August 29, 1979
Subject:
Retirement; Local Disability Retirement Plan; Longevity Pay Considered in Computation.
Requested By:
Robert J. Robinson, City Attorney Asheville
Question:
Should longevity pay be taken into consideration in computing disability payments to policemