Borough of Athens, PA Deferred Retirement Option Plan (DROP)

Eligibility. Effective May 14, 2018, members of the Athens Borough Police Department who have not yet retired prior to the implementation of the DROP program may enter into the DROP on the first day of any month following the attainment of age 50 and the completion of 25 or more years of credited service with Athens Borough.

Written election.

(1)

An eligible member of the Plan electing to participate in the DROP program must complete and execute a DROP election form prepared by Athens Borough and/or the pension plan administrator, which shall evidence the member's participation in the DROP program, and document the participant's rights and obligations under the DROP. The form must be signed by the member and the Chief Administrative Officer of the Plan and submitted to Athens Borough, Bradford County, Pennsylvania, at least 30 days prior to the member's effective date of retirement. The DROP election form shall include an irrevocable notice to the Athens Borough by the member, that the member shall terminate from employment with the Athens Borough Police Department effective on a specific date not less than one year nor more than five years from the effective date of the DROP election. In addition, all retirement documents required by the Athens Borough Police Pension Plan Administrator must be filed and presented to the Athens Borough Council for approval of retirement and commencement of the monthly pension benefit. Once the retirement application has been approved by the Council, it shall become irrevocable.

(2)

After a member enters the DROP program, contributions to the pension plan by the participant and the Borough will cease, and the amount of monthly benefits will be frozen except for any applicable cost-of-living adjustment (COLA) increases awarded to all pension recipients.

(3)

Members shall be advised to consult a tax advisor, of their choice, prior to considering the DROP program, as there may be serious tax implications and/or consequences to participating in the DROP program.

Limitation on pension accrual. After the effective date of the DROP election, the participant shall no longer earn or accrue additional years of continuous service for pension purposes.

Benefit calculation. For all Plan purposes, continuous service of a member participating in the DROP program shall remain as it existed on the effective date of commencement of participation in the DROP program. Service thereafter shall not be recognized or used for the calculation or determination of any benefits payable by the Athens Borough Police Pension Plan. The average monthly pay of the member for pension calculation purposes shall remain as it existed on the effective date of commencement of participation in the DROP program. Earnings or increases in earnings thereafter shall not be recognized or used for the calculation or determination of any benefits payable by the Plan. The pension benefit payable to the participants shall increase only as a result of cost-of-living adjustments (COLAs), which are effective on or after the date of the member's participation in the DROP program.

Payments to DROP participant account. The monthly retirement benefits that would have been payable had the member elected to cease employment and receive a normal retirement benefit shall, upon the member commencing participation in the DROP program, be credited on the first day of each month into a separate ledger account established by the Plan Administrator to track and accumulate the participant's monthly pension benefits. This account shall be designated the "DROP participant account." Interest shall be compounded and credited monthly at an annual rate of 2%. All interest credited to the DROP participant account shall be included in the final cash settlement.

Early termination. A participant may withdraw from the DROP program at any time and no penalty shall be imposed for early termination of DROP participation. However, the participant shall not be permitted to make any withdrawals from the DROP participant account until DROP participation has ended.

Payout. Upon the termination date set forth in the DROP election form or on such date as the participant withdraws or is terminated from the DROP program, if earlier, the normal retirement benefits payable to the participant or the participant's beneficiary, if applicable, shall be paid directly to the participant or beneficiary and shall no longer be credited to the DROP participant account. Within 45 days following the actual termination of a participant's employment with Athens Borough, the accumulated balance in the DROP participant account shall be paid to the participant in a single lump-sum payment. Such payment shall be made either in cash, subject to any federal withholding as may be required, or as a direct rollover to an individual retirement account (IRA). If the participant or beneficiary fails to elect a method of payment within 60 days after the participant's termination date, the retirement system shall pay the balance as a lump sum.

Disability during DROP. If a participant becomes temporarily disabled during the DROP period, the participation freezes and the time period while on temporary disability does not count towards the selected DROP participation period. Upon return to duty, the DROP period shall resume, continuing with the remaining time left in the DROP period. The participant shall receive disability pay in the same manner as disabled police officers that are not participating in DROP. In no event shall a participant on temporary disability have the ability to draw from the DROP participant account. However, notwithstanding any other provision in this subsection, if an officer is disabled and has not returned to work as of the date of the required resignation, then such resignation shall take precedence over all other provisions herein, and said officer shall be required to resign. If a DROP participant becomes eligible for a disability pension benefit due to a permanent, service-related disability under Act 600 and terminates employment, the monthly normal retirement benefit shall cease.

Death. If a participant dies before the DROP participant account balance is paid, the participant's beneficiary under Act 600 shall have the same rights as the participant to withdraw the DROP participant account balance. The monthly benefit credited to the participant's DROP participant account during the month of the participant's death shall be the final monthly benefit for DROP participation.

Killed-in-service survivor benefit. If a participant is killed in service, the participant's beneficiaries under Act 600 shall be entitled to apply to the Commonwealth of Pennsylvania and receive a recalculation for payment of survivor benefits at 100% of the participant's salary at the time of death.

Amendment. Any amendments to this DROP article shall be consistent with the provisions covering deferred retirement option plans set forth in any applicable collective bargaining agreement or state or federal law, and shall be binding upon all future participants and upon all participants who have balances in their DROP participant accounts.