HB 1633

1	A bill to be entitled
2	An act relating to the West Palm Beach Firefighters
3	Pension Fund, City of West Palm Beach, Palm Beach County;
4	amending chapter 24981 (1947), Laws of Florida, as
5	amended; amending the definition of final average salary;
6	amending the sources of revenue; amending the service
7	pensions; amending the normal retirement benefit; amending
8	the share account benefit; adding a BackDROP benefit;
9	amending the beneficiary benefits; amending provisions
10	related to the rollovers from other plans; providing an
11	effective date.
12
13	Be It Enacted by the Legislature of the State of Florida:
14
15	Section 1.  Subparagraph 7. of paragraph (a) of subsection
16	(1), paragraphs (a) and (b) of subsection (3), paragraph (a),
17	subparagraphs 3., 5., and 6., of paragraph (j), and paragraph
18	(k) of subsection (5), and subparagraph 1. of paragraph (b) of
19	subsection (7) of section 17 of chapter 24981 (1947), Laws of
20	Florida, as amended by chapter 2002-360, Laws of Florida, are
21	amended, and paragraph (l) is added to subsection (5) of said
22	section, to read:
23	Section 17. West Palm Beach Firefighters Pension Fund.--
24	(1)  Creation of fund.--There is hereby created a special
25	fund for the Fire Department of the City of West Palm Beach to
26	be known as the West Palm Beach Firefighters Pension Fund. All
27	assets of every description held in the name of the
28	West Palm Beach Firemen's Relief and Pension Fund and in the
29	name of the West Palm Beach Firefighters Pension Fund have been
30	and shall continue to be combined.
31	(a)  Definitions.--The following words or phrases, as used
32	in this act, shall have the following meanings, unless a
33	different meaning is clearly indicated by the context:
34	7.  "Final average salary" means the average of the monthly
35	salary paid a member in the 2 3 best years of employment, paid
36	in and prior to the 23rd year of credited service. No active
37	nonDROP member shall have any salary amounts paid prior to
38	October 1, 2000, used in the calculation of final average
39	salary. Those members whose final average salary would include
40	salary amounts paid prior to October 1, 2000, shall use salary
41	paid during the period from October 1, 2000, through September
42	30, 2001, to replace any salary amounts paid prior to October 1,
43	2000.
44	(3)  Sources of revenue.--The financing of the Fund shall
45	consist of the following sources of revenue:
46	(a)  Taxes of insurance companies.--The moneys returned to
47	the City as provided by chapter 175, Florida Statutes, shall be
48	used to fund the share account benefit described in paragraph
49	(5)(j). For the plan year October 1, 2003, through September 30,
50	2004, all of the chapter 175 funds received shall be utilized to
51	offset the City's contributions for the cost of the purchase of
52	extra benefits, less any amounts used to fund the share account
53	benefits for DROP members who do not convert in accordance with
54	sub-subparagraph (5)(a)2.b. Beginning October 1, 2004, the
55	chapter 175 moneys shall again be used in full to fund the share
56	account benefits provided for in paragraph (5)(j). The City
57	shall not opt out of participation in chapter 175, Florida
58	Statutes, or any similar statutory enactment unless exigent
59	circumstances exist, such as the bankruptcy of the City or
60	changes or amendments to the statute regarding extra benefits by
61	the Legislature. If any statutory changes are made by the
62	Legislature, the City and the Board may renegotiate the impact
63	of such changes, if necessary.
64	(b)  Member contributions.--The member shall contribute
65	6.45 percent of his or her salary to the Fund, which shall be
66	deducted each pay period from the salary of each member in the
67	Department. Effective the first full payroll period after
68	January 1, 2002, the member shall contribute 7.85 percent of his
69	or her salary to the Fund, which shall be deducted each pay
70	period from the salary of each member in the Department.
71	Effective the first full payroll period after October 1, 2002,
72	the member shall contribute 8.85 percent of his or her salary to
73	the Fund, which shall be deducted each pay period from the
74	salary of each member in the Department. Effective the first
75	full payroll period after October 1, 2003, the member shall
76	contribute 9.85 percent of his or her salary to the Fund, which
77	shall be deducted each pay period from the salary of each member
78	in the Department. Effective the first full payroll period after
79	October 1, 2004, the member shall contribute 18.2 percent of his
80	or her salary to the Fund, which shall be deducted each pay
81	period from the salary of each member in the Department.
