§ 1:271. Deferred retirement option plan.

A.

Establishment; applicability; purpose; citation.

1.

As governed by the provisions of this section, there exists, as a part of this pension plan, an optional account known as the deferred retirement option plan.

2.

The provisions of this section are somewhat different with respect to those otherwise eligible members of the retirement system whose election to participate in the deferred retirement option plan occurred before July 1, 1991, than for those whose election occurred on or after July 1, 1991.

3.

This deferred retirement option plan may be cited as the "DROP."

4.

The purpose of the DROP is to allow, contractually, in lieu of immediate termination of employment and receipt of a service retirement allowance, continued employment for a specified period of time, coupled with the deferral of receipt of retirement benefits until the end of such specified period of participation, at which time employment is to terminate.

B.

Eligibility for participation; limitations.

1.

Participation in the DROP is an option available to any member of this pension plan as follows:

a.

For members whose date of hire was prior to September 1, 2015:

(1)

Has not less than twenty-five (25) nor more than thirty (30) years of creditable service at any age, or

(2)

Effective July 1, 2002, has not less than ten (10) years of creditable service and has reached the age of fifty-five (55) years.

b.

For members whose date of hire was on or after September 1, 2015:

(1)

Has not less than twenty-five (25) years of creditable service at fifty-five (55) years of age for non-public safety employees, or at fifty (50) years of age for public safety employees, or

(2)

Has not less than ten (10) years of creditable service at sixty (60) years of age for non-public safety employees, or at fifty-five (55) years of age for public safety employees.

c.

Applications for DROP participation must be filed with the retirement system not less than thirty (30) nor more than ninety (90) days before the effective date of DROP participation.

2.

For purposes of this subsection, creditable service shall not include service in another retirement system which is reciprocally recognized by this retirement system under authority of state law (R.S. 11:142, as amended).

3.

For members whose date of hire was prior to September 1, 2015, the election to participate in the DROP, under the provisions of either (1) or (2) of section 1:271(B)(1), shall be exercised prior to the applicant's attaining thirty (30) years of creditable service, or the option to so participate is forfeited.

For members whose date of hire was on or after September 1, 2015, the election to participate in the DROP, under the provisions of (1) of section 1:271(B)(1), shall be exercised prior to the applicant's attaining thirty-three (33) years of creditable service, or the option to so participate is forfeited, except that members who do not reach the minimum required retirement age, as provided in section 1:271(B)(1) must exercise the option to participate in the DROP no later than sixty (60) days following the attainment of fifty-five (55) years of age for non-public safety employees, or fifty (50) years of age for public safety employees, in order to participate the full five (5) years. The election to participate in the DROP, under the provisions of (2) of section 1:271 (B)(1) shall be exercised prior to the applicant's attaining thirty (30) years of creditable service, or the option to so participate is forfeited.

4.

A member shall participate in the DROP only once, except as provided in subsection B.6 of this section.

5.

For a member whose date of hire was prior to September 1, 2015, and who has not less than twenty-five (25) nor more than thirty (30) years of creditable service at any age, the duration of participation in the DROP shall be for a specific period, which shall not exceed either of the following:

(a)

Five (5) years.

(b)

A number of years which, when added to the number of years of creditable service for which the member has credit in this pension plan, equals thirty-two (32).

For a member whose date of hire was on or after September 1, 2015, and who has not less than twenty-five (25) nor more than thirty-three (33) years of creditable service, the duration of participation in the DROP shall be for a specific period, which shall not exceed:

(a)

Five (5) years; or

(b)

A number of years which, when added to the number of years of creditable service for which the member has credit in this pension plan, equals thirty-five (35); or

(c)

For members who are not eligible to participate in DROP at thirty (30) years of service because of age, a number of years representing the difference between (1) the member's earliest date to participate in DROP (defined as the no more than sixty (60) days following attainment of age fifty-five (55) for non-public safety employees, or age fifty (50) for public safety employees) plus five (5) years, and (2) the effective date of election to participate in DROP, provided this difference equals at least two (2) years.

The duration of participation in the DROP for a member whose date of hire is prior to September 1, 2015, and who has not less than ten (10) years of creditable service and has reached the age of fifty-five (55) years shall be for a specific period, which shall not exceed three (3) years. The duration of participation in the DROP for a member whose date of hire was on or after September 1, 2015, and who has not less than ten (10) years of creditable service, and has reached the age of sixty (60) for nonpublic safety employees or the age of fifty-five (55) for public safety employees shall be for a specific period, which shall not exceed three (3) years.

6.

