Sec. 5.01. SERVICE.  Except as provided by Section 5.02 of this Act, a member shall receive credit for service during all periods of employment by the municipality as a police officer.  Service credit is used in determining the eligibility for benefits and the amount of benefits to which the member is entitled under this Act.
Sec. 5.02. VESTING.  No right to retirement benefits provided under this Act vests until a member completes five years of service.
Sec. 5.03. BREAK IN SERVICE.    (a)  A member has a break in service if the member's employment with the municipality is terminated by reason of the member's quitting, retiring, or being discharged and the member is rehired.  An authorized leave of absence, as described in Subsection (b) or (c) of this section, does not constitute a break in service if the member returns to work at the end of the leave.
(b) A member who is granted a leave of absence for military service is entitled to receive service credit for the period of military service if the member:
(1) is honorably discharged;
(2) returns to active employment with the municipality not later than the 90th day after the date the member is discharged;  and
(3) is employed by the municipality for at least one full year after the member's return.
(c) A member who is granted a leave of absence for reasons other than military service is entitled to receive service credit for the leave if:
(1) the leave of absence is for a period of three months or less;  and
(2) the member returns to active employment before the expiration of the leave period.
(d) A determination as to whether a member was absent or at work shall be made by the board on the basis of whether the member received compensation from the municipality for the period in question.  The decision of the board based on the municipality's payroll records is final and binding on the member and the member's beneficiaries.
(e) A member who has a break in service loses credit for all prior service unless the member makes a contribution to the fund in an amount that may be authorized by the board and certified by the actuary for the fund.  Except as provided by Subsection (b) of this section, a member may not be given credit for time not employed in the police department.
ARTICLE 6. CONTRIBUTIONS

Sec. 6.01.  CONTRIBUTION OF MEMBERS AND PARTICIPATION IN FUND; WAGE DEDUCTIONS.  Subject to modification under Section 11.01 of this Act, each member shall make contributions to the fund, and the municipality is authorized to deduct 12 percent of the member's monthly wages as contributions to the fund for service rendered after August 31, 2019. 
Sec. 6.02. PICKUP OF MEMBER CONTRIBUTIONS.    (a)  As provided by Section 414(h)(2), Internal Revenue Code of 1986 (26 U.S.C. Section 414(h)(2)), the municipality shall pick up and pay a member's required contribution.  Although the contributions so picked up are designated as member contributions, the contributions shall be treated as contributions being paid by the municipality in lieu of contributions by the member for determining tax liability under the Internal Revenue Code of 1986 and are not included in the gross income of the member until the amounts are distributed or made available to the member or the member's beneficiary.  The member may not choose to receive the picked-up contributions directly, and the picked-up contributions must be paid by the municipality to the fund.
(b) Member contributions picked up under Subsection (a) of this section are included in the compensation of the member for purposes of determining benefits and contributions under the fund.
(c) The municipality shall pay the member contributions from the same source of funds used in paying compensation to the member by reducing the gross compensation of the member.
Sec. 6.03.  CONTRIBUTIONS BY MUNICIPALITY.  (a)  Subject to modification under Section 11.01 of this Act and not later than the 15th business day after the first day of the municipality's fiscal year, the municipality shall contribute to the fund 18 percent of payroll based on authorized positions, as determined by the municipality.
(b)  Not later than December 31 of the year following the year in which the municipality makes a contribution under Subsection (a) of this section, the municipality shall:
(1)  calculate the difference, if any, between the amount of the municipality's actual payroll for the applicable fiscal year and the amount of payroll on which its contribution under Subsection (a) of this section was based; and
(2)  contribute to the fund an amount equal to the municipality's applicable contribution rate multiplied by the amount of the difference calculated under Subdivision (1) of this subsection.
Sec. 6.04.  MUNICIPALITY'S LIABILITY.  (a)  Except as provided by this section, the municipality may not be held liable or responsible for any claim or asserted claim for benefits under the fund, but all claims shall be paid from the money for which provisions have been made under the terms of the plan and fund.
(b)  The municipality shall pay the pension fund, in the manner provided by Subsection (d) of this section, money in an amount sufficient to offset any negative financial impact to the fund, as determined by the actuary for the fund, caused by a unilateral action taken by the municipality, including a reduction by the municipality in the number of the municipality's police officers.
(c)  The actuary for the fund, as part of the actuary's actuarial valuation of the fund, shall annually determine whether a reduction in the number of municipal police officers by a municipality had a negative financial impact to the fund.