82	Effective the first full payroll period after January 1, 2005,
83	the member shall contribute 18.7 percent of his or her salary to
84	the Fund, which shall be deducted each pay period from the
85	salary of each member in the Department. Effective the first
86	full payroll period after January 1, 2006, the member shall
87	contribute 19.2 percent of his or her salary to the Fund, which
88	shall be deducted each pay period from the salary of each member
89	in the Department. All amounts of member contributions that are
90	deducted shall be immediately paid over to the Pension Fund. For
91	contributions made before October 1, 2004, any contribution
92	amount The contribution increase over 6.85 percent is to be used
93	to purchase eligibility for participation in the postretirement
94	health insurance benefits; effective October 1, 2004, that
95	amount will increase to 15.2 percent.
96	(5)  Service pension.--
97	(a)  Normal retirement.--
98	1.  Any member who is actively employed on and after
99	October 1, 2003, excluding members in the DROP, who has attained
100	age 50 years and who has acquired 15 or more years of service
101	credit; who has attained age 55 years and who has acquired 10 or
102	more years of service credit; or who has acquired 26 years of
103	service credit without regard to age shall, upon application
104	filed with the Board, be retired and shall be entitled to a
105	monthly pension for the remainder of his or her life equal to
106	the greater of the following:
107	a.  Four percent of final average salary times credited
108	service subject to a maximum of 92 percent of final average
109	salary. However, in all cases, members shall be entitled to at
110	least 2 percent per year of credited service; or
111	b.  The sum of the following:
112	(I)  Two and one-half percent of final average salary
113	multiplied by the number of years, and fraction of a year, of
114	service credit to a maximum of 26 years of service, and 2
115	percent of his or her final average salary multiplied by the
116	number of years, and fraction of a year, in excess of 26 years
117	of service, for all years of service earned through September
118	30, 1988; and
119	(II)  Two percent of final average salary multiplied by the
120	number of years, and fraction of a year, of service credit
121	earned on and after October 1, 1988.
122	2.  Any Member who is actively employed by the Department
123	on and after October 1, 2003, and who is a member of the DROP on
124	or after that date, may elect one of the following transition
125	benefits by making a written election within 45 days after the
126	effective date of this special act on a form provided by the
127	Board of Trustees. The right to elect the transition benefits
128	contained in sub-subparagraph b. shall terminate if no written
129	election is made within 45 days after the effective date of this
130	act. In the event a member does not submit a timely written
131	election, the member shall be deemed to have elected the
132	transition benefits contained in sub-subparagraph a. below:
133	a.  Retain member's original monthly retirement benefit,
134	DROP account balance, and share account balance. DROP members
135	who select this transition benefit may continue to participate
136	in the DROP until the end of the original DROP term. Additional
137	allocations to the share account shall be made in accordance
138	with the provisions of paragraph (j).
139	b.  Convert the member's original monthly benefit and DROP
140	balance to a new monthly benefit and BackDROP. In order to be
141	entitled to this benefit, the member must cease membership in
142	the DROP program. The new converted benefits will not be paid
143	until the member has terminated employment. The conversion of
144	the member's benefits shall be based on the following:
145	(I)  Original monthly benefit conversion: A DROP member is
146	entitled to a conversion of the original monthly benefit in an
147	amount equal to 4 percent for each year of credited service
148	excluding the BackDROP period with a 2-year final average
149	salary. The 2-year final average salary shall be determined
150	based on a 24-month period with the highest average prior to the
151	number of full years of BackDROP (selected by the member in
152	accordance with sub-sub-subparagraph II). No final average
153	salary shall be included in a monthly benefit calculation for
154	which a member has received a BackDROP payment.
155	(II)  BackDROP conversion: The DROP member is entitled to a
156	lump sum payment equal to the new monthly benefit annualized
157	times a period of whole years as selected by the member up to a
158	maximum of 5. The DROP member may select zero years. The
159	BackDROP benefit will be paid interest at the rate of 8.25
160	percent less expenses, compounded annually.
