Bill Text: MI HB4060 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Retirement; fire and police; amount of defined benefit pension of municipal fire and police; limit as a percent of base pay. Amends sec. 6 of 1937 PA 345 (MCL 38.556).
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2011-01-18 - Printed Bill Filed 01/14/2011 [HB4060 Detail]
Download: Michigan-2011-HB4060-Introduced.html
HOUSE BILL No. 4060
January 13, 2011, Introduced by Rep. Geiss and referred to the Committee on Oversight, Reform, and Ethics.
A bill to amend 1937 PA 345, entitled
"Fire fighters and police officers retirement act,"
by amending section 6 (MCL 38.556), as amended by 2003 PA 8.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 6. (1) Age and service retirement benefits payable under
this act are as follows:
(a) A member who is 55 years of age or older and who has 25 or
more years of service as a police officer or fire fighter in the
employ of the municipality affected by this act may retire from
service upon written application to the retirement board stating a
date, not less than 30 days or more than 90 days after the
execution and filing of the application, on which the member
desires to be retired. The retirement board shall grant the
benefits to which the member is entitled under this act, unless the
member continues employment. If the member continues employment,
the member's pension shall be deferred with service years of credit
until actual retirement. Upon the approval of the legislative body
or the electors of a municipality under this act, a member under 50
years of age who has 25 or more years of service, or without the
necessity for approval, a member 50 years of age or more who has 25
or more years of service, may leave service and receive the full
retirement benefits payable throughout the member's life as
provided in subdivision (e).
(b) A member who is 60 years of age or older shall be retired
by the retirement board upon the written application of the
legislative body, or board or official provided in the charter of
the municipality as head of the department in which the member is
employed. Upon retirement, the retirement board shall grant the
benefits to which the member is entitled under this act, unless the
member continues employment. If the member continues employment,
the member's pension shall be deferred with service years of credit
until actual retirement.
(c) A member who is 65 years of age shall be retired by the
retirement board on the first day of the month following attainment
of 65 years of age.
(d) A member who has 10 or more years of service shall have
vested retirement benefits that are not subject to forfeiture on
account of disciplinary action, charges, or complaints. If the
member leaves employment before the date the member would have
first become eligible to retire as provided in subdivision (a) for
any reason except the member's retirement or death, the member is
entitled to a pension that shall begin the first day of the
calendar month immediately after the month in which the member's
written application for the pension is filed with the retirement
board that is on or after the date the member would have been
eligible to retire had the member continued in employment. The
retirement board shall grant the member the benefits to which the
member is entitled under this act, unless the member resumes
service. If the member resumes service, the member's pension shall
be further deferred with service years of credit until the member
actually retires.
(e) Upon retirement from service as provided in this
subsection, a member shall receive a regular retirement pension
payable throughout the member's life of 2% of the member's average
final compensation multiplied by the first 25 years of service
credited to the member, plus 1% of the member's average final
compensation multiplied by the number of years, and fraction of a
year, of service rendered by the member in excess of 25 years. A
municipality under this act, upon approval of the legislative body
or the electors of the municipality, may increase the percentage of
the payment from 2% up to a maximum of 2.5%. If an increase is
approved, the increase shall not be reduced for members under the
system at the time of the increase. The legislative body may also
increase the percentage of employee contributions. If a retired
member dies before the total of regular pension payments received
by the member equals the total of the member's contributions made
to the retirement system, the difference between the member's total
contributions and the total of the member's regular retirement
pension payments received shall be paid in a single sum to the
person or persons the member nominates by written designation duly
executed and filed with the retirement board. If there is not a
person or persons surviving the retired member, the difference, if
any, shall be paid to the retired member's legal representative or
estate.
(f) As used in this section, "average final compensation"
means the average of the highest annual compensation received by a
member during a period of 5 consecutive years of service contained
within the member's 10 years of service immediately preceding the
member's retirement or leaving service. However, if so provided in
a collective bargaining agreement entered into between a
municipality under this act and the appropriate recognized
bargaining agent, average final compensation may mean the average
of the 3 years of highest annual compensation received by a member
during the member's 10 years of service immediately preceding the
member's retirement or leaving service. If the member has less than
5 years of service, average final compensation means the annual
average compensation received by the member during his or her total
years of service. For members who become members on and after
December 31, 2010, notwithstanding anything that may be to the
contrary in this act, average final compensation shall not exceed
55% of the member's base pay. If a collective bargaining agreement
that requires a greater average final compensation than 55% of the
member's base pay is in effect on December 31, 2010, then average
final compensation of a member subject to the collective bargaining
agreement shall be administered in accordance with the terms of the
collective bargaining agreement until the agreement expires or is
renegotiated. As used in this section, "base pay" means the hourly
pay rate of the member up to 40 hours per week and 52 weeks per
year. Base pay shall not include any of the following:
(i) Overtime pay.