(d)  If the actuary determines a negative financial impact to the fund has occurred under this section, the municipality shall:
(1)  provide additional funding to the fund in the time frame prescribed for making contribution increases under Section 11.01(b-1) of this Act; and
(2)  continue to provide the funding described by Subdivision (1) of this subsection until the negative impact of the action is eliminated as determined by the actuary for the fund.
Sec. 6.05. LOANS TO MEMBERS.  A member may borrow from the member's contributions to the fund as approved by the board based on the rules adopted by the board in compliance with the Internal Revenue Code of 1986.  The rules must be applied in a nondiscriminatory manner.
ARTICLE 7. RETIREMENT PENSIONS

Sec. 7.01. NORMAL PENSION.  A member who retires on or after the member's 65th birthday is entitled to receive a monthly amount equal to the following:
(1) 1.35 percent of the member's average monthly compensation multiplied by the number of years of service, not to exceed 15 years;  plus
(2) 1.65 percent of the member's average monthly compensation multiplied by the number of years of service in excess of 15 years, not to exceed an additional 15 years, for a total of 30 years.
Sec. 7.02. EARLY PENSION.    (a)  A member who terminates service on or after the member's 55th birthday but before the member's 65th birthday and who has at least 10 years of service credited in the fund is entitled to receive a monthly amount equal to a benefit determined as a fraction of the following amount:
(1) 1.35 percent of the member's average monthly compensation multiplied by the sum of the number of full and fractional years of service, not to exceed 15 years, plus the number of years and full months from the date of termination of employment to the member's 65th birthday;  plus
(2) 1.65 percent of the member's average monthly compensation multiplied by the sum of the number of full and fractional years of service, not to exceed an additional 15 years, for a total of 30 years, plus the number of years and full months from date of termination of employment to the member's 65th birthday.
(b) The fraction used to compute an early retirement benefit is determined by dividing the number of full and fractional years of service by the sum of the number of full and fractional years of service plus the number of years and full months from date of termination to the member's 65th birthday.
(c) If payment of an early pension begins before the member's 65th birthday, the amount determined under Subsections (a) and (b) of this section shall be reduced by 1/180th for each of the first 60 months and 1/360th for each of the next 60 months by which the starting date of pension payments precedes that birthday.
Sec. 7.03. SPECIAL EARLY PENSION.    (a)  A member who terminates service with the municipality on or after the date the member has 20 years of service credited in the fund shall receive a monthly amount beginning the first day of the month following the later of the member's 45th birthday or the date of termination of service.  If the member retires before reaching age 62, the member's pension is determined by the following formulas:
(1) the pension benefit payable until the age of 62 is equal to the following:
(A) 1.35 percent of the member's average monthly compensation multiplied by the number of years of service, not to exceed 15 years;  plus
(B) 1.65 percent of the member's average monthly compensation multiplied by the number of years of service in excess of 15 years, not to exceed an additional 10 years, for a total of 25 years;  plus
(C) 1.0 percent of the member's average monthly compensation multiplied by the number of years of service in excess of 25 years but not to exceed an additional five years, for a total of 30 years;  plus
(D) 1.075 percent of the member's average monthly compensation multiplied by the number of years of service limited to 20 years;  plus
(E) 3.35 percent of the member's average monthly compensation multiplied by the number of years of service in excess of 20 years, not to exceed an additional five years;  and
(2) the pension benefit payable after the member reaches age 62 is equal to the following:
(A) 1.35 percent of the member's average monthly compensation multiplied by the number of years of service, not to exceed 15 years;  plus
(B) 1.65 percent of the member's average monthly compensation multiplied by the number of years of service in excess of 15 years, not to exceed an additional 15 years, for a total of 30 years.
(b) A member who terminates service with the municipality on or after the date the member has 20 years of service credited in the fund and who retires on or after age 62 is entitled to receive a monthly amount equal to:
(1) 1.35 percent of the member's average monthly compensation multiplied by the number of years of service, not to exceed 15 years;  plus
(2) 1.65 percent of the member's average monthly compensation multiplied by the number of years of service in excess of 15 years, not to exceed an additional 15 years, for a total of 30 years.