161	1.  Any member whose entry or reentry in the employment of
162	the Department occurs after April 30, 1959, who has attained age
163	50 years and who has acquired 15 or more years of service credit
164	or, effective for retirements after January 20, 2002, has 25
165	years of service credit without regard to age shall, upon
166	application filed with the Board, be retired and shall be
167	entitled to a monthly pension for the remainder of his or her
168	life equal to the greater of the following, as applicable:
169	a.  For a member who is actively employed by the Department
170	on or after October 1, 1998, or who is part of the DROP on or
171	after October 1, 1998, 3 percent of his or her final average
172	salary multiplied by the number of years, and fraction of a
173	year, of service credit earned from and after October 1, 1982,
174	plus 2-1/2 percent of his or her final average salary multiplied
175	by the number of years, and fraction of a year, of service
176	credit earned prior to October 1, 1982, provided that in no case
177	shall the total monthly pension payable to any such member
178	exceed 78 percent of his or her final average salary;
179	b.  For members who terminated employment, retired, or
180	entered the DROP prior to October 1, 1998, except as provided in
181	sub-subparagraph a., 2-1/2 percent of his or her final average
182	salary multiplied by the number of years, and fraction of a
183	year, of service credit, provided that in no case shall the
184	total monthly pension payable to any member exceed 65 percent of
185	his or her final average salary; or
186	c.  The sum of the following:
187	(I)  Two and one-half percent of final average salary
188	multiplied by the number of years, and fraction of a year, of
189	service credit to a maximum of 26 years of service, and 2
190	percent of his or her final average salary multiplied by the
191	number of years, and fraction of a year, in excess of 26 years
192	of service, for all years of service earned through September
193	30, 1988; and
194	(II)  Two percent of final average salary multiplied by the
195	number of years, and fraction of a year, of service credit
196	earned on and after October 1, 1988.
197	2.  Any member whose entry or reentry in the employment of
198	the Department occurs after April 30, 1959, and prior to July 1,
199	1977, may elect upon his or her retirement to receive a pension
200	under the provisions of this subparagraph in lieu of
201	subparagraph 1., as follows: Any member who has attained age 55
202	years and who has acquired 20 or more years of service credit
203	shall, upon his or her application filed with the Board, be
204	retired and, when so retired, shall be entitled to a monthly
205	pension for the remainder of his or her life equal to the
206	greater of the following:
207	a.  Two percent of final average salary multiplied by the
208	number of years, or fraction of a year, of service credit not to
209	exceed 25 years, provided that in no case shall the total
210	monthly pension payable to any member exceed 65 percent of his
211	or her final average salary; or
212	b.  The sum of the following:
213	(I)  Two and one-half percent of final average salary
214	multiplied by the number of years, and fraction of a year, of
215	service credit to a maximum of 26 years of service, and 2
216	percent of final average salary multiplied by the number of
217	years and fraction of a year in excess of 26 years of service,
218	for all years of service earned through September 30, 1988; and
219	(II)  Two percent of final average salary multiplied by the
220	number of years, and fraction of a year, of service credit
221	earned on and after October 1, 1988.
222
223	The 4-percent 3-percent benefit accrual factor in sub-
224	subparagraph 1.a. is contingent on and subject to the adoption
225	and maintenance of the assumptions set forth in subsection
226	(23)(22). If such assumptions are modified by legislative,
227	judicial, or administrative agency action, and the modification
228	results in increased City contributions to the Pension Fund, the
229	4-percent 3-percent accrual factor in sub-subparagraph 1.a.
