PRIOR PRINTER'S NO. 1042 PRINTER'S NO. 2054
No. 919 Session of 1975
INTRODUCED BY MESSRS. WOJDAK, FINEMAN, IRVIS, SALVATORE,
MANDERINO, VANN, BUTERA, RUGGIERO, LINCOLN, MORRIS, PETRARCA,
PRENDERGAST, LaMARCA, SALOOM, ARTHURS, ROMANELLI, O'KEEFE,
GILLESPIE, GARZIA, DeMEDIO, ENGLEHART, HAMILTON, SHUPNIK,
BELLOMINI, YAHNER, LAUDADIO, RENWICK, NOVAK, TRELLO, PERRI,
OLIVER, BURNS, WRIGHT, NOYE, GRING, FISHER, FLAHERTY,
DOMBROWSKI, PIEVSKY, WHELAN, HASAY, WILSON, BERSON,
GALLAGHER, BERLIN, STOUT, RAPPAPORT, BRUNNER, GEISLER,
CAPUTO, SWEENEY, SCHMITT, BARBER, PERRY, W. D. HUTCHINSON,
O'CONNELL, A. K. HUTCHINSON, BLACKWELL, ROSS, GIAMMARCO,
JOHNSON, MRS. TOLL, MRS. KELLY, MESSRS. WANSACZ, McLANE,
SCHWEDER, REED, KOWALYSHYN, GEORGE, LEDERER, SHANE AND
GLEASON, MARCH 20, 1975
AS REPORTED FROM COMMITTEE ON LAW AND JUSTICE, HOUSE OF
REPRESENTATIVES, AS AMENDED, JULY 21, 1975
AN ACT
1 Amending the act of May 29, 1956 (P.L.1804, No.600), entitled
2 "An act providing for the establishment of police pension
3 funds or pension annuities in certain boroughs, towns and
4 townships, and the regulation and maintenance thereof;
5 providing for an actuary; continuance of existing funds or
6 transfer thereof to funds herein established; prescribing
7 rights of beneficiaries; contributions by members; providing
8 for expenses of administration; continuation of existing
9 authority to provide annuity contracts; credit for military
10 service; refunds; exempting allowances from judicial process;
11 and repealing certain acts," changing the age and service <--
12 requirements for retirement by members of the police force.
13 PROVIDING FOR POLICE PENSION FUNDS; PROVIDING FOR THE PAYMENT <--
14 OF THE ACTUARY'S COMPENSATION.
15 The General Assembly of the Commonwealth of Pennsylvania
16 hereby enacts as follows:
17 Section 1. Section 3 1, act of May 29, 1956 (P.L.1804, <--
18 No.600), entitled "An act providing for the establishment of
1 police pension funds or pension annuities in certain boroughs,
2 towns and townships, and the regulation and maintenance thereof;
3 providing for an actuary; continuance of existing funds or
4 transfer thereof to funds herein established; prescribing rights
5 of beneficiaries; contributions by members; providing for
6 expenses of administration; continuation of existing authority
7 to provide annuity contracts; credit for military service;
8 refunds; exempting allowances from judicial process; and
9 repealing certain acts," amended October 21, 1965 (P.L.643 <--
10 No.317), JUNE 23, 1970 (P.L.417, NO.139), is amended to read: <--
11 Section 3. Each ordinance or resolution establishing a police <--
12 pension fund shall prescribe a minimum period of total service
13 in the aggregate of twenty-five years and may, if actuarially
14 feasible, prescribe a minimum period of total service in the
15 aggregate of twenty years in the same borough, town or township
16 and shall fix the age of the members of the force at [fifty-
17 five] fifty years, [or, if an actuarial study of the cost shows
18 that such reduction in age is feasible, may fix the age of the
19 members of the force at fifty years, after which they may retire
20 from active duty,] and such members as are retired shall be
21 subject to service, from time to time, as a police reserve, in
22 cases of riot, tumult or preservation of the public peace until
23 unfitted for such service, when they may be finally discharged
24 by reason of age or disability.
