Pennsylvania Statutes Title 53 P.S. Municipal and Quasi-Municipal Corporations § 895.1121. DROP participant account

(a) General rule.--If a local government creates a DROP, it shall establish a DROP participant account as an interest-bearing ledger account in its pension trust fund.  The account balance shall be accounted for separately but need not be physically segregated from other pension trust fund assets.

(b) Subsidiary DROP participant accounts.--A separate interest-bearing subsidiary DROP participant account shall be established for each DROP participant.  While a retired member is employed as a DROP participant, the member's monthly, normal retirement benefit and interest thereon shall be credited to the DROP participant's subsidiary DROP participant account under section 1114(c). 1  The interest shall be compounded and credited monthly at the actual rate earned by the DROP participant account that shall not be less than 0% nor more than 4 1/2 %.

(c) Termination of employment.--When a DROP participant terminates employment with the local government as a DROP participant, the DROP participant's total accumulated benefits shall be calculated, charged to the DROP participant account and paid out of the pension trust fund under section 1114(d)(2).

(d) Account held in trust.--A DROP participant account shall be held in trust for the exclusive benefit of DROP retired members who are or were DROP participants and for the beneficiaries of the members.