(ii) Accrued sick leave or accrued vacation time.
(iii) Bonus pay.
(iv) The cost of health insurance or other fringe benefits.
(v) One-time lump-sum payments.
(g) A member shall be given service credit for time spent in
the military, naval, marine, or other armed service of the United
States government during time of war, or other national emergency
recognized by the board, if the member was employed by the
municipality at the time of entry into the armed service, and is or
was reemployed by the municipality as a police officer or fire
fighter within 6 months after the date of termination of his or her
required enlistment or assignment in the armed service. A
municipality by a 3/5 vote of its governing body or by a majority
vote of the qualified electors may provide service credit for not
more than 6 years of active military service to the United States
government to a member who is employed subsequent to this military
service upon payment to the retirement system of 5% of the member's
full-time or equated full-time compensation for the fiscal year in
which payment is made multiplied by the years of service that the
member elects to purchase up to the maximum. Service is not
creditable if it is or would be creditable under any other federal,
state, or local publicly supported retirement system. However, this
restriction does not apply to those persons who have or will have
acquired retirement eligibility under the federal government for
service in the reserve. A member shall be given service credit for
the time the member is absent from active service without full pay
on account of sickness or injury. If the absence from active
service is due to nonservice connected sickness or injury, not more
than 60 days of the absence shall be credited as service in any 1
calendar year, as determined by the retirement board.
(h) Before the effective date of the member's retirement as
provided in this subsection, but not after the effective date of
the member's retirement, a member may elect to receive his or her
benefit in a pension payable throughout the member's life, called a
regular retirement pension, or the member may elect to receive the
actuarial equivalent, computed as of the effective date of
retirement, of the member's regular retirement pension in a reduced
retirement pension payable throughout the member's life, and
nominate a survivor beneficiary, under an option provided in this
subdivision. Upon the death of a retirant who retires on or after
July 1, 1975, and who is receiving a regular retirement pension,
his or her spouse, if living, shall receive a pension equal to 60%
of the regular retirement pension the deceased retirant was
receiving. Benefits shall not be paid under this subdivision on
account of the death of a retirant if the member elected to receive
his or her pension under an option provided in this subdivision. As
used in this subsection, "spouse" means the person to whom the
retirant was legally married on both the effective date of
retirement and the date of death. Except as otherwise provided in
this act, if a member fails to elect an option before the effective
date of retirement, then the pension shall be paid as a regular
retirement pension. A member may elect 1 of the following options:
(i) Option I. Upon the death of a retired member, his or her
reduced retirement pension shall be continued throughout the life
of and paid to the person, having an insurable interest in the
retired member's life, that the member nominated by written
designation executed and filed with the retirement board before the
effective date of the member's retirement.
(ii) Option II. Upon the death of a retired member, 1/2 of his
or her reduced retirement pension shall be continued throughout the
life of and paid to the person, having an insurable interest in the
retired member's life, that the member nominated by written
designation executed and filed with the retirement board before the
effective date of the member's retirement.
(i) If a member continues in service on or after the date of
acquiring 20 years of service credit, does not have an option I
election provided for in subdivision (j) in force, and dies while
in service of the municipality before the effective date of the
member's retirement, leaving a surviving spouse, the spouse shall
receive a pension computed in the same manner as if the member had
retired effective the day preceding the date of the member's death,
elected option I provided for in subdivision (h), and nominated the
spouse as survivor beneficiary. Upon the death of the spouse the
pension shall terminate. A pension shall not be paid under this
subdivision on account of the death of a member if benefits are
paid under subsection (2) on account of the member's death.
(j) A member who continues in service on or after the date of
acquiring 25 years of service credit may, at any time before the
effective date of the member's retirement, by written declaration
executed and filed with the board in the manner and form prescribed
by the board, elect option I provided for in subdivision (h) and
nominate a survivor beneficiary whom the board finds to be
dependent upon the member for at least 50% of the beneficiary's
support. If a member who has an option I election provided for in
this subdivision in force dies while in service before the
effective date of the member's retirement, the member's survivor
beneficiary shall immediately receive the same pension that the
survivor beneficiary would have been entitled to receive under
option I if the member had retired pursuant to this act effective
the day preceding the date of the member's death, notwithstanding
that the member may not have attained 55 years of age. If a member
who has an option I election provided for in this subdivision in
force subsequently retires pursuant to this act, the member, within
90 days immediately preceding the effective date of the member's
retirement, but not after the effective date of the member's
retirement, may elect an option provided for in subdivision (h).