25 SECTION 1. EACH BOROUGH, TOWN AND TOWNSHIP OF THIS <--
26 COMMONWEALTH MAINTAINING A POLICE FORCE OF THREE OR MORE FULL-
27 TIME MEMBERS SHALL, AND ALL OTHER BOROUGHS, TOWNS OR TOWNSHIPS
28 MAY, ESTABLISH, BY ORDINANCE OR RESOLUTION, A POLICE PENSION
29 FUND OR PENSION ANNUITY TO BE MAINTAINED BY A CHARGE AGAINST
30 EACH MEMBER OF THE POLICE FORCE, BY ANNUAL APPROPRIATIONS MADE
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1 BY THE BOROUGH, TOWN OR TOWNSHIP, BY PAYMENTS MADE BY THE STATE
2 TREASURER TO THE MUNICIPAL TREASURER FROM THE MONEYS RECEIVED
3 FROM TAXES PAID UPON PREMIUMS BY FOREIGN CASUALTY INSURANCE
4 COMPANIES FOR PURPOSES OF PENSION RETIREMENT FOR POLICEMEN, AND
5 BY GIFTS, GRANTS, DEVISES OR BEQUESTS GRANTED TO THE PENSION
6 FUND PURSUANT TO SECTION TWO OF THIS ACT. [SUCH FUND]
7 A REGIONAL POLICE FORCE COMPRISING TWO OR MORE BOROUGHS,
8 TOWNS AND TOWNSHIPS AND EMPLOYING THREE OR MORE POLICEMEN SHALL
9 BE SUBJECT TO THIS ACT AND MEMBERS OF SUCH REGIONAL POLICE FORCE
10 SHALL RECEIVE CREDIT FOR (I) SERVICE PRIOR TO THE FORMATION OF
11 SUCH REGIONAL POLICE FORCE WHILE SERVING IN THE POLICE FORCE OF
12 ANY MUNICIPALITY WHICH BECAME PART OF SUCH REGIONAL POLICE
13 FORCE, AND (II) SERVICE SUBSEQUENT TO SUCH FORMATION AS A MEMBER
14 OF SUCH REGIONAL POLICE FORCE.
15 ASSETS OF ANY POLICE PENSION FUND MAINTAINED BY ANY
16 INDIVIDUAL MUNICIPALITY PRIOR TO THE FORMATION OF THE REGIONAL
17 POLICE FORCE SHALL, AS SOON AS PRACTICABLE, BE TRANSFERRED TO
18 THE POLICE PENSION FUND ESTABLISHED FOR THE MEMBERS OF THE
19 REGIONAL POLICE FORCE.
20 WHENEVER A MUNICIPALITY SHALL WITHDRAW FROM A REGIONAL POLICE
21 FORCE, THERE SHALL BE ACTUARIALLY DETERMINED AN EQUITABLE SHARE
22 OF THE ASSETS OF THE REGIONAL POLICE PENSION FUND AND SUCH SHARE
23 SHALL BE TRANSFERRED TO THE POLICE PENSION FUND ESTABLISHED BY
24 SUCH WITHDRAWING MUNICIPALITY.
