CHAPTER 8.5. DEFERRED RETIREMENT OPTION PLAN (DROP)
IC 36-8-8.5
Chapter 8.5. Deferred Retirement Option Plan (DROP)
IC 36-8-8.5-1
Repealed
(Repealed by P.L.51-2006, SEC.5.)
IC 36-8-8.5-1.5
DROP expiration date
Sec. 1.5. This chapter expires for members of the 1925 fund, the1937 fund, or the 1953 fund on the date the authority of the board oftrustees of the public employees' retirement fund to distribute fromthe pension relief fund established under IC 5-10.3-11-1 to units oflocal government (described in IC 5-10.3-11-3) amounts determinedunder IC 5-10.3-11-4.7 expires.
As added by P.L.51-2006, SEC.1.
IC 36-8-8.5-2
Applicability
Sec. 2. Except as provided in section 1.5 of this chapter, thischapter applies to a person who is a member of any of the followingfunds:
(1) 1925 Police Pension Fund (IC 36-8-6) (referred to in thischapter as the 1925 fund).
(2) 1937 Firefighters' Pension Fund (IC 36-8-7) (referred to inthis chapter as the 1937 fund).
(3) 1953 Police Pension Fund (Indianapolis) (IC 36-8-7.5)(referred to in this chapter as the 1953 fund).
(4) 1977 Police Officers' and Firefighters' Pension andDisability Fund (IC 36-8-8) (referred to in this chapter as the1977 fund).
As added by P.L.62-2002, SEC.5. Amended by P.L.51-2006, SEC.2.
IC 36-8-8.5-3
"Applicable fund"
Sec. 3. As used in this chapter, "applicable fund" means thefollowing:
(1) For members of the 1925 fund, the 1925 fund.
(2) For members of the 1937 fund, the 1937 fund.
(3) For members of the 1953 fund, the 1953 fund.
(4) For members of the 1977 fund, the 1977 fund.
As added by P.L.62-2002, SEC.5.
IC 36-8-8.5-4
"DROP"
Sec. 4. As used in this chapter, "DROP" means the deferredretirement option plan established by this chapter.
As added by P.L.62-2002, SEC.5.
IC 36-8-8.5-5 "DROP election"
Sec. 5. As used in this chapter, "DROP election" means amember's election to enter the DROP.
As added by P.L.62-2002, SEC.5.
IC 36-8-8.5-6
"DROP entry date"
Sec. 6. As used in this chapter, "DROP entry date" means the datethat a member's DROP election becomes effective.
As added by P.L.62-2002, SEC.5.
IC 36-8-8.5-7
"DROP frozen benefit"
Sec. 7. As used in this chapter, "DROP frozen benefit" means amember's monthly retirement benefit calculated under the provisionsof the applicable fund and based on:
(1) the salary of a first class officer or firefighter that is in effecton the member's DROP entry date; and
(2) the member's years of service accrued on the member'sDROP entry date.
As added by P.L.62-2002, SEC.5.
IC 36-8-8.5-8
"DROP retirement date"
Sec. 8. As used in this chapter, "DROP retirement date" means thefuture retirement date selected by a member at the time the membermakes a DROP election.
As added by P.L.62-2002, SEC.5.
IC 36-8-8.5-9
Eligibility
Sec. 9. A member may make a DROP election as provided in thischapter only if the member is eligible to receive an unreduced benefitunder the provisions of the applicable fund on the member's DROPentry date.
As added by P.L.62-2002, SEC.5.
IC 36-8-8.5-10
DROP election requirements
Sec. 10. A member who elects to enter the DROP shall agree tothe following:
(1) The member shall execute an irrevocable election to retireon the DROP retirement date and shall remain in active serviceuntil that date.
(2) While in the DROP, the member shall continue to makecontributions to the applicable fund under the provisions of thatfund.
(3) The member shall elect a DROP retirement date not lessthan twelve (12) months and not more than thirty-six (36)months after the member's DROP entry date. (4) The member may not remain in the DROP after the date themember reaches any mandatory retirement age that may applyto the member.
(5) The member may make an election to enter the DROP onlyonce in the member's lifetime.
As added by P.L.62-2002, SEC.5.
IC 36-8-8.5-11
Employer contributions
Sec. 11. The employer of a 1977 fund member who elects to enterthe DROP shall continue to make the employer contributions to the1977 fund on behalf of that member under the provisions of the 1977fund.
As added by P.L.62-2002, SEC.5.
IC 36-8-8.5-12
Calculation of retirement benefit
Sec. 12. (a) The retirement benefit for a member who enters theDROP and retires on:
(1) the member's DROP retirement date; or
(2) the date the member retires because of a disability asprovided under section 16.5(d) of this chapter;
is determined under this chapter rather than under the provisions ofthe applicable fund.
(b) A member who retires on the member's DROP retirement dateor on the date the member retires because of a disability as providedunder section 16.5(d) of this chapter may elect to receive a retirementbenefit in one of the following forms:
(1) A retirement benefit paid by and calculated under theprovisions of the applicable fund as if the member had neverentered the DROP.
(2) A retirement benefit paid by the applicable fund andconsisting of:
(A) the DROP frozen benefit; plus
(B) an additional amount, paid as the member elects undersubsection (c), calculated by multiplying:
(i) the amount of the DROP frozen benefit; by
(ii) the number of months that the member was in theDROP.
(c) A member who chooses the retirement benefit described insubdivision (b)(2) must elect to receive the additional amountdescribed in subdivision (b)(2)(B) as:
(1) a lump sum paid on:
(A) the member's DROP retirement date; or
(B) the date the member retires because of a disability asprovided under section 16.5(d) of this chapter; or
(2) three (3) equal annual payments:
(A) commencing on:
(i) the member's DROP retirement date; or
(ii) the date the member retires because of a disability as
provided under section 16.5(d) of this chapter; and
(B) thereafter paid on the anniversary of:
(i) the member's DROP retirement date; or
(ii) the date the member retires because of a disability asprovided under section 16.5(d) of this chapter.