230	shall be automatically decreased prospectively, from the date of
231	the action, to completely offset the increase in City
232	contributions. However, in no event shall the benefit accrual
233	factor in sub-subparagraph 1.a. be adjusted below 3.5 2.5
234	percent.  To the extent that the benefit accrual factor is less
235	than 4 3 percent, the supplemental pension distribution
236	calculation under paragraph (d) shall be adjusted for employees
237	who retire on or after October 1, 1998, and those employees who
238	were members of the DROP on October 1, 1998.  The adjustment
239	shall be to decrease the minimum return of 8.25 percent needed
240	to afford the supplemental pension distribution, when the amount
241	of the reduction is zero if an employee has been credited with
242	16 or more years with the 3-percent benefit accrual factor or
243	1.25 percent if an employee has been credited with no more than
244	a 2.5-percent benefit accrual factor. If an employee has been
245	credited with less than 16 years at the 3-percent benefit
246	accrual factor, then the accumulated amount over 2.5 percent for
247	each year of service divided by .5 percent divided by 16
248	subtracted from 1 multiplied by 1.25 percent is the reduction
249	from 8.25 percent. An example of the calculation of the minimum
250	return for supplemental pension distribution as described above
251	is set forth in Appendix B to the collective bargaining
252	agreement between the City of West Palm Beach and the West Palm
253	Beach Association of Firefighters, Local 727-IAFF, October 1,
254	2003-September 30, 2006 October 1, 1998-September 30, 2001.
255	(j)  Chapter 175, Florida Statutes, share accounts.--
256	3.  Annual allocation of accounts.--
257	a.  Moneys shall be credited to each individual member
258	account in an amount directly proportionate to the number of pay
259	periods for which the member was paid compared to the total
260	number of pay periods for which all members were paid, counting
261	the pay periods in the calendar year preceding the date for
262	which chapter 175, Florida Statutes, tax revenues were received.
263	For the fiscal year beginning October 1, 2003, and ending
264	September 30, 2004, share account allocations shall only be made
265	to DROP members who elect not to convert in accordance with sub-
266	subparagraph (5)(a)2.b. For purposes of determining the pro rata
267	share for those share account allocations during the fiscal year
268	beginning October 1, 2003, and ending September 30, 2004, the
269	pay periods of all active firefighters, including DROP members,
270	shall be used. Share account allocations made on and after
271	October 1, 2004, shall be made to each individual share account.
272	b.  At the end of each fiscal year (September 30), each
273	individual account shall be adjusted to reflect the earnings or
274	losses resulting from investment, as well as reflecting
275	costs, fees, and expenses of administration.
276	c.  The investment earnings or losses credited to the
277	individual member accounts shall be in the same percentage as
278	are earned or lost by the total investment earnings or losses of
279	the Fund as a whole, unless the Board dedicates a separate
280	investment portfolio for chapter 175, Florida Statutes, share
281	accounts, in which case the investment earnings or losses shall
282	be measured by the investment earnings or losses of the separate
283	investment portfolio.
284	d.  Costs, fees, and expenses of administration shall be
285	debited from the individual member accounts on a proportionate
286	basis, taking the cost, fees, and expenses of administration of
287	the Fund as a whole, multiplied by a fraction, the numerator of
288	which is the total assets in all individual member accounts and
289	the denominator of which is the total assets of the Fund as a
290	whole. The proportionate share of the costs, fees, and expenses
291	shall be debited from each individual member account on a pro
292	rata basis in the same manner as chapter 175, Florida Statutes,
293	tax revenues are credited to each individual member account
294	(i.e., based on pay periods).
295	e.  If the entire balance of the individual member account
296	is withdrawn before September 30 of any year, there shall be no
297	adjustment made to that individual member account to reflect
298	either investment earnings or losses or costs, fees, and
299	expenses of administration.
300	5.  Forfeitures.--Any member who has less than 10 years of
301	credited service and who is not eligible for payment of benefits
302	after termination of employment with the City shall forfeit his
303	or her individual member account. The amounts credited to said
304	individual member account shall be redistributed to the other
305	individual member accounts in the same manner as chapter 175,
306	Florida Statutes, tax revenues are credited (i.e., based on pay
307	periods). However, the assets shall first be used to ensure that
308	the former member's refund of contributions has not actuarially
309	adversely impacted the payment for the extra benefits. If there
310	has been an adverse impact, the shortfall shall be made up first
311	before the amounts are reallocated to active members.
312	6.  Payment of benefits.--The normal form of benefit
313	payment shall be a lump sum payment of the entire balance of the
314	individual member account; or, upon the written election of the
315	member, upon a form prescribed by the Board, payment may be made
316	either by:
317	a.  Installments.--The account balance shall be paid out to
318	the member retirant in three equal payments paid over 3 years,
319	the first payment to be made upon approval of the Board; or
320	b.  Annuity.--The account balance shall be paid out in
321	monthly installments over the lifetime of the member or until
322	the entire balance is exhausted. The monthly amount paid shall
323	be determined by the Fund's actuary in accordance with
324	selections made by the member in a form provided by the Board.