25 THE GOVERNING BODY OF A REGIONAL POLICE FORCE SHALL FULFILL
26 THE CAPACITY OF EMPLOYER OR GOVERNING BODY OF A TOWNSHIP FOR A
27 POLICE PENSION FUND OF A REGIONAL POLICE FORCE.
28 A POLICE PENSION FUND ESTABLISHED PURSUANT TO THIS ACT SHALL
29 BE UNDER THE DIRECTION OF THE GOVERNING BODY OF THE BOROUGH,
30 TOWN OR TOWNSHIP, AND APPLIED UNDER SUCH REGULATIONS AS SUCH
19750H0919B2054 - 3 -
1 GOVERNING BODY, BY ORDINANCE OR RESOLUTION, MAY PRESCRIBE FOR
2 THE BENEFIT OF SUCH MEMBERS OF THE POLICE FORCE AS SHALL RECEIVE
3 HONORABLE DISCHARGE THEREFROM BY REASON OF AGE AND SERVICE, OR
4 DISABILITY, AND MAY PRESCRIBE FOR THE BENEFIT (I) OF WIDOWS, AND
5 IF NO WIDOW SURVIVES OR IF SHE SURVIVES AND SUBSEQUENTLY DIES OR
6 REMARRIES, THEN (II) OF CHILD OR CHILDREN UNDER THE AGE OF
7 EIGHTEEN YEARS, OF MEMBERS OF THE POLICE FORCE OR OF MEMBERS
8 RETIRED ON PENSION. ALL SUCH PENSIONS AS SHALL BE ALLOWED TO
9 THOSE WHO ARE RETIRED BY REASON OF DISABILITIES SHALL BE IN
10 CONFORMITY WITH A UNIFORM SCALE. THE WIDOW OF A MEMBER OF THE
11 POLICE FORCE OR A MEMBER WHO RETIRES ON PENSION WHO DIES OR IF
12 NO WIDOW SURVIVES OR IF SHE SURVIVES AND SUBSEQUENTLY DIES AND
13 REMARRIES, THEN THE CHILD OR CHILDREN UNDER THE AGE OF EIGHTEEN
14 YEARS OF A MEMBER OF THE POLICE FORCE OR A MEMBER WHO RETIRES ON
15 PENSION WHO DIES ON OR AFTER THE EFFECTIVE DATE OF THIS
16 AMENDMENT, MAY, DURING HER LIFETIME OR SO LONG AS SHE DOES NOT
17 REMARRY IN THE CASE OF A WIDOW OR UNTIL REACHING THE AGE OF
18 EIGHTEEN YEARS IN THE CASE OF A CHILD OR CHILDREN, BE ENTITLED
19 TO RECEIVE A PENSION CALCULATED AT THE RATE OF FIFTY PER CENTUM
20 OF THE PENSION THE MEMBER WAS RECEIVING OR WOULD HAVE BEEN
21 RECEIVING HAD HE BEEN RETIRED AT THE TIME OF HIS DEATH.
22 SECTION 2. SECTION 3 OF THE ACT, AMENDED OCTOBER 21, 1965
23 (P.L.643, NO.317), IS AMENDED TO READ:
24 SECTION 3. [EACH ORDINANCE OR RESOLUTION ESTABLISHING A
25 POLICE PENSION FUND SHALL PRESCRIBE A MINIMUM PERIOD OF TOTAL
26 SERVICE IN THE AGGREGATE OF TWENTY-FIVE YEARS IN THE SAME
27 BOROUGH, TOWN OR TOWNSHIP AND SHALL FIX THE AGE OF THE MEMBERS
28 OF THE FORCE AT FIFTY-FIVE YEARS, OR, IF AN ACTUARIAL STUDY OF
29 THE COST SHOWS THAT SUCH REDUCTION IN AGE IS FEASIBLE, MAY FIX
30 THE AGE OF THE MEMBERS OF THE FORCE AT FIFTY YEARS, AFTER WHICH
19750H0919B2054 - 4 -
1 THEY MAY RETIRE FROM ACTIVE DUTY,] EACH ORDINANCE OR RESOLUTION
2 ESTABLISHING A POLICE PENSION FUND SHALL PRESCRIBE A MINIMUM
3 PERIOD OF TOTAL SERVICE IN THE AGGREGATE OF TWENTY-FIVE YEARS IN
4 THE SAME BOROUGH, TOWN, OR TOWNSHIP, OR IF AN ACTUARIAL STUDY OF
5 THE COST SHOWS THAT SUCH REDUCTION IN SERVICE IS FEASIBLE, MAY
6 FIX THE SERVICE AT NO LESS THAN TWENTY YEARS, AND SHALL FIX THE
7 AGE OF MEMBERS OF THE FORCE AT FIFTY-FIVE YEARS OR IF AN
8 ACTUARIAL STUDY OF THE COST SHOWS THAT SUCH REDUCTION IN AGE IS
9 FEASIBLE, MAY FIX THE AGE OF THE MEMBERS OF THE FORCE AT NO LESS
10 THAN FIFTY YEARS, AFTER WHICH THEY MAY RETIRE FROM ACTIVE DUTY
11 AND SUCH MEMBERS AS ARE RETIRED SHALL BE SUBJECT TO SERVICE,
12 FROM TIME TO TIME, AS A POLICE RESERVE, IN CASES OF RIOT, TUMULT
13 OR PRESERVATION OF THE PUBLIC PEACE UNTIL UNFITTED FOR SUCH
14 SERVICE, WHEN THEY MAY BE FINALLY DISCHARGED BY REASON OF AGE OR
15 DISABILITY.
16 SECTION 3. SECTION 6 OF THE ACT, AMENDED JUNE 15, 1972
17 (P.L.396, NO.118), IS AMENDED TO READ:
18 SECTION 6. [WHEN A POLICE PENSION FUND IS ESTABLISHED UNDER
19 THE PROVISIONS OF THIS ACT, THE GOVERNING BODY OF THE BOROUGH,
20 TOWN OR TOWNSHIP, MAY EMPLOY AN ACTUARY, AND MAY FIX HIS
21 COMPENSATION. THE ACTUARY SHALL DETERMINE THE PRESENT VALUE OF
22 THE LIABILITY ON ACCOUNT OF PENSIONS PAYABLE UNDER SECTION FIVE
23 OF THIS ACT TO ORIGINAL MEMBERS FOR SERVICE PRIOR TO THE DATE OF
24 THE ESTABLISHMENT OF THE FUND, AND SHALL OFFSET THE VALUE OF ANY
25 ASSETS TRANSFERRED TO THE FUND FROM A PREVIOUS PENSION FUND TO
26 DETERMINE THE UNFUNDED LIABILITY. THE UNFUNDED LIABILITY SHALL
27 BE PAID ENTIRELY BY THE BOROUGH, TOWN OR TOWNSHIP: PROVIDED,
28 THAT IT MAY BE FUNDED OVER A PERIOD NOT TO EXCEED TWENTY-FIVE
29 YEARS. THE ACTUARY SHALL ALSO DETERMINE THE AMOUNT WHICH SHALL
30 BE CONTRIBUTED ANNUALLY INTO THE FUND FOR THE SERVICE OF MEMBERS
19750H0919B2054 - 5 -
1 SUBSEQUENT TO THE ESTABLISHMENT OF THE FUND (TO BE KNOWN AS
2 "FUTURE SERVICE COST").]