Should the participation period be interrupted by termination of employment for any reason, upon re-establishment of membership, provided the member has not received any distributions from his DROP account not based on his life expectancy, the member shall be immediately eligible for resumption of participation for the balance of the maximum period or the balance of his original DROP participation period, if any.

7.

Any member whose election to participate in the DROP occurs on or after July 1, 1991, shall contractually agree with the retirement system to be bound by the provisions of this section. The member shall specifically agree in such contract to terminate employment at the end of the specified period of participation, and shall specifically agree to the results stipulated for failure to abide by such terms of the contract. Prior to sixty (60) days before the end of the specified period of participation, the board shall give notice of same, by certified mail, return receipt requested, to the member.

C.

Conditions of participation; effects.

1.

Upon commencement of participation in the DROP, although the participant shall remain a member of this pension plan, neither member nor employer contributions shall thenceforth be payable, even if an election was made to continue employment following the specified period of participation as was permitted for members whose election to participate was made before July 1, 1991. Neither shall contributions be payable if the member violates the terms of any contract to terminate employment at the end of the specified period of participation. No additional service credit or additional benefits shall be earned.

2.

Upon commencement of participation, the service retirement allowance that would have been payable to the member had the member elected to terminate employment and receive a service retirement allowance, shall be paid into the DROP account in lieu of being paid to the member.

3.

The DROP account shall not earn interest or be credited with interest during the specified period of participation. However, a percentage rate shall be determined annually, not later than December 31, in the manner set forth in this subsection, and DROP interest shall be computed as a derivative of this rate.

(a)

The percentage rate from which DROP interest is computed will be certified by the retirement system actuary in accordance with a calculation averaging five (5) years of market rates of return, compounded quarterly, on retirement system investments. Each five (5) year period shall end on September 30, with the percentage rate so certified being applicable for the twelve (12) month period beginning on January 1 of the following calendar year, computed one (1) year in arrears. Provided, however, that the percentage rate certified by the actuary for the period from July 1, 1996 to December 31, 1997, shall be computed using market rates of return, compounded quarterly, for the period from April 1, 1991 through September 30, 1996, said rate to be determined not later than December 31, 1997.

(b)

The DROP interest rate that is credited to individual accounts before January 1, 2005 shall be calculated in accordance with subsection C.3.(b)(1) of this section; and on or after January 1, 2005 shall be calculated in accordance with subsection C.3.(b)(2) of this section.

(1)

The DROP interest rate that is credited to individual accounts shall be either a long-term or a short-term earnings rate. The long-term rate shall be equal to the percentage rate as certified by the actuary, less one (1) annual percentage point (one hundred (100) basis points); whereas the short-term rate shall be equal to the percentage rate as certified by the actuary, less two (2) annual percentage points (two hundred (200) basis points);

The long-term rate applies to all DROP accounts during the member's specified period of participation, on accounts after the specified period of participation when amounts withdrawn during the remainder of the first annual period, or any subsequent annual period, do not exceed twenty (20) percent of the balance at the beginning of such an annual period, and to all accounts with beginning of period balances of ten thousand dollars ($10,000.00) or less. The short-term rate applies to all DROP accounts after the member's specified period of participation when amounts withdrawn during the remainder of the first annual period, or any subsequent annual period, exceed twenty (20) percent of the balance at the beginning of such an annual period.

(2)

The DROP interest rate that is credited to individual accounts shall be equal to the percentage rate as certified by the actuary, less one (1) annual percentage point (one hundred (100) basis points).

(c)

The method of computation of the percentage rate from which DROP interest is derived, as set forth in this subsection, and the manner of monthly compounding of DROP interest on a nominal basis of computation, shall be used, unless the metropolitan council establishes an alternative method of determining the rate or of compounding DROP interest, and the metropolitan council enacts by ordinance such an alternative method.

4.

The board of trustees shall have the authority to develop and implement rules and procedures to carry out the intent of this subsection.

5.

Interest shall be credited to the DROP account of a member whose election to participate in the DROP occurred before July 1, 1991, and paid in the same manner as the principal of his account.

6.

If the member's election occurred on or after July 1, 1991, the following procedures apply:

(a)

If the member dies, or terminates employment during or at the end of the specified period of participation as contractually agreed, a sum equal to the amount the individual account would have earned, if interest, as compounded, had been applicable to such account, shall be added to the account. Such interest and manner of compounding shall be equal to the interest and compounding in effect for the same period of time.