Sec. 7.04. EXTRA-SPECIAL EARLY PENSION.    (a)  A member who terminates service after having 25 years of service credited in the fund and who retires before the age of 62 is entitled to receive a monthly amount determined by the following formulas:
(1) the pension benefit payable up to the age of 62 equals the following:
(A) 1.35 percent of the member's average monthly compensation multiplied by the number of years of service, not to exceed 15 years;  plus
(B) 1.65 percent of the member's average monthly compensation multiplied by the number of years of service in excess of 15 years, not to exceed an additional 10 years, for a total of 25 years;  plus
(C) 1.0 percent of the member's average monthly compensation multiplied by the number of years of service in excess of 25 years, not to exceed an additional five years, for a total of 30 years;  plus
(D) 1.075 percent of the member's average monthly compensation multiplied by the number of years of service, not to exceed 20 years;  plus
(E) 3.35 percent of the member's average monthly compensation multiplied by the number of years of service in excess of 20 years, not to exceed an additional five years;  and
(2) the pension benefit payable after the member reaches age 62 is equal to the following:
(A) 1.35 percent of the member's average monthly compensation multiplied by the number of years of service, not to exceed 15 years;  plus
(B) 1.65 percent of the member's average monthly compensation multiplied by the number of years of service in excess of 15 years, not to exceed an additional 15 years, for a total of 30 years.
(b) A member who meets the requirements for an extra-special early pension and who retires on or after age 62 is entitled to receive a monthly amount equal to the following:
(1) 1.35 percent of the member's average monthly compensation multiplied by the number of years of service, not to exceed 15 years;  plus
(2) 1.65 percent of the member's average monthly compensation multiplied by the number of years of service in excess of 15 years, not to exceed an additional 15 years, for a total of 30 years.
Sec. 7.05. REEMPLOYMENT OF RETIRED MEMBERS ELIGIBLE TO RECEIVE CERTAIN PENSIONS.  If a retired member eligible to receive a normal, early, special early, or deferred vested pension is reemployed by the municipality, the payment of any pension, whether or not payment has begun, to which the retired member is entitled from the plan may not be suspended, whether or not the person again becomes a member.  The retired member shall be treated as a new employee for purposes of determining the person's membership in this plan and for purposes of determining the person's service after reemployment.  However, for purposes of computing any death benefit under this plan, the previous period of service shall be used if it produces a greater amount of death benefit than the member's last period of service.
Sec. 7.06. MODIFICATION.  The pensions provided by Sections 7.01-7.04 of this Act are subject to modification as provided by Section 11.01 of this Act.
ARTICLE 8. DEFERRED VESTED PENSION

Sec. 8.01. DEFERRED VESTED PENSION.    (a)  A member is eligible for a deferred vested pension if the member's employment is terminated, for reasons other than death or retirement under a normal, early, special early, extra-special early, or disability pension, on or after the completion of five or more years of service.
(b) Payment of a deferred vested pension begins as of the first day of the month following the member's 65th birthday, if the member is then living.  If the member has completed 10 years of service, the member may request the deferred vested pension to begin as of the first day of the month following the member's 55th birthday or as of the first day of any subsequent month that precedes the member's 65th birthday.
(c) If payment of a deferred vested pension begins before the member's 65th birthday, the amount shall be reduced by 1/180th for each of the first 60 months and 1/360th for each of the next 60 months by which the starting date of the pension payment precedes the member's 65th birthday.  The provisions of this section are subject to change as provided by Section 11.01 of this Act.
ARTICLE 9. DISABILITY PENSIONS

Sec. 9.01. DISABILITY PENSIONS.    (a)  A member is eligible for a disability pension if the member's employment is terminated by reason of a disability before the member's 65th birthday.
(b) Payment of a disability pension begins following a 12-month waiting period following the member's termination of service based on disability, except that if disability is presumed to be permanent before the completion of the 12-month period, disability payments begin following the certification of the disability.
(c) Payment of a disability pension may not begin until the disability is certified to be continuous for a period of 90 days.
(d) Payment of a disability pension ends on the member's death or the end of the member's disability.  If the disability ends on or after the member's 65th birthday, the member's disability pension shall be continued in the same manner as if the disability had continued.
Sec. 9.02. REEMPLOYMENT FOLLOWING DISABILITY.    (a)  If a member who has received any disability pension payments recovers and is reemployed by the municipality as a police officer not later than the 30th day after the date of certification that the disability has ended, the member's membership in the fund shall be reinstated as of the date the person returns to active employment.
(b) The member shall receive credit for all service with the municipality credited to the member at the inception date of the member's disability.
(c) The board may extend the 30-day period when, in the board's judgment, reasonable cause exists for extending the period.
Sec. 9.03. END OF DISABILITY BEFORE AGE 65.  If a member's disability ends before the member's 65th birthday and the member is not reemployed by the municipality, the member shall be treated as a terminated member and is not entitled to further benefits except the excess, if any, of the member's accumulated contributions less the total amount of disability benefits received.  However, if the member meets the requirements for an early, special early, extra-special early, or deferred vested pension on the date of termination for disability, the member is entitled to receive a pension equal in amount to the early, special early, extra-special early, or deferred vested pension the member would have been entitled to as of the date of the member's disability.