3 EVERY POLICE PENSION FUND SUBJECT TO THIS ACT SHALL BE
4 SUBJECT TO MINIMUM FUNDING REQUIREMENTS COMMENCING NO LATER THAN
5 JANUARY 1, 1977. AS OF THE DATE THAT A POLICE PENSION FUND
6 BECOMES SUBJECT TO THE MINIMUM FUNDING REQUIREMENTS OF THIS ACT,
7 THE GOVERNING BODY OF THE BOROUGH, TOWN, OR TOWNSHIP SHALL
8 EMPLOY AN ACTUARY AND SHALL FIX HIS COMPENSATION. THE ACTUARY'S
9 COMPENSATION MAY BE PAID OUT OF THE POLICE PENSION FUND IN THE
10 DISCRETION OF THE GOVERNING BODY. FOR THIS PURPOSE AN ACTUARY
11 MEANS: A MEMBER OF THE AMERICAN ACADEMY OF ACTUARIES, OR; AN
12 INDIVIDUAL WHO HAS DEMONSTRATED TO THE SATISFACTION OF THE
13 INSURANCE COMMISSIONER OF PENNSYLVANIA THAT HE HAS THE
14 EDUCATIONAL BACKGROUND NECESSARY FOR THE PRACTICE OF ACTUARIAL
15 SCIENCE AND HAS HAD AT LEAST SEVEN YEARS OF ACTUARIAL
16 EXPERIENCE. THE ACTUARY SHALL DETERMINE THE PRESENT VALUE OF THE
17 LIABILITY ON ACCOUNT OF BENEFITS PAYABLE UNDER THIS ACT AND
18 SHALL OFFSET THE VALUE OF ANY ASSETS OF THE FUND TO DETERMINE
19 THE UNFUNDED LIABILITY. THE UNFUNDED LIABILITY SHALL BE PAID
20 ENTIRELY BY THE BOROUGH, TOWN, OR TOWNSHIP: PROVIDED, THAT IT
21 SHALL BE FUNDED BY EQUAL ANNUAL PAYMENTS WITHIN A PERIOD NOT TO
22 EXCEED THIRTY YEARS FROM THE DATE THAT THE FUND BECOMES SUBJECT
23 TO THE MINIMUM FUNDING REQUIREMENTS. THE ACTUARY SHALL ALSO
24 DETERMINE THE AMOUNT WHICH SHALL BE CONTRIBUTED ANNUALLY INTO
25 THE FUND FOR THE SUBSEQUENT SERVICE OF MEMBERS, TO BE KNOWN AS
26 "FUTURE SERVICE COST." IN THE EVENT OF A SUBSEQUENT
27 LIBERALIZATION OF BENEFITS, THE ACTUARY SHALL COMPUTE AN
28 INCREMENTAL FUTURE SERVICE COST, AND AN INCREMENTAL UNFUNDED
29 LIABILITY ATTRIBUTABLE TO SUCH BENEFIT LIBERALIZATION. THE
30 INCREMENTAL UNFUNDED LIABILITY SHALL BE FUNDED WITHIN A NEWLY
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1 ESTABLISHED PERIOD NOT TO EXCEED THIRTY YEARS FROM THE EFFECTIVE
2 DATE OF THE LIBERALIZATION. THE INCREMENTAL FUTURE SERVICE COST
3 SHALL BE INCLUDED IN THE FUTURE SERVICE COST PREVIOUSLY
4 ESTABLISHED. THE TERM "MINIMUM FUNDING REQUIREMENTS" SHALL REFER
5 TO CONTRIBUTIONS SUFFICIENT TO MEET THE ABOVE PROVISIONS FOR
6 FUTURE SERVICE COST AND THE REQUIRED INSTALLMENT TOWARD PAYMENT
7 OF THE UNFUNDED LIABILITY.
8 IF AN ACTUARY, WHETHER EMPLOYED BY AN INSURANCE COMPANY OR
9 NOT, CERTIFIES THAT ALL PENSION AND OTHER BENEFITS PROVIDED
10 UNDER A POLICE PENSION FUND ORDINANCE ARE NO LESS THAN THOSE
11 REQUIRED UNDER THIS ACT AND ARE FULLY PROVIDED AND FULLY
12 GUARANTEED BY AN INSURANCE COMPANY'S OR COMPANIES' POLICIES,
13 WITHOUT THE NEED OF A SIDE FUND TO CONVERT SUCH POLICIES TO
14 ANNUITIES, WITH PREMIUMS FULLY PAID BY THE RETIREMENT DATE OF
15 MEMBERS, THE FUND SHALL BE DEEMED TO SATISFY THE MINIMUM FUNDING
16 REQUIREMENTS AND NO FURTHER ACTUARIAL CERTIFICATION SHALL BE
17 REQUIRED. ANY POLICE PENSION FUND WHICH REQUIRES A SIDE FUND TO
18 CONVERT INSURANCE POLICIES TO ANNUITIES AT RETIREMENT SHALL BE
19 SUBJECT TO ACTUARIAL STUDY AND MINIMUM FUNDING REQUIREMENTS.
20 WHENEVER IN THIS ACT THE TERM "ACTUARIAL SOUNDNESS," OR
21 "FOUND FEASIBLE AFTER AN ACTUARIAL STUDY," OR "ACTUARIALLY
