Borough of Lansdowne, PA Article II Police Pension Plan

[Adopted 12-7-2011 by Ord. No. 1267[1]]

[1] Editor's Note: This ordinance also superseded former Art. II, Police Pension Fund, adopted 3-31-1975 by Ord. No. 933.

§ 61-6 Definitions; word usage.

A. As used in this article, 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 Borough prior to such date of reference). For purposes of computing average applicable compensation, actual monthly earnings shall be based on W-2 earnings in which all forms of earnings are derived from the terms and conditions of the employee's employment, less severance payments made at the time of retirement or death (i.e., unused sick leave and vacation).

BOROUGH

The Borough of Lansdowne, Delaware County, Commonwealth of Pennsylvania.

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

Shall be based on W-2 earnings in which all forms of earnings are derived from the terms and conditions of the employee's employment, less severance payments made at the time of retirement or death (i.e., unused sick leave and vacation).

COUNCIL

The Council of the Borough of Lansdowne.

EARLY RETIREMENT DATE

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

EFFECTIVE DATE

January 1, 2011.

EMPLOYEE

Any sworn police officer in the full-time employ of the Borough 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.

MANDATORY RETIREMENT AGE

The date on which the member has attained age 65.

MEMBER

Any sworn police officer in the full-time employ of the Borough Police Department who has satisfied the eligibility requirements established in § 61-7 hereof and who is, at the time of reference, or has prior to his or her elimination, been making such contributions as may be required pursuant to § 61-8A hereof.

NORMAL RETIREMENT DATE

The first day following the date on which the member completes 25 years of service and the date on which the member attains age 50.

PLAN

The Police Pension Plan for the Borough of Lansdowne, 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 Borough. 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 of general military conflict shall be counted as service for purposes of the Plan, provided that such member returns to police service with the Borough 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 Borough.

TRUSTEE

The Council of the Borough of Lansdowne or any other agency or person appointed by such to serve in that capacity as set forth in the Trust Agreement.

B. 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.

§ 61-7 Eligibility.

A. 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.

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

§ 61-8 Contributions; service credit.

A. Contributions by members.

(1) Members shall pay into the Fund at a rate of 5.0% of compensation. Compensation, for this purpose, shall be as defined in § 61-6 of the Plan. The Council 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 3.0%, compounded annually.

(2) 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.

B. 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.

C. Deposits. Contributions by members shall be remitted to the Trustee monthly.

D. State aid. The portion of the payments made by the State Treasurer to the Borough and designated by the Council 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:

(1) To reduce the unfunded liability, or, after such liability has been fully funded;

(2) To apply against the annual obligation of the Borough for future service costs, or to the extent that the payment may be in excess of such obligations;

(3) To reduce member contributions pursuant to Subsection A hereof.

E. Borough contributions. Subject to the provisions and limitations set forth in other sections of this Plan, the Borough shall contribute the amounts certified to be necessary by the Fund's actuary to provide the benefits provided by this Plan.

F. Nonintervening military buy back.

(1) The Plan provides 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 Borough prior to such military service, payable by the member.

(2) 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 interest at the rate of 4 3/4%, compounded annually from the date of initial entry into service to the date of payment.

(3) 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 who 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. 67 (relating to retired pay for nonregular service).

G. 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.

§ 61-9 Retirement benefits.

A. Normal retirement.

(1) 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.

(2) In addition to the monthly retirement benefit described above, each member who has completed in excess of 26 years of service shall receive an additional monthly pension benefit equal to a $20.83 per month ($250 annually) for each of the first four years of service completed in excess of 25 years and $16.67 per month ($200 annually) for the fifth year of service in excess of 25 years of service, up to a maximum annual benefit of $1,200 or a maximum monthly benefit of $100 per month.

B. 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 Borough 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 § 61-11A. 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.

C. Postponed retirement. An employee shall be allowed to continue as an employee beyond his normal retirement date, but must terminate employment with the Borough upon reaching his mandatory retirement age. 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 § 61-8A hereof shall continue.

D. Disability benefit.

(1) If a member who was hired prior to January 1, 2011, retires because of a total and permanent disability, he shall be entitled to receive a pension benefit equal to 70% of the member's average applicable compensation, provided that the disability benefit, social security disability benefits, and workers' compensation payments (or the annuity value of a lump sum workers' compensation settlement) may not exceed 100% of the member's compensation received in the prior 12 months. The disability pension paid under this provision shall be offset to meet this requirement.