The option election is effective as of the effective date of the
member's retirement. A pension shall not be paid under this
subdivision on account of the death of a member if benefits are
paid under subsection (2) on account of the member's death.
(k) If a retirant receiving a reduced retirement pension under
subdivision (h)(i) or (ii) is divorced from the spouse who had been
named the retirant's survivor beneficiary under subdivision (h)(i)
or (ii), the election of a reduced retirement pension payment option
shall be considered void by the retirement system if the judgment
of divorce or award or order of the court, or an amended judgment
of divorce or award or order of the court, described in section 9
and dated after June 27, 1991 provides that the election of a
reduced retirement pension payment option under subdivision (h)(i)
or (ii) is to be considered void by the retirement system and the
retirant provides a certified copy of the judgment of divorce or
award or order of the court, or an amended judgment of divorce or
award or order of the court, to the retirement system. If the
election of a reduced retirement pension payment option under
subdivision (h)(i) or (ii) is considered void by the retirement
system under this subsection, the retirant's retirement pension
shall revert to a regular retirement pension, including
postretirement adjustments, if any, subject to an award or order of
the court as described in the public employee retirement benefit
protection act. The retirement pension shall revert to a regular
retirement pension under this subdivision effective the first day
of the month after the date the retirement system receives a
certified copy of the judgment of divorce or award or order of the
court. This subdivision does not supersede a judgment of divorce or
award or order of the court in effect on June 27, 1991. This
subdivision does not require the retirement system to distribute or
pay retirement assets on behalf of a retirant in an amount that
exceeds the actuarially determined amount that would otherwise
become payable if a judgment of divorce had not been rendered.
(2) Disability and service connected death benefits payable
under this act are as follows:
(a) To a surviving spouse, a duty death pension of the same
amount each week as that which has been paid the surviving spouse
under the worker's disability compensation act of 1969, 1969 PA
317, MCL 418.101 to 418.941, to become due and payable on the
termination of the payments to the surviving spouse by a
municipality under the worker's disability compensation act of
1969, 1969 PA 317, MCL 418.101 to 418.941, and to continue for the
surviving spouse's life.
(b) If death results to a member in the line of duty, and the
member leaves surviving children, the children shall be paid a
pension of the same amount as that which has been paid to them as a
weekly benefit under the worker's disability compensation act of
1969, 1969 PA 317, MCL 418.101 to 418.941, to become due and
payable upon termination of the payments under the worker's
disability compensation act of 1969, 1969 PA 317, MCL 418.101 to
418.941, and to continue to each surviving child until he or she
attains 18 years of age, or until his or her marriage or death
before attaining 18 years of age.
(c) If death results to a member in the line of duty and the
member leaves other surviving dependents, the dependents shall
receive a pension of the same amount as that which has been paid to
them as a weekly benefit under the worker's disability compensation
act of 1969, 1969 PA 317, MCL 418.101 to 418.941, to become due and
payable upon termination of the payments under the worker's
disability compensation act of 1969, 1969 PA 317, MCL 418.101 to
418.941, and to continue until the time the retirement board
determines that the need for a pension no longer exists.
(d) Upon the application of a member or the member's
department head, a member who becomes totally incapacitated for
duty by reason of a personal injury or disease occurring as the
natural and proximate result of causes arising out of and in the
course of the member's employment by the municipality shall be
retired by the retirement board. The member shall be given a
medical examination by a medical committee consisting of a
physician named by the retirement board, a physician named by the
member claiming benefits, and a third physician designated by the
first 2 physicians named. The medical committee, if determined by a
majority opinion, shall certify in writing that the member is
mentally or physically incapacitated for the further performance of
duty as a police officer or fire fighter in the service of the
municipality; that the incapacity is likely to be permanent; and
that the member should be retired. Upon retirement for disability
as provided in this subdivision, a member who has not attained 55
years of age shall receive a disability retirement pension of 50%
of the member's average final compensation, which shall be
determined according to subsection (1)(f), and shall be payable
until the member becomes 55 years of age. Upon becoming 55 years of
age, the disabled member shall receive a disability retirement
pension computed according to subsection (1)(e). In computing the
disability retirement pension, the member shall be given service
credit for the period of receipt of a disability retirement pension
before attainment of 55 years of age. If a member retired after
attaining 55 years of age on account of disability, as provided in
this subdivision, the member shall receive a disability retirement
pension computed according to subsection (1)(e), notwithstanding
that the member may not have 25 years of service credit. The
disability retirement pension provided for in this subdivision is
subject to subdivisions (f) and (g).