Sec. 9.04. INELIGIBILITY FOR DISABILITY PENSION.  A member is not eligible for a disability pension if the board determines that the member's disability results from:
(1) addiction to narcotics or hallucinogenic drugs;
(2) an injury suffered while engaged in a felonious or criminal act or enterprise;
(3) a self-inflicted injury;
(4) voluntary or involuntary service in the armed forces of any nation;  or
(5) an absence in excess of three months for which the member received no earnings from the municipality, unless the absence was due to sickness or accident that resulted in disability.
Sec. 9.05. RULES CONCERNING DISABILITIES.  The board may establish rules as appropriate to certify a member's disability and to verify the continued existence of the disability.
Sec. 9.06. AMOUNT OF DISABILITY PENSION.  Subject to Section 11.01 of this Act, a member who meets the requirements for a disability pension is entitled to receive a monthly amount determined as follows:
(1) the pension payable until age 65 equals 60 percent of the member's monthly rate of pay at the time of the disability minus any primary social security benefit actually paid to the member and the amount of other payments the member is entitled to receive from workers' compensation or any other disability plan, except that a member's disability pension under this Act may not exceed $1,500 per month;  and
(2) the pension payable beginning at age 65 is an amount computed in the same manner as for a normal retirement pension considering the member's compensation and service as if:
(A) the member had continued employment with the municipality until the member's 65th birthday;  and
(B) the member's rate of pay had remained constant from the time of disability until the member's 65th birthday.
ARTICLE 10. SEVERANCE AND DEATH BENEFITS;  REFUND OF CONTRIBUTIONS

Sec. 10.01. SEVERANCE BENEFITS.    (a)  A member whose employment with the municipality is terminated before the member qualifies for a benefit is entitled to receive a refund of accumulated contributions, payable in a lump sum or in installments without interest.
(b) A member who receives a payment under this section forfeits any further rights or benefits from the fund.
Sec. 10.02. REFUND OF CONTRIBUTIONS.    (a)  In lieu of any other benefit to which a retired member may be entitled, a member may elect to receive a refund of accumulated contributions, payable in a lump sum or in installments without interest.
(b) A member who receives a payment under this section forfeits any further rights or benefits from the fund.
Sec. 10.03. DEATH OF MEMBER WHILE ACTIVELY EMPLOYED BY MUNICIPALITY.    (a)  If a member dies while actively employed by the municipality, leaving a spouse or a dependent child under the age of 18, the board shall order a monthly allowance as provided by this section.
(b) The surviving spouse of an active member who, on the date of the member's death, had completed five or more years of service is eligible to receive a spouse's pension, payable monthly in an amount equal to 50 percent of the amount computed for a normal retirement pension but using the member's compensation and service earned as of the date of death.  Payment of a spouse's pension continues until the death or remarriage of the spouse.
(c) If there is not a surviving spouse, each surviving dependent child of the deceased member under the age of 18 is eligible for a dependent child's pension, payable monthly in an amount equal to 50 percent of the amount computed for a normal retirement pension, but using the member's compensation and service earned as of the date of death.  If there is more than one such child, the monthly amount shall be divided equally among the children at the time the amount is paid.  Payment of a dependent child's pension continues until the child attains the age of 18 or until the child's death, whichever occurs first.
(d) If a surviving spouse receiving a spouse's pension dies leaving a surviving dependent child or children under the age of 18, the spouse's pension shall be continued to the child or children under the terms of this section.
(e) If a member dies while actively employed by the municipality after having completed five or more years of service with the municipality and leaves no surviving spouse or dependent children, the member's beneficiaries are eligible to receive a death benefit equal to the greater of the member's total accumulated contributions or $2,500.
(f) If a member dies while actively employed by the municipality after having completed less than five years of service with the municipality, the member's beneficiaries are eligible to receive a death benefit equal to the member's accumulated contributions.
(g) The total amount of death benefit payments payable under Subsection (f) of this section may not be less than the greater of $2,500 or the total amount of the member's accumulated contributions.  If a spouse or dependent child dies before receiving the minimum amount and is not survived by another person entitled to the death benefit, the balance of that amount is payable in a lump sum to the estate of the decedent.  If the spouse remarries before receiving that amount and there are no surviving dependent children to receive payment, the balance of the death benefit is payable in a lump sum to the beneficiaries of the member.
Sec. 10.04. DEATH OF RETIRED MEMBER.    (a)  If a member dies under a normal, early, special early, extra-special early, or disability pension, or retires under an early, special early, extra-special early, or disability pension but dies before beginning to receive the pension and is survived by a spouse, the spouse is eligible for a monthly pension if the spouse was married to the member before the member's termination of service with the municipality's police department.