(2) If a member who was hired on or after January 1, 2011, retires because of a total and permanent disability, he shall be entitled to receive a pension benefit equal to 50% of the member's average applicable compensation, provided that the disability benefit, social security disability benefits, and workers' compensation payments (or the annuity value of a lump sum workers' compensation settlement) may not exceed 100% of the member's compensation received in the prior 12 months.

(3) The workers' compensation benefits shall not be reduced by the pension benefit received. The disability pension paid under this provision shall be offset to meet this requirement.

(4) The benefit will commence on the first day of the month following the month in which he retires. Council reserves the right to require disabled members to present evidence of total and permanent disability and of the continuance of such condition from time to time and either reserves the right to require members to submit to medical examinations by practitioner(s) selected by the Council as a precondition to the continued payment of benefits.

E. Cost-of-living adjustment. There shall be a cost-of-living adjustment provided to all members who retire. The annual cost-of-living adjustment shall not exceed 5% or the percentage increase for the calendar year in the All Urban Consumers CPI for the Philadelphia Metropolitan area, whichever is less. The adjustments shall be applicable each year; provided, however, that in no case shall the total police pension benefits exceed 75% of the salary for computing retirement benefits and shall not cause the total cost-of-living adjustment to exceed 25%. No cost-of-living adjustment shall be granted which would impair the actuarial soundness of the Pension Fund. All adjustments shall be effective on the annual anniversary of the member's retirement.

§ 61-10 Death benefits.

A. 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.

B. Pension benefit to surviving spouse and dependent children.

(1) 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.

(2) 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.

(3) In the event a member dies after completing 12 or more years of service but was not yet eligible for normal retirement or pre-retirement survivor benefits, the surviving spouse shall act on behalf of the member in selecting the alternative addressed in § 61-11A. 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.

(4) In the event a member dies after completing 20 or more years of service but was not yet eligible for normal retirement or pre-retirement survivor benefits, the surviving spouse shall act on behalf of the member in selecting the alternative addressed in § 61-9B. 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.

(5) 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 stepchildren, adopted children, and any child conceived before the time of the member's date and thereafter born to the member's spouse.

C. Pre-retirement survivor benefit. In the event a member is killed in service, 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 benefit to which the member was entitled prior to the member's death, solely by virtue of the member's service as a Borough police officer (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. The terms "dependent children" and "attending college" shall be consistent with that of Subsection B.

§ 61-11 Severance of employment.

If a member leaves the employ of the Borough 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 §§ 61-9 or 61-10 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 § 61-8A. However, a member who has completed 12 or more years of service may elect either Subsection A or B as described below:

A. He may elect to leave his contributions, plus interest, in the Fund so as to receive a vested pension benefit to start at his normal retirement date. He must file with the Secretary of the Borough, within 90 days of the date he ceases to be a full-time police officer, a written notice of his intention to vest. The amount of the vested pension benefit shall be (x) divided by (y), where (x) is the number of years of service at the date of termination and (y) is the number of years of service which the member would have had if he worked until normal retirement date, multiplied by the benefits described in § 61-9A. Years of service shall be measured in years and completed months.

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 § 61-8A. If he elects to receive the refund of his contributions, plus interest, he would forfeit the pension benefit outlined in Subsection A.

§ 61-12 Method of distribution of benefits.

A. Refund benefits becoming distributable pursuant to § 61-11 and death benefits becoming distributable pursuant to the provision of § 61-10A shall be paid in the form of a lump sum distribution.

B. 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 § 61-10B.

§ 61-13 Management of Fund.

A. It is the duty of the Trustee to pay the benefits to members and their beneficiaries, as provided in §§ 61-9, 61-10, and 61-11 in accordance with the instructions received from the Council provided, however, that the duty of the Trustee to make such payments is wholly contingent upon the sufficiency of the Fund for such purposes.

B. The Council 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 Borough at such rates as may be agreed upon by the Council. Such compensation may be paid from the Fund.

C. Investment manager.

(1) The Council 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. Each person appointed shall be:

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

[1] Editor's Note: See 50 U.S.C. § 80b-1 et seq.