22 FEASIBLE," OR "ACTUARIAL CONDITION," OR "ACTUARIAL STUDY" SHALL
23 BE USED, THE INTENTION SHALL BE THAT THE BOROUGH, TOWN, OR
24 TOWNSHIP SHALL AGREE TO MAKE CONTRIBUTIONS AT A LEVEL NO LESS
25 THAN THE MINIMUM FUNDING REQUIREMENTS UNDER THIS ACT.
26 MEMBERS SHALL PAY INTO THE FUND, MONTHLY, AN AMOUNT EQUAL TO
27 NOT LESS THAN FIVE PER CENTUM NOR MORE THAN EIGHT PER CENTUM OF
28 MONTHLY COMPENSATION. WHERE POSITIONS COVERED BY THE FUND ARE
29 INCLUDED IN AN AGREEMENT UNDER THE FEDERAL SOCIAL SECURITY ACT,
30 MEMBERS SHALL PAY INTO THE FUND, MONTHLY, AN AMOUNT DETERMINED
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1 AS FOLLOWS: (1) IF THE PENSION PLAN ESTABLISHED UNDER THE
2 PROVISIONS OF THIS ACT PROVIDES FOR NO OFFSET UNDER SUBCLAUSE
3 (II) OF THE SECOND PARAGRAPH OF SECTION 5, FIVE PER CENTUM OF
4 TOTAL COMPENSATION OR (2) IF SUCH PENSION PLAN PROVIDES FOR AN
5 OFFSET UNDER SUBCLAUSE (II) OF THE SECOND PARAGRAPH OF SECTION
6 5: (I) ON COMPENSATION ON WHICH SOCIAL SECURITY TAXES ARE
7 PAYABLE, AT A RATE CALCULATED BY SUBTRACTING FROM FIVE PER
8 CENTUM THE PRODUCT OBTAINED BY MULTIPLYING THREE PER CENTUM BY
9 SUCH OFFSET PERCENTAGE; AND (II) ON COMPENSATION IN EXCESS OF
10 THAT ON WHICH SOCIAL SECURITY TAXES ARE PAYABLE, IF ANY, FIVE
11 PER CENTUM. THE REMAINDER OF THE NEEDED ANNUAL CONTRIBUTIONS, AS
12 DETERMINED BY THE ACTUARY, SHALL BECOME THE OBLIGATION OF THE
13 BOROUGH, TOWN OR TOWNSHIP, AND SHALL BE PAID BY IT TO THE
14 PENSION FUND BY ANNUAL APPROPRIATIONS.
15 IF AN ACTUARIAL STUDY SHOWS THAT THE CONDITION OF THE POLICE
16 PENSION FUND OF ANY BOROUGH, TOWN OR TOWNSHIP IS SUCH THAT
17 PAYMENTS INTO THE FUND BY MEMBERS MAY BE REDUCED BELOW THE
18 MINIMUM PERCENTAGES HEREINBEFORE PRESCRIBED, OR ELIMINATED, AND
19 THAT IF SUCH PAYMENTS ARE REDUCED OR ELIMINATED CONTRIBUTIONS BY
20 THE BOROUGH, TOWN OR TOWNSHIP WILL NOT BE REQUIRED TO KEEP THE
21 FUND ACTUARIALLY SOUND, THE GOVERNING BODY OF THE BOROUGH, TOWN
22 OR TOWNSHIP MAY, ON AN ANNUAL BASIS, BY ORDINANCE OR RESOLUTION,
23 REDUCE OR ELIMINATE PAYMENTS INTO THE FUND BY MEMBERS.
24 THE PAYMENTS MADE BY THE STATE TREASURER TO THE MUNICIPAL
25 TREASURER FROM THE MONEYS RECEIVED FROM TAXES PAID UPON PREMIUMS
26 BY FOREIGN CASUALTY INSURANCE COMPANIES FOR PURPOSES OF PENSION
27 RETIREMENT OR DISABILITY BENEFITS FOR POLICEMEN SHALL BE USED,
28 AS FOLLOWS: (1) TO REDUCE THE UNFUNDED LIABILITY OR, AFTER SUCH
29 LIABILITY HAS BEEN FUNDED, (2) TO APPLY AGAINST THE ANNUAL
30 OBLIGATION OF THE BOROUGH, TOWN OR TOWNSHIP FOR FUTURE SERVICE
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1 COST TO OR TO THE EXTENT THAT THE PAYMENT MAY BE IN EXCESS OF
2 SUCH OBLIGATION, (3) TO REDUCE MEMBER CONTRIBUTION. UNLESS
3 OTHERWISE SPECIFICALLY PROVIDED, ANY OTHER MONEYS PAID INTO THE
4 POLICE PENSION FUND SHALL BE APPLIED EQUALLY AGAINST THE MEMBER
5 AND THE MUNICIPAL PORTIONS OF THE FUTURE SERVICE COST.
6 IT SHALL BE THE DUTY OF THE GOVERNING BODY TO APPLY SUCH
7 PAYMENTS IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT.
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