Section 18-42 Retirement by reason of age or service.

(c) The administrator shall pay to a retiree, retired on account of age or service, retirement benefits determined by subsections (1) or (2) below. The plan benefits of subsection (1) below apply to employees hired after October 1, 1991 and employees employed on October 1, 1991 who elected the benefits of subsection (1). The plan benefits of subsection (2) below apply to employees employed on October 1, 1991 who elected the benefits of subsection (2).

(1) A retiree retired due to age or service shall receive three (3) per cent of highest average salary per year of covered employment up to twenty (20) years. For each year of service in covered employment over twenty (20), the retiree shall receive an additional two (2) per cent of highest average salary per year, up to a maximum of seventy (70) per cent for twenty-five (25) years of service. This benefit shall continue for life. In the first month of each plan year, the retirement benefit shall be increased by 0.6% (i.e. annual compound COLA).

(2) A retiree covered under this option of the plan shall receive, up to age sixty-two (62), three (3) per cent of highest average salary per year of covered employment up to twenty (20) years. For each year of service in covered employment over twenty (20), the retiree shall receive an additional two (2) per cent of highest average salary per year, up to a maximum of seventy (70) per cent for twenty-five (25) years of service. In addition, a covered police employee retiring prior to age sixty-two (62) according to the eligibility requirements of this plan shall receive an increase in the first month of each plan year after retirement of two (2) per cent of the retirement benefits per year up to age sixty-two (62). After age sixty-two (62), all employees retired under this option shall receive two and twenty hundredths (2.20) per cent of the highest average salary times the number of years of continuous service up to twenty (20) years. For each year over twenty (20), one and seventy hundredths (1.70) per cent of highest average salary is added. The maximum benefit is fifty-two and five tenths (52.5) per cent of highest average salary with twenty-five (25) years of continuous service. The benefit calculated at age sixty-two (62) is then increased by two (2) per cent for each year from retirement to age sixty-one (61). The benefits calculated at age sixty-two (62) shall be increased each future year of retirement by two (2) per cent. The benefit calculated at age sixty-two (62) is then payable from age sixty-two (62) and increased in each future year by two (2) per cent of the preceding year's benefit amount.

(e) If, when a covered police employee’s employment is terminated, the reserve value of the employee’s retirement benefits is less than five thousand dollars ($5,000.00), the administrator shall pay the employee the amount of the reserve value in a single lump sum payment. “Reserve value” is the actuarial equivalent of the pension benefits the covered police employee would otherwise be eligible to receive under the police retirement plan. The single lump sum payment shall be made as soon as possible after employment is terminated and shall be in lieu of all other retirement benefits otherwise due the employee under the police retirement plan. The single lump sum payment shall be a complete discharge of all liabilities of the police retirement fund to the employee. This subsection shall not apply to covered police employees who retire on disability.

(f) In accordance with the requirements of subsection 401(a)(9) of the code, distribution of retirement benefits under this section shall begin no later than April 1 of the year in which the retiree either attains age seventy and one-half or retires, whichever is later. Any distribution options in the police retirement plan inconsistent with the provisions of section 401(a)(9) of the code are overridden by the provisions of the code.