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

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

(2) Each investment manager shall acknowledge, in writing, that it is a fiduciary with respect to the Plan. The Council 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 Council 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.

(3) The Council 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.

D. Fair market value of Fund.

(1) 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 Council may direct.

(2) 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 Borough with respect to each Plan year in accordance with the assumptions most recently adopted by the Council for the purpose of such computations; provided, however, that the liability of the Borough to make such contributions is subject to all of the conditions and limitations set forth elsewhere in this Plan.

§ 61-14 Administration.

A. The Plan shall be administered by the Council of the Borough of Lansdowne. The Council shall make and adopt rules and regulations for the efficient administration of the Plan.

B. The Council shall keep all data, records and documents pertaining to the administration of the Plan and shall execute all documents necessary to carry out the provision of the Plan, and shall provide all such data, records and documents to the professionals whose services are employed pursuant to § 61-13B of this Plan.

C. The Council shall construe the Plan, shall determine any questions or 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 be the sole judge of such expediency. The Council shall act uniformly with respect to matters coming before it concerning employees in similar circumstances.

D. The members of the Council, 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 Borough against all judgments not involving findings of their respective personal or collective willful misconduct or gross negligence and against all cost, including counsel fees, incurred in defense of actions brought against them.

E. The Council 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.

F. To enable the Council to perform its function, the Borough 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 Council may require.

G. The Council 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 Council shall be taken at meetings at which at least four members shall be present, or by written resolutions concurred in by not less than four of its members shall be the action of the entire Council. Written minutes shall be kept of the meetings and action of the Council.

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

§ 61-15 Borough provisions.

A. It is the expectation of the Borough 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.

B. 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 Borough or under its control, save the Uniformed Employee's Pension Fund herein provided for.

C. Nothing contained in the Plan shall be held or construed as a contract or guarantee of employment nor to create any liability upon the Borough to retain any person in its service. The Borough 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.

§ 61-16 Termination or amendment of Plan.

A. The Borough 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.

B. In the event of termination of this Plan, the Council shall allocate the assets then remaining in the Fund as follows:

(1) Sufficient funds shall be maintained to provide the pension benefits prescribed in § 61-8 for all members who have retired prior to termination or who are eligible for retirement at the time of the termination of this Fund.

(2) Contributions with interest at a rate established by the Council as provided in § 61-10 shall be refunded to any and all members who terminate service at the time of the termination of the Fund.

(3) 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 Council sees fit, provided that such distribution is in compliance with § 61-13.

(4) All funds in excess of the funds described in Subsection B(1), (2) and (3) 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.

§ 61-17 Miscellaneous provisions.

A. 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 Code Section 414(p),[1] and those other domestic relations orders permitted to be so treated by the Council under the provisions of the Retirement Equity Act of 1984.[2] The Borough 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.

[1] Editor's Note: See Internal Revenue Code § 414(p).

[2] Editor's Note: See 29 U.S.C. § 1001 et seq.

B. Any person dealing with the Borough may rely upon a copy of this Plan and any amendments thereto certified to be true and correct by the Trustee.

C. 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.

D. If the Council 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 Borough or the Fund.

E. 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.

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

G. 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.

H. This article repeals all other ordinances prior to the date of its enactment.

§ 61-18 Act 44 Retirement Program.

[Added 2-17-2016 by Ord. No. 1300]

A. Title. This section shall be known as the "Lansdowne Police Act 44 Retirement Program."

B. Definitions. When used in this section, the below words shall have the meaning indicated.

BOROUGH

Borough of Lansdowne, Delaware County, Pennsylvania.

ACT 44 PROGRAM

The Act 44 Deferred Retirement Option Program referred to in the Collective Bargaining Agreement between the Delaware County Pennsylvania FOP Lodge No. 27 and the Borough of Lansdowne.

ACT 44 PROGRAM ACCOUNT

A separate ledger account created to accept Act 44 Program participants' monthly pension benefit while an Act 44 Program participant, as well as any interest thereon.

FUND or PLAN

The Lansdowne Borough Police Pension Plan.

PARTICIPANT

A police officer who meets the eligibility for and has executed the proper documents for participation in Act 44 Program and has had such application approved by the Borough.

