§ 36-8-10-12.2 — Deferred retirement option plan (DROP)

Indiana § 36-8-10-12.2

• Jurisdiction: Indiana
• Title 36: LOCAL GOVERNMENT
• Art. 8: PUBLIC SAFETY
• Ch. 10: Sheriff's Department; Merit Board; Pensions

Text

2. (a) This section applies to a county that
adopts a deferred retirement option plan as part of its retirement plan
under this chapter.
(b) As used in this section, "DROP" refers to a deferred retirement
option plan established under this section.
(c) As used in this section, "DROP frozen benefit" refers to a
monthly pension benefit calculated under the provisions of a retirement
plan established under this chapter based on the employee
beneficiary's:
(1) salary; and
(2) years of service;
on the date the employee beneficiary enters the DROP.
(d) As used in this section, "maximum years of service" refers to the
maximum number of years of service included in the monthly pension
benefit calculation under a department's retirement plan.
(e) An employee beneficiary who:
(1) is not yet credited with the maximum number of years of
service; and
(2) is eligible to receive an unreduced benefit immediately upon
termination of employment;
may elect to enter a DROP. The employee beneficiary's election is
irrevocable.
(f) The employee beneficiary exits a DROP on the earliest of the
following:
(1) The date that the employee beneficiary is credited with the
maximum years of service under the retirement plan.
(2) The employee beneficiary's retirement date.
(3) The date any required benefit begins.
(g) The retirement benefit paid to the employee beneficiary who
participated in a DROP consists of:
(1) the DROP frozen benefit; plus
(2) an additional amount, paid as the employee beneficiary elects
under subsection (h), determined in STEP THREE of the
following formula:
STEP ONE: Multiply:
(A) the DROP frozen benefit; by
(B) the number of months the employee beneficiary
participated in the DROP.
STEP TWO: Multiply the product determined in STEP ONE by
an interest rate that does not exceed three percent (3%) annually.
STEP THREE: Add the product determined under STEP ONE
and the product determined under STEP TWO.
(h) The employee beneficiary shall elect, at the employee
beneficiary's retirement, to receive the additional amount calculated
under subsection (g)(2) in one (1) of the following ways:
(1) A lump sum.
(2) An actuarially equivalent increase in the monthly pension
benefit payable to the employee beneficiary.
(3) A combination of (1) and (2).
(i) The cost of living payment determined under section 23 of this
chapter does not apply to the additional amount calculated under
subsection (g)(2). No cost of living payment is applied to a DROP
frozen benefit while the employee beneficiary is participating in a
DROP.
(j) If an employee beneficiary becomes disabled:
(1) in the line of duty; or
(2) other than in the line of duty;
benefits for the employee beneficiary are calculated as if the employee
beneficiary had never entered the DROP.
(k) Except as provided in subsection (m), if, before the employee
beneficiary's monthly pension benefit begins, an employee beneficiary
dies, in the line of duty or other than in the line of duty, death benefits
are payable as follows:
(1) The benefit under subsection (g)(2) is paid in a lump sum to
the employee beneficiary's surviving spouse. If there is no
surviving spouse, the lump sum must be divided equally among
the employee beneficiary's surviving children. If there are no
surviving children, the lump sum is paid to the employee
beneficiary's parents. If there are no surviving parents, the lump
sum is paid to the employee beneficiary's estate.
(2) A benefit is paid on the DROP frozen benefit under the terms
of the county's retirement plan.
(l) A DROP under this section must be designed to be actuarially
cost neutral to the county's retirement plan.
(m) This subsection applies if:
(1) an employee beneficiary dies in the line of duty before
payment of the employee beneficiary's monthly pension benefit
begins; and
(2) the calculation of a death benefit under the provisions of the
county's retirement plan depends upon whether an employee
beneficiary dies in the line of duty or other than in the line of
duty.
Death benefits for an employee beneficiary who dies in the line of duty
are calculated under the provisions of the county's retirement plan as
if the employee beneficiary had never entered the DROP and shall be
adjusted as necessary to ensure compliance with subsection (l).

Legislative History

As added by P.L.97-2005, SEC.1. Amended by P.L.51-2006, SEC.4.