(a) This section shall apply to Class 1 municipalities only.
(b) There is established a Retroactive Deferred Retirement Option ("Back Drop") Plan for any retirement and relief system established pursuant to Act 1272, 1973 Regular Session (Acts 1973, p. 2124), as amended.
A participant who retires at least 90 days following July 1, 2002, who has then completed at least 23 years of credited service, and who is otherwise entitled to retire and receive a normal retirement benefit, shall have the opportunity to elect a Back Drop plan. A participant eligible for the Back Drop plan can elect in writing at his or her retirement to retroactively drop his or her credited service in excess of 20 years, for a period of months not exceeding 36 months immediately preceding the date of retirement (the "Back Drop period"); provided that the beginning of the Back Drop period may not extend past the earliest date on which the participant would have qualified for a normal retirement benefit. A participant who is not actively employed may not make a Back Drop election. To be effective, a Back Drop election by a married participant must be approved in writing by his or her spouse.
(c) Notwithstanding the provisions of Section 1 of Article VI of Act 1272, 1973 Regular Session (Acts 1973, p. 2124), as amended, in effect as of the date of a participant's retirement, any participant making the Back Drop election shall have his or her retirement benefits determined under said section as if retirement had occurred on the beginning date of the Back Drop period, so that for purposes of calculating the retirement benefits, service during the Back Drop period shall not count as credited service, and salary earned during the Back Drop period shall not be included in the calculation of final average salary.
(d) Any participant who elects the Back Drop plan shall receive, not less than 30 days or more than 90 days after his or her retirement, a lump-sum distribution equal to the monthly benefits that would have been paid during the Back Drop period if the participant's retirement had occurred on the beginning date of the Back Drop period, calculated as provided in subsection (c), together with interest thereon at a percentage rate as the board may determine, annually, compounded monthly from the date on which each monthly benefit would have been paid; provided that no interest shall be paid unless the actuary retained by the board determines that sufficient funds are available to pay the interest on a cost-neutral basis.
(e) If any participant who elects the Back Drop plan dies before the lump-sum distribution referred to in subsection (d) is paid, the Back Drop election shall be null and void, and the benefits to which the participant and his or her surviving spouse, if any, are entitled will be calculated as if the Back Drop election had never been made.
(f) If any participant was receiving retirement benefits under a Back Drop election made in accordance with the preceding provisions of this section, then notwithstanding any other provisions of Section 10 of Article VI of Act 1272, 1973 Regular Session (Acts 1973, p. 2124), as amended, the benefits to which the participant's surviving spouse is entitled shall be calculated on the basis of the retirement benefit which the participant was receiving as a result of the Back Drop election.
(g) The board shall have the authority to terminate the Back Drop plan created in this section prospectively at any time if it is determined that contributions to the system are not sufficient to pay the costs of the Back Drop plan; provided that no termination shall affect the rights of any participant, or surviving spouse of a participant, who has properly made his or her Back Drop election as required herein but has not yet begun receiving benefits to which he or she would be entitled as a result of the election.
(h) The board is authorized, with approval of the governing body of the municipality primarily served by the system, to make any and all rules and regulations necessary to implement and administer the Back Drop plan which are not inconsistent with this section or applicable law.
Last modified: May 3, 2021