POLICE OFFICERS

Police officers of the Lansdowne Police Department.

RESIGNATION DATE

The date the participant exits Act 44 Program.

C. Eligibility. Eligibility for the Act 44 Program shall be determined as follows:

(1) Police officers who have not retired prior to the implementation of the Act 44 Program may enter into the Act 44 Program on the first day of the month following completion of 25 years of credited service and attaining the age of 50 (the superannuation date as defined by the pension plan).

(2) If the officer completed 25 years of credited service and attained the age of 50 prior to January 1, 2016, the officer shall be eligible to enter the program effective January 1, 2016.

D. Election to participate. Eligible officers who wish to be participants in the Act 44 Program must signify the intention to enter the Act 44 Program in writing as follows:

(1) A police officer electing to participate in the Act 44 Program must complete and execute an "Act 44 Program participation election form" prepared by the Borough, which shall evidence the member's election to participate in the Act 44 Program. The Act 44 Plan participation election form shall include an irrevocable notice to the Borough, by the police officer member, that the police officer shall resign from employment with the Police Department effective on a specific date (the "resignation date"). In no event shall the resignation date be later than 36 months from the first day of the month following their superannuation retirement date (unless the officer was already eligible for superannuation retirement prior to the enactment of the Act 44 Program, in which event the thirty-six-month period shall begin the first day of the month following the enactment of the Act 44 Program, or as of any earlier date the officer elects to participate pursuant to this Act 44 Program, but not earlier than January 1, 2016). A police officer shall cease to work as and may no longer be employed as a police officer on the officer's resignation date, unless the Borough properly terminates or honorably discharges the officer prior to the resignation date. A participant may resign from employment while in Act 44 Program status, which shall terminate his/her participation in the Act 44 Program.

(2) In addition to the above information, the Act 44 Program participation election form shall also advise the employee of the following: (1) an explanation of the participant's rights and obligations while in the Act 44 Program; (2) that, as a condition of Act 44 Program participation, the participant foregoes active participation in the Police Pension Plan and foregoes any recalculation of pension benefits to include salary increases occurring after Act 44 Program participation commences; and (3) that the Act 44 Program participant's service while in Act 44 Program will not count as pension service nor will it entitle a participant to any service increment benefits to which the participant was not entitled prior to commencing Act 44 Program participation. An Act 44 Program participant must also complete any and all retirement documents required by the Police Pension Plan Administrator, and such documents must be filed and presented to the Borough for approval of retirement and any payment of pension. Once an Act 44 Program participation election form has been approved by the Borough, it is irrevocable. Likewise, once an Act 44 Program participant enters the Act 44 Program, the participant may not subsequently leave and then re-enter the Act 44 Program, even if the employee separates from employment and subsequently begins employment with the Borough again.

(3) The maximum period of time during which an officer can participate in a drop shall be 36 months.

E. Benefit Calculation. For all pension plan purposes, continuous service of a police officer participating in the Act 44 Program shall remain as it existed on the effective date of commencement of participation in the Act 44 Program. Service thereafter shall not be recognized or used for the calculation or determination of any benefits payable by the Borough Police Pension Plan. The average monthly compensation of the police officer for pension calculation purposes shall remain, as it existed on the effective date of commencement of participation in the Act 44 Program. Earnings or increases in earnings thereafter shall not be recognized or used for the calculation or determination of any benefits payable by the Pension Plan. The pension benefit payable to the members shall increase only as a result of cost of living adjustments in effect on the effective date of the member's commencement of participation in the Act 44 Program (if any) or by applicable cost of living adjustments granted thereafter.

F. Accumulation of the Act 44 Program Account. The monthly retirement benefits that would have been payable had the police officer elected to cease employment and receive a normal retirement benefit, shall, upon the police officer commencing participation in Act 44 Program, accumulate to the benefit of that officer and be accounted for on that police officer's Act 44 Program Account. Participants shall not have the option of self-directed investment of their individual Act 44 Program Account while in the Act 44 Program. Instead, the monies shall be invested in a fund to be identified and selected solely by the Borough in accordance with applicable law so as to generate a rate of return of no less than 0% and no more than 4.5%.