(b) The pension is equal to 50 percent of the pension to which the member was entitled on the date of death.  If the retired member retired and began receiving a pension before the age of 62, the monthly amount of the pension payable to the member's surviving spouse after the date on which the retired member would have attained age 62 shall be reduced to 50 percent of the pension which the retired member would have received had the member attained age 62.
(c) If a retired member who is receiving disability retirement benefits dies before the age of 65, the monthly amount of the pension shall be equal to 50 percent of the pension the member would have received had the member worked until the date of death at the rate of pay in effect at the inception of the disability.
(d) Payment of the pension continues until the date of death or remarriage of the spouse, whichever occurs first.
(e) The total benefit payments payable under this section may not be less than the greater of the retired member's total accumulated contributions, or $2,500, less any previous payments made to the retired member.  If the spouse dies before receiving that amount, the balance of the minimum amount of the death benefit is payable in a lump sum to the spouse's estate.  If the spouse remarries before receiving the minimum amount or if the retired member and the spouse are divorced on the retired member's date of death, the balance of the minimum amount of the death benefit is payable in a lump sum to the beneficiaries of the retired member.
(f) If a member dies under a normal, early, special early, extra-special early, or disability pension, or retires under an early, special early, extra-special early, or disability pension but dies before beginning to receive the pension and does not leave a surviving spouse, the beneficiaries of the retired member are eligible for a death benefit equal to the greater of the member's accumulated contribution or $2,500, less any payments previously made to the deceased member.
(g) If a member who is entitled to or is receiving a deferred vested pension dies, the member's beneficiaries are eligible for a death benefit, payable in a lump sum, equal to the deceased member's total accumulated contributions, less any pension payments previously received.
Sec. 10.05. DESIGNATION OF BENEFICIARY BY BOARD.  If a member dies without having designated one or more beneficiaries, the board may designate a beneficiary under rules adopted by the board as provided by Section 2.01 of this Act.
Sec. 10.06. MODIFICATION OF SEVERANCE AND DEATH BENEFITS.  This article is subject to any modifications made in accordance with Section 11.01 of this Act.
ARTICLE 11. MODIFICATIONS

Sec. 11.01.  MODIFICATION OF BENEFITS, MEMBERSHIP QUALIFICATIONS, ELIGIBILITY REQUIREMENTS, AND CONTRIBUTIONS.  (a)  Subject to Section 2.10 of this Act and except as otherwise provided by this section, the board, with the approval of at least six board members, may modify:
(1)  benefits provided by this Act, including the multiplier by which a pension benefit amount provided under Article 7 of this Act is calculated, except that any increase in benefits is subject to Subsection (b) of this section;
(2)  future membership qualifications;
(3)  eligibility requirements for pensions or benefits, including the age at which a member is eligible to retire; or
(4)  subject to Subsection (b) of this section, the contribution rates provided by Sections 6.01 and 6.03 of this Act.
(b)  Notwithstanding any other provision of this Act, the board of trustees may not modify the contribution rates expressly provided by Sections 6.01 and 6.03 of this Act before January 1, 2025.  If, on or after January 1, 2025, the fund's most recent actuarial valuation recommends an actuarially determined contribution rate that exceeds the aggregate contribution rates provided by Sections 6.01 and 6.03 of this Act, as modified under this section, if applicable, the board shall:
(1)  calculate the difference between the actuarially determined contribution rate and the aggregate contribution rates; and
(2)  by rule, increase the contribution rates applicable under Sections 6.01 and 6.03 of this Act by 50 percent of the difference calculated under Subdivision (1) of this subsection.
(b-1)  An increase in contribution rates under Subsection (b) of this section may not take effect before:
(1)  the January 1 following the date on which the board of trustees approved the applicable actuarial valuation, if the approval occurred at least three months before the first day of the municipality's fiscal year; or
(2)  the first day of the municipality's fiscal year that begins more than three months after the date the board approved the applicable actuarial valuation, if the approval occurred less than three months before the first day of the municipality's next fiscal year.
(c)  Notwithstanding any other provision of this Act, the board, with the approval of at least five board members, may provide for refunds, in whole or in part, with or without interest, of accumulated contributions made to the fund by members who leave the municipality's service before qualifying for a pension.
(d)  Actions authorized under this section may not be made unless first reviewed by a qualified actuary selected by the board.  To qualify, an actuary who is an individual must be a Fellow of the Society of Actuaries or a member of the American Academy of Actuaries.  The basis for the actuary's approval or disapproval of a board action is not subject to judicial review.