325	(k)  Deferred Retirement Option Plan (DROP).--Effective
326	upon the ratification of the collective bargaining agreement
327	between the City of West Palm Beach and the West Palm Beach
328	Association of Firefighters, Local 727-IAFF, October 1, 2003-
329	September 30, 2006, no new members may enter into the DROP.
330	Existing DROP members on the ratification date shall have the
331	option to remain in the DROP for the remainder of their
332	individual 5-year terms in accordance with the provisions of
333	subparagraph (5)(a)2.
334	1.  Eligibility to participate in the DROP.--
335	a.  Any member who is eligible to receive an early or
336	normal retirement pension may participate in the DROP. Members
337	shall elect to participate by applying to the Board of Trustees
338	on a form provided for that purpose.
339	b.  Election to participate shall be forfeited if not
340	exercised within the first 35 years of combined credited
341	service.
342	c.  A member shall not participate in the DROP beyond the
343	time of attaining 37 years of service and the total years of
344	participation in the DROP shall not exceed 5 years. For example:
345	(I)  Members with 32 years of credited service at the time
346	of entry shall participate for only 5 years.
347	(II)  Members with 33 years of credited service at the time
348	of entry shall participate for only 4 years.
349	(III)  Members with 34 years of credited service at the
350	time of entry shall participate for only 3 years.
351	(IV)  Members with 35 years of credited service at the time
352	of entry shall participate for only 2 years.
353	d.  Upon a member's election to participate in the DROP, he
354	or she shall cease to be a member and shall no longer accrue any
355	benefits under the Pension Fund, except for the benefits
356	provided under paragraph (j) of this subsection, chapter 175,
357	Florida Statutes, share accounts. For all Fund purposes, the
358	member becomes a retirant, except that a DROP participant shall
359	continue to receive shares of the chapter 175, Florida Statutes,
360	money in accordance with paragraph (j), chapter 175, Florida
361	Statutes, share accounts. The amount of credited service and
362	final average salary shall freeze as of the date of entry into
363	the DROP.
364	2.  Amounts payable upon election to participate in the
365	DROP.--
366	a.  Monthly retirement benefits that would have been
367	payable had the member terminated employment with the Department
368	and elected to receive monthly pension payments shall be paid
369	into the DROP and credited to the retirant. Payments into the
370	DROP shall be made monthly over the period the retirant
371	participates in the DROP, up to a maximum of 60 months.
372	b.  Payments to the DROP earn interest using the rate of
373	investment return earned on Pension Fund assets as reported by
374	the Fund's investment monitor. DROP assets are commingled with
375	the Pension Fund assets for investment purposes. However, if a
376	member does not terminate employment at the end of participation
377	in the DROP, interest credit shall cease on the current balance
378	and on all future DROP deposits.
379	c.  No payments shall be made from the DROP until the
380	member terminates employment with the Department.
381	d.  Upon termination of employment, participants in the
382	DROP shall receive the balance of the DROP account in accordance
383	with the following rules:
384	(I)  Members may elect to receive payment upon termination
385	of employment or defer payment of the DROP until the latest day
386	under sub-sub-subparagraph (III).
387	(II)  Payments shall be made in either:
388	(A)  Lump sum.--The entire account balance shall be paid to
389	the retirant upon approval of the Board of Trustees.
390	(B)  Installments.--The account balance shall be paid out
391	to the retirant in three equal payments paid over 3 years, the
392	first payment to be made upon approval of the Board of Trustees.
393	(C)  Annuity.--The account balance shall be paid out in
394	monthly installments over the lifetime of the member or until
395	the entire balance is exhausted. The monthly amount paid shall
396	be determined by the Fund's actuary in accordance with
397	selections made by the member in a form provided by the Board of
398	Trustees.
399	(III)  Any form of payment selected by a member must comply
400	with the minimum distribution requirements of the IRC 401(A)(9),
401	and are subject to the requirements of subsection (19).