(e) Upon the application of a member or the member's
department head, a member in service who has 5 or more years of
service credit and who becomes totally and permanently
incapacitated for duty by reason of a personal injury or disease
occurring as the result of causes arising outside the course of the
member's employment by the municipality may be retired by the
retirement board. The member shall be given a medical examination
by a medical committee consisting of a physician named by the
retirement board, a physician named by the member claiming
benefits, and a third physician designated by the first 2
physicians named. The medical committee, if determined by a
majority opinion, shall certify in writing that the member is
mentally or physically incapacitated for the further performance of
duty as a police officer or fire fighter in the service of the
municipality, that the incapacity is likely to be permanent, and
that the member should be retired. Upon retirement for disability,
as provided in this subdivision, a member who has not attained 55
years of age shall receive a disability retirement pension until
the member becomes 55 years of age, recovers, or dies, whichever
occurs first, of 1.5% of the member's average final compensation
multiplied by the number of years of service credited to the
member. Upon becoming 55 years of age, the member's disability
retirement pension shall be increased to 2% of the member's average
final compensation multiplied by the number of years of service
credited to the member at the time of his or her retirement. Upon
retirement for disability as provided in this subdivision, a member
who is 55 years of age or older shall receive a disability
retirement pension computed according to subsection (1)(e). This
subdivision is subject to subdivisions (f) and (g).
(f) At least once each year during the first 5 years after the
retirement of a member with a disability retirement pension and at
least once in every 3-year period after disability retirement, the
retirement board may, and upon the retired member's application
shall, require a retired member who has not attained 55 years of
age to undergo a medical examination. The medical examination shall
be given by or under the direction of a physician, designated by
the retirement board, at the place of residence of the retired
member or other place mutually agreed upon. If a retired member who
has not attained 55 years of age refuses to submit to the medical
examination in the period, the member's disability retirement
pension may be discontinued by the retirement board. If the
member's refusal continues for 1 year, all the member's rights to
his or her disability retirement pension may be revoked by the
retirement board. If upon a medical examination of the retired
member the physician reports to the retirement board that the
retired member is physically capable of resuming employment in the
classification held by the member at the time of retirement, the
member shall be restored to active service in the employ of the
municipality and payment of the disability retirement pension shall
cease if the report of the physician is concurred in by the
retirement board. A retired member restored to active service shall
again become a member of the retirement system from the date of
return to service. The member shall contribute to the retirement
system after restoration to active service in the same manner as
before the member's disability retirement. Service credited to the
member at the time of disability retirement shall be restored to
full effect. The member shall be given service credit for the
period the member was receiving a duty disability retirement
pension provided for in subdivision (d), but shall not be given
service credit for the period the member was receiving a nonduty
disability retirement pension provided for in subdivision (e).
Amounts paid under the worker's disability compensation act of
1969, 1969 PA 317, MCL 418.101 to 418.941, to a retired member
shall be offset against and payable in place of benefits provided
under this act. If the benefits under the worker's disability
compensation act of 1969, 1969 PA 317, MCL 418.101 to 418.941, are
less than the benefits payable under this act, the amount to be
paid out of the funds of the retirement system shall be the
difference between the benefits provided under the worker's
disability compensation act of 1969, 1969 PA 317, MCL 418.101 to
418.941, and the benefits provided in this act. Upon the
termination of benefits under the worker's disability compensation
act of 1969, 1969 PA 317, MCL 418.101 to 418.941, the benefits
shall be paid pursuant to this act.
(g) Within 60 days before a member becomes 55 years of age, or
before retirement from service if retirement occurs after the
member becomes 55 years of age, a disabled member who is retired as
provided in subdivision (d) or (e) may elect to continue to receive
a disability retirement pension as a benefit terminating at death,
to be known as a regular disability pension, or may elect to
receive the actuarial equivalent, at that time, of a regular
disability pension in a reduced disability pension payable
throughout life pursuant to an option provided in subsection
(1)(h). If a disabled member fails to elect an option, as provided
in this subdivision, before becoming 55 years of age or before
retirement, the member's retirement pension shall be paid to the
member as a regular disability pension terminating at death. If a
disabled member who has not elected an option provided in
subsection (1)(h) dies before the total of the member's regular
disability pension payments received equals or exceeds the total of
the member's contributions made to the retirement system, the
remainder, if any, shall be paid in a single sum to the person or
persons nominated by the member by written designation duly
executed and filed with the board. If there is not a designated
person or persons surviving, then the remainder, if any, shall be
paid to the retired member's legal representative or estate.