(b)

If the member does not abide by the terms of the contract and does not terminate employment at the end of the period of participation as contractually agreed, payments into the DROP account shall cease, and the member shall immediately receive a distribution representing a lump-sum payment from the member's individual account in the DROP equal to its balance, without the addition of any sum representing interest, and such member's account shall be terminated. Such member shall not be considered retired, but shall remain as a member of the pension plan. Only upon actual termination of employment shall the member be considered a retiree and entitled to the receipt of retirement benefits.

7.

This account shall not be subject to any fees or charges of any kind for any purpose, except as otherwise provided in this subsection.

D.

Termination of participation.

1.

If the member remains an employee for the specified period of participation in the DROP and then immediately thereafter terminates employment, the member shall become a retiree and shall receive, at the retiree's option, any one (1) of the following:

(a)

A lump-sum distribution from the retiree's individual account in the DROP equal to its balance, provided that such lump-sum distribution must be received prior to the retiree's receiving his first regular pension.

(b)

A method of distribution based on life expectancy.

(c)

Any other method of distribution as approved by the board of trustees.

The payments that were being made into the DROP account in lieu of a retirement allowance shall thenceforth be paid to the retiree.

2.

If the member terminates employment prior to the end of the specified period of participation, the member shall immediately become a retiree and shall receive, at the retiree's option, any one (1) of the following:

(a)

A lump-sum distribution from the retiree's individual account in the DROP equal to its balance, provided that such lump-sum distribution must be received prior to the retiree's receiving his first regular pension.

(b)

A method of distribution based on life expectancy.

(c)

Any other method of distribution as approved by the board of trustees.

The payments that were being made into the DROP account in lieu of a retirement allowance shall thenceforth be paid to the retiree.

3.

If the member dies during the period of participation or after the end of the period of participation, but before total distribution of his DROP account, and the member's named beneficiary is the member's surviving spouse to whom the member was legally married at the time of the member's death, the surviving spouse shall receive, at the surviving spouse's option, any one (1) of the following:

(a)

A lump-sum distribution from the retiree's individual account in the DROP equal to its balance.

(b)

A method of distribution based on life expectancy.

(c)

Any other method of distribution as approved by the board of trustees.

4.

If the member dies during the period of participation, or after the end of the period of participation, but before total distribution of his DROP account, and the member's named beneficiary is someone other than the member's surviving spouse to whom the member was legally married at the time of the member's death, the named beneficiary shall receive a lump-sum payment equal to the member's individual account balance in the DROP account.

5.

If the member dies during the period of participation and a beneficiary was not named, the member's estate shall receive a lump-sum payment equal to the member's individual account balance in the DROP account.

6.

If, at the end of the specified period of participation, a member who has not contractually agreed to retire at such time does not terminate employment, retirement system membership shall continue, and payments into the DROP account shall immediately cease. Such member's individual account shall not continue to earn interest until the member has terminated employment. No funds shall be payable from the account so long as the member's employment is not terminated. Upon termination of employment, the member shall immediately become a retiree and shall receive, at the retiree's option, any one (1) of the following:

(a)

A lump-sum distribution from the retiree's individual account in the DROP equal to its balance, provided that such lump-sum distribution must be received prior to the retiree's receiving his first regular pension.

(b)

A method of distribution based on life expectancy.

(c)

Any other method of distribution as approved by the board of trustees.

The payments that were being made during the period of participation into the DROP account in lieu of a retirement allowance shall thenceforth be paid to the retiree.

7.

If, at the end of the specified period of participation, a member who has not contractually agreed to retire at that time does not terminate employment and then dies while still employed, and the member's named beneficiary is the member's surviving spouse to whom the member was legally married at the time of the member's death, the surviving spouse shall receive, at the surviving spouse's option, any one (1) of the following:

(a)

A lump-sum distribution from the retiree's individual account in the DROP equal to its balance.

(b)

A method of distribution based on life expectancy.

(c)

Any other method of distribution as approved by the board of trustees.

8.

If at the end of the specified period of participation, a member who has not contractually agreed to retire at that time does not terminate employment and then dies while still employed, and the member's beneficiary is someone other than the member's surviving spouse to whom the member was legally married at the time of the member's death, the named beneficiary shall receive a lump-sum payment equal to the member's individual account balance in the DROP account.

9.

If at the end of the specified period of participation, a member who has not contractually agreed to retire at that time does not terminate employment and then dies, and a beneficiary was not named, the member's estate shall receive a lump-sum payment equal to the member's individual account balance in the DROP account.

(Ord. No. 10779, § 1, 12-11-96; Ord. No. 11623, § 1, 12-8-99; Ord. No. 12323, § 1, 5-22-02; Ord. No. 13040, § 1, 8-25-04; Ord. No. 16039, § 1, 8-12-15)