402	(IV)  The beneficiary of the DROP participant who dies
403	before payments from DROP begin shall have the same right as the
404	participant in accordance with subsection (7).
405	3.  Loans from the DROP.--
406	a.  Availability of loans.--
407	(I)  Loans are available to members only after termination
408	of employment, provided the member had participated in the DROP
409	for a period of 12 months.
410	(II)  Loans may only be made from a member's own account.
411	(III)  There may be no more than one loan at a time.
412	b.  Amount of loan.--
413	(I)  Loans may be made up to a maximum of 50 percent of
414	account balance.
415	(II)  The maximum dollar amount of a loan is $50,000,
416	reduced by the highest outstanding loan balance during the last
417	12 months.
418	(III)  The minimum amount of a loan is $5,000.
419	c.  Limitation on loans.--Loans shall be made from the
420	amounts paid into the DROP and earnings thereon.
421	d.  Term of the loan.--
422	(I)  The loan must be for at least 1 year.
423	(II)  The loan shall be no longer than 5 years.
424	e.  Loan interest rate.--
425	(I)  The interest rate shall be fixed at the time the loan
426	is originated for the entire term of the loan.
427	(II)  The interest rate shall be equal to the lowest prime
428	rate published by the Wall Street Journal on the last day of
429	each calendar quarter preceding the date of the loan
430	application.
431	f.  Defaults of loans.--
432	(I)  Loans shall be in default if 2 consecutive months'
433	repayments are missed or if a total of 4 months' repayments are
434	missed.
435	(II)  Upon default, the entire balance becomes due and
436	payable immediately.
437	(III)  If a loan in default is not repaid in full
438	immediately, the loan may be canceled and the outstanding
439	balance treated as a distribution, which may be taxable.
440	(IV)  Upon default of a loan, a member shall not be
441	eligible for additional loans.
442	g.  Miscellaneous provisions.--
443	(I)  All loans must be evidenced by a written loan
444	agreement signed by the member and the Board of Trustees. The
445	agreement shall contain a promissory note.
446	(II)  A member's spouse must consent in writing to the
447	loan. The consent shall acknowledge the effect of the loan on
448	the member's account balance.
449	(III)  Loans shall be considered general assets of the
450	Fund.
451	(IV)  Loans shall be subject to administrative fees to be
452	set by the Board of Trustees.
453	4.  After-tax contributions to the DROP.--
454	a.  A member may make after-tax contributions to the DROP.
455	The maximum amount that may be contributed is the lesser of:
456	(I)  The IRS 415(c) limit.
457	(II)  The amount allowable under IRC 401(m).
458	b.  After-tax contributions to the DROP shall earn interest
459	in the same manner as set forth in sub-subparagraph 2.b.
460	c.  Distributions to members or their beneficiaries of
461	after-tax contributions may be withdrawn at any time on or after
462	termination of employment. However, payments must be made at
463	least as promptly as required under subsection (19).
464	d.  Loans shall not be made against after-tax
465	contributions.
466	(l)  Backwards Deferred Retirement Option Plan
467	(BackDROP).--
468	1.  Eligibility to participate in the BackDROP.--
469	a.  Any member who has attained age 53 with 18 or more
470	years of service, who has attained age 58 with 13 or more years
471	of service, or who has acquired 26 years of service regardless
472	of age may participate in the BackDROP. Members shall elect to
473	participate by applying to the Board of Trustees on a form
474	provided for that purpose. A member may not participate in both
475	the DROP and the BackDROP.
476	b.  Election to participate shall be forfeited if not
477	exercised within the first 28 years of credited service.
478	However, a member who is actively employed by the Department on
479	October 1, 2003, may elect to participate in the BackDROP beyond
480	the 28th year as follows: the member may elect to participate in
481	the benefit for 3 full years in the 29th year of employment, for
482	1 full year in the 30th year of employment, and after the 30th
483	year of employment all elections to participate in the BackDROP
484	end.
485	c.  A member shall not be eligible to receive a BackDROP
486	benefit that is greater than an accumulation of 60 months of the
487	monthly retirement benefit. A member shall not be eligible to
488	receive a benefit which is less than an accumulation of 36
489	months of the monthly retirement benefit, except for the
490	reduction of benefits as defined in sub-subparagraph b.
