enrollment and entry into DROP.

5. The length of DROP. The DROP term shall be for a period of not less than 12 months and not more than 60 months from the date of entry. Once enrolled for a period of 12 months in DROP, the participant can end his or her participation at any time, but no later than 60 months from date of entry. If an employee ends his or her participation in the DROP during the DROP term, such action shall constitute a voluntary resignation from employment. Participation in DROP does not constitute a guarantee of employment for the DROP term, nor does the Township waive the right to take disciplinary action, including termination, during the DROP term for any lawful reason set forth in the Police Tenure Act.[1]

[1] Editor's Note: See 53 P.S. § 811 et seq.

6. Retirement status and pension contribution. Once enrolled in DROP, the participant shall be retired under the pension plan for the purpose of calculating pension benefits and all compensation to be redeemed and/or paid under the agreement upon a police employee's retirement, but not for the purpose of employment with the Warminster Police Department. The participant shall continue to receive all other employee benefits and programs as set forth in the agreement. Once a police employee enters DROP, he or she shall no longer be required to make contributions to the pension plan, nor shall he or she be eligible for any further pension benefits other than the pension benefit determined in Subsection 7, Retirement rate, hereof.

7. Retirement rate. Payments to DROP will be made at the participant's calculated monthly retirement benefit amount, determined by Article 18 of the agreement, at the date the police employee enters DROP. Payments shall be sent to the participant's DROP account with the investment manager (See Subsection 9 below.) on a monthly basis. Payments to DROP shall be increased pursuant to the cost-of-living adjustments as set forth in Article 18 of the agreement.

8. Payout. Upon the termination date set forth in the participant's enrollment form, unless a voluntary or involuntary termination occurs sooner, the pension benefits payable to the participant or participant's beneficiary, if applicable, shall be paid to the participant or beneficiary and shall no longer be paid to the participant's DROP account. Within 30 days following termination of a participant's employment, the participant shall provide instructions to the investment manager mutually selected by the Township and the Warminster Police Benevolent Association (WPBA) regarding the desired disposition of the balance in his or her DROP account. It is understood by the parties that each participant must obtain his or her own professional legal and/or tax advice to determine and analyze the propriety and impact of his or her desired disposition of the DROP account balance under state, federal and local tax laws. The Township assumes no responsibility in this regard whatsoever, and the DROP enrollment form shall contain this disclaimer of liability and must be acknowledged by each participant upon enrollment.

9. Administration. DROP accounts shall be administered by investment manager(s) who shall be mutually selected by the Township and WPBA. The costs and fees associated with the management and administration of the DROP shall be paid exclusively by the participant. The participant shall be solely and exclusively responsible for all risks associated with his or her account with the investment manager. The Township shall have no responsibility or liability for the performance of a participant's DROP account, and the enrollment form required of each participant shall require an acknowledgment of this disclaimer.

10. Tax consequences. Upon enrollment in the DROP, each participant acknowledges 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 that any such consequences, including any fines or penalties, as well as any professional legal and/or tax advice which may be appropriate, shall be the sole and exclusive responsibility of each DROP participant.

11. Disability issues. If the participant becomes temporarily disabled during his or her participation in DROP, the participant shall receive disability pay in the same amount as police employees that are not participating in DROP. If a participant is injured, to the extent that he or she is totally disabled from performing police work for Warminster Township as defined in Article 18(F) of the agreement, the participant shall be retired. Participation in DROP shall terminate, and distribution of accumulated pension benefits shall be disbursed to the participant in accordance with IRS regulations, as well as applicable state, federal and local laws. Further, the participant's pension shall be reclassified as a service-related disability pension and paid directly to the participant or his or her beneficiary. No period of disability shall postpone the deferred retirement date set forth on a participant's enrollment form.

12. Survivorship options. If a participant dies during his or her participation period, all funds in that participant's account shall be disbursed to the participant's beneficiary or beneficiaries listed in the DROP enrollment form. Upon the death of a participant, either during or following his or her DROP term, the death and survivor benefits will be payable by the pension plan in accordance with Article 18(I) and (J) of the agreement, with the stipulation that the monthly pension benefit upon which survivorship calculations are determined shall be that amount determined by Subsection 7, Retirement rate, above. If a participant is killed in service, the named beneficiary of a participant shall be entitled to apply for and receive a recalculation for payment pursuant to Article 18(M) of the agreement.

13. Conflict with existing laws. This section shall be interpreted, if possible, to be consistent and not in conflict with any provision of the Constitution or statutes of the federal government or the Commonwealth of Pennsylvania. If, after DROP is instituted, the Internal Revenue Service, any agency of the Commonwealth of Pennsylvania, the Pennsylvania Commonwealth Court, and/or the Pennsylvania Supreme Court issues an official opinion, pension audit finding or pension audit observation indicating that any benefit or component of this section is in conflict with Pennsylvania law, the Township and WPBA agree to bargain in accordance with Act 111[2] over deletion of this benefit or component. In the event any such opinion, audit finding or observation relates specifically to the disability pension provisions under Subsection 11 above, the relevant provision shall be rendered void, and the parties shall immediately commence efforts bargaining on that issue. If legislation is passed in Pennsylvania establishing a DROP plan, it is the intent of the parties that this section should conform to said legislation. The parties further agree to commence bargaining, if necessary, to resolve any logistical obstacles that may arise in connection with initially implementing the DROP accounts as described herein.

[2] Editor's Note: See 43 P.S. § 217.1 et seq.