(d) In calculating a member's retirement benefit under thischapter, the applicable fund must use the lesser of:
(1) the member's actual years of service; or
(2) thirty-two (32) years of service.
(e) Except as provided under section 16.5(d) of this chapter, theretirement benefits for a member who exits the DROP for any reasonother than retirement on the member's DROP retirement date arecalculated under the provisions of the applicable fund as if themember had never entered the DROP.
As added by P.L.62-2002, SEC.5. Amended by P.L.148-2007, SEC.3.
IC 36-8-8.5-13
Cost of living adjustment
Sec. 13. (a) A cost of living adjustment to the monthly benefit ofa member of the 1925 fund, 1937 fund, or 1953 fund is determinedin STEP FOUR of the following formula:
STEP ONE: Calculate a percentage by dividing:
(A) the amount of any increase in the salary of a first classofficer or firefighter, whichever is applicable; by
(B) the prior year's salary of a first class officer orfirefighter, whichever is applicable.
STEP TWO: Add:
(A) the member's DROP frozen benefit; and
(B) the amount of any prior cost of living adjustmentscalculated under this section.
STEP THREE: Multiply the percentage determined under STEPONE by the sum determined under STEP TWO.
STEP FOUR: Add the product determined under STEP THREEto the sum determined under STEP TWO.
(b) A cost of living adjustment to the monthly benefit of amember of the 1977 fund is determined under the provisions ofIC 36-8-8, as applied after:
(1) the member's DROP retirement date; or
(2) the date the member retires because of a disability asprovided under section 16.5(d) of this chapter.
As added by P.L.62-2002, SEC.5. Amended by P.L.148-2007, SEC.4.
IC 36-8-8.5-14
DROP exit date
Sec. 14. (a) Subject to subsection (b), a member who enters theDROP established by this chapter shall exit the DROP at the earliestof:
(1) the member's DROP retirement date;
(2) thirty-six (36) months after the member's DROP entry date;
(3) the mandatory retirement age applicable to the member, if
any; or
(4) the date the member retires because of a disability asprovided under section 16.5(d) of this chapter.
(b) A member of the 1925 fund, the 1937 fund, or the 1953 fundwho enters the DROP established by this chapter must exit theDROP on the date the authority of the board of trustees of the publicemployees' retirement fund to distribute from the pension relief fundestablished under IC 5-10.3-11-1 to units of local government(described in IC 5-10.3-11-3) amounts determined underIC 5-10.3-11-4.7 expires.
As added by P.L.62-2002, SEC.5. Amended by P.L.51-2006, SEC.3;P.L.148-2007, SEC.5.
IC 36-8-8.5-15
Survivor benefits
Sec. 15. If a member dies:
(1) in the line of duty; or
(2) other than in the line of duty;
while the member is in the DROP, benefits for the member'ssurvivors are calculated under the provisions of the applicable fundas if the member had never entered the DROP.
As added by P.L.62-2002, SEC.5.
IC 36-8-8.5-16
Repealed
(Repealed by P.L.148-2007, SEC.11.)
IC 36-8-8.5-16.5
Disability benefit
Sec. 16.5. (a) This section applies to a member of the 1977 fundwho becomes disabled after June 1, 2005, while the member is in theDROP, because of a disability that arose either in the line of duty orother than in the line of duty.
(b) The retirement benefit for a member who retires because of adisability while in the DROP is determined under this chapter ratherthan under the provisions of the applicable fund. Determinations asto whether:
(1) the member is disabled; and
(2) a disability is in the line of duty;
under this chapter are made under the provisions of the applicablefund.
(c) If the member retires because of a disability less than twelve(12) months after the date the member enters the DROP, the benefitsfor the member are calculated under the provisions of the applicablefund as if the member had never entered the DROP.
(d) If the member retires because of a disability at least twelve(12) months after the date the member enters the DROP, the benefitsfor the member are calculated under section 12 of this chapter, andthe member's retirement date is the date the member retires becauseof a disability rather than the member's DROP retirement date.As added by P.L.148-2007, SEC.6.
IC 36-8-8.5-17
Exemption from levy limits; taxes of civil taxing unit for pensionbenefits
Sec. 17. (a) The ad valorem property tax levy limits imposed byIC 6-1.1-18.5 do not apply to ad valorem property taxes imposed bya civil taxing unit for a calendar year to pay pension benefits undersection 12(c) of this chapter to the extent provided in subsection (b).
(b) For purposes of determining the property tax levy limitimposed on a civil taxing unit under IC 6-1.1-18.5, the civil taxingunit's ad valorem property tax levy for a calendar year does notinclude an amount equal to the amounts paid by the civil taxing unitfor pension benefits in that calendar year under section 12(c) of thischapter, minus:
(1) the amount of pension relief distributions underIC 5-10.3-11-4, IC 5-10.3-11-4.5 (repealed effective January 1,2009), and IC 5-10.3-11-4.7 to be received by the civil taxingunit in that calendar year that is attributable to pension benefitspaid under section 12(c) of this chapter for that calendar year;and
(2) an amount equal to the percentage of the civil taxing unit'spension distributions that were relieved under IC 5-13-12-4 inthe preceding calendar year, multiplied by the amount ofpension benefits paid under section 12(c) of this chapter in thatcalendar year.
As added by P.L.62-2002, SEC.5. Amended by P.L.1-2009, SEC.170.