491	d.  Member contributions shall continue throughout the
492	period of employment and are not refundable for the BackDROP
493	period.
494	e.  Members who elect to participate in the BackDROP must
495	retire and terminate employment to be eligible for payment of
496	the benefit.
497	2.  Benefits payable upon election to participate in the
498	BackDROP.--
499	a.  Upon election to receive the BackDROP benefit, a
500	member's retirement benefits will be calculated as if the member
501	had chosen to retire and terminate employment at a date which is
502	3, 4, or 5 whole years earlier. The number of years to be
503	applied is based upon the member's election. The monthly pension
504	amount shall be multiplied by 36, 48, or 60, depending upon the
505	member's election of 3, 4, or 5 years. The BackDROP benefit
506	shall be calculated as a single sum, including interest at the
507	rate of 8.25 percent less expenses, compounded annually for the
508	period of BackDROP.
509	b.  No payments shall be made from the BackDROP until the
510	member terminates employment with the Department.
511	c.  Upon termination of employment, participants in the
512	BackDROP shall receive the balance of the BackDROP account in
513	accordance with the following rules:
514	(I)  Members may elect to receive payment upon termination
515	of employment or defer payment of the BackDROP until the latest
516	day under sub-sub-subparagraph (III).
517	(II)  Payments shall be made in either:
518	(A)  A lump sum.--The entire account balance shall be paid
519	to the retirant upon approval of the Board of Trustees.
520	(B)  Installments.--The account balance shall be paid out
521	to the retirant in three equal payments paid over 3 years, the
522	first payment to be made upon approval of the Board of Trustees.
523	(C)  Annuity.--The account balance shall be paid out in
524	monthly installments over the lifetime of the member or until
525	the entire balance is exhausted. The monthly amount paid shall
526	be determined by the Fund's actuary in accordance with
527	selections made by the member in a form provided by the Board of
528	Trustees.
529	(III)  Any form of payment selected by a member must comply
530	with the minimum distribution requirements of the IRC 401(A)(9),
531	and are subject to the requirements of subsection (19).
532	(IV)  The beneficiary of the BackDROP member shall have the
533	same right as the participant in accordance with subsection (7).
534	3.  BackDROP earnings.--
535	a.  BackDROP members may select one of three methods to
536	credit investment earnings to their accounts. Investment
537	earnings shall be credited on a quarterly basis. The method may
538	be changed each year effective October 1; however, the method
539	must be elected prior to October 1. The methods are:
540	(I)  The BackDROP is credited with earnings and losses
541	using the rate of investment return earned on Pension Fund
542	assets as reported by the Fund's investment monitor. BackDROP
543	assets are commingled with the Pension Fund assets for
544	investment purposes;
545	(II)  A fixed rate of 8.25 percent; or
546	(III)  A percentage of the BackDROP account assets to be
547	credited with earnings or losses in accordance with sub-sub-
548	subparagraph (I) and a corresponding percentage of the BackDROP
549	account assets credited in accordance with sub-sub-subparagraph
550	(II). The combined total percentage invested under this sub-sub-
551	subparagraph must equal 100 percent.
552	b.  Costs, fees, and expenses of administration shall be
553	debited from the individual member BackDROP accounts on a
554	proportionate basis, taking the cost, fees, and expenses of
555	administration of the Fund as a whole, multiplied by a fraction,
556	the numerator of which is the total of assets in all individual
557	member accounts and the denominator of which is the total of
558	assets of the Fund as a whole.
559	(7)  Beneficiary benefits.--
560	(b)  Death in the line of duty.--In the event a member dies
561	while in the employ of the Department, and the Board finds his
562	or her death to be the natural and proximate result of causes
563	arising out of and in the actual performance of duty as a
564	firefighter in the employ of the City, the following applicable
565	pensions shall be paid:
566	1.  Surviving spouse's benefits.--The surviving spouse
567	shall receive a monthly pension equal to sixty-six and two-
568	thirds three-fourths of the member's highest 12 months' salary
569	or top step firefighter pay, whichever is greater duty
570	disability pension the member would otherwise have been entitled
571	to receive at the time of his or her death. Upon the surviving
572	spouse's death, the pension shall terminate.
573	Section 2.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.