G. Accrual of nonpension benefits. After a police officer elects to participate in the Act 44 Program, all other contractual benefits shall continue to accrue with the exception of those provisions relating to the Police Pension Plan and service-connected disability pensions.

H. Payout. Upon separation from employment, the Act 44 Program payout options available to the Act 44 Program participant shall be as follows:

(1) The balance of the Act 44 Program participant's account, less withholding taxes, if any, remitted to the Internal Revenue Service, shall be paid to the participant or the participant's surviving beneficiary.

(2) The balance of the Act 44 Program participant's account shall be paid directly to the custodian of an eligible retirement plan as defined by Internal Revenue Code Section 402(c)(8)(b), or in the case of an eligible rollover distribution to the surviving spouse of a deceased Act 44 Program participant, an eligible retirement plan that is an individual retirement account or an individual retirement annuity as defined by Internal Revenue Code Section 402(c)(9).

(3) If the Act 44 Program participant or beneficiary fails to make an election within 60 days following the date of termination of Act 44 Program participation, then the Chief Administrative Officer of the pension plan shall implement Subsection H(1) above.

I. Service-connected disability while a participant in the Act 44 Program. If an Act 44 Program participant becomes temporarily incapacitated due to a service-connected injury during his participation in Act 44 Program, that police officer shall continue to participate in the Act 44 Program. The police officer shall receive disability pay in the same amount as disabled police officers that are not participating in Act 44 Program. In no event shall a police officer on temporary disability have the ability to draw from his Act 44 Program account. However, notwithstanding any other provision in this subsection, if a police 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 be required to resign. Nothing contained in this plan shall be construed as conferring any legal rights upon any police officer or other person to a continuation of employment nor shall participation in the Act 44 Program supersede or limit in any way the right of the Borough to honorably discharge a police officer based upon an inability to perform his or her full duties as a police officer. If an Act 44 Program participant becomes eligible for a service-connected disability pension and his employment is terminated due to an inability to continue in service on grounds that render him eligible for a service-connected disability pension, the monthly normal retirement benefit of the Act 44 Program participant shall be reclassified as being on account of a service-connected disability. In no event shall an ACT 44 participant's monthly retirement benefit be recalculated. The ACT 44 participant's monthly retirement benefit shall remain 50% as calculated at the time of entry into the Act 44 Program. The pension benefit payable to the member shall increase only as a result of the cost of living adjustments in effect on the effective date of the member's commencement of participation in the Act 44 Program (if any) or by applicable cost of living adjustments granted thereafter.

J. Death. If an Act 44 Program participant dies, the participant's eligibility for Act 44 Program shall terminate upon the date of death. In such case, if the Act 44 Program account balances have not yet been paid out, the participant's legal beneficiary shall have the same rights and options as the participant to withdraw/roll over the account balance.

K. Forfeiture of benefits. Notwithstanding a police officer's status as an Act 44 Program participant, a current or former participant 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 Act 44 Program Account. In such a case, the participant shall only be entitled to receive the contributions, if any, made by the participant to the Police Pension Fund, without interest.

L. Cost of management for Act 44 Program. The police officers and the Borough agree that any costs or fees associated with the management of the Act 44 Program accounts shall be paid directly from the Pension Fund and not by the Borough.

M. Amendment. Any amendments to this Act 44 Program section shall be consistent with the provisions covering individual retirement option plans set forth in any applicable collective bargaining agreement and shall be binding upon all future Act 44 Program participants and upon all Act 44 Program participants who have balances in their individual retirement option accounts. The Act 44 Program may only be amended by a written instrument, not by any oral agreement or past practice.

N. Construal of provisions. A police officer's election to participate in the Act 44 Program shall in no way be construed as a limitation on the Borough's right to suspend or to terminate a police officer for just cause or to grant the police officer an honorable discharge based upon a physical or mental inability to perform his or her duties.

O. Severability. The provisions of the Act 44 Program shall be severable: and if any of its provisions shall be held to be unconstitutional or illegal, the validity of any of the remaining provisions of the Act 44 Program shall not be affected thereby. It is hereby expressly declared as the intent of the Borough that the Act 44 Program would have been adopted had such unconstitutional or illegal provision or provisions not been included herein.

P. Effective date. The effective date of the Act 44 Program shall be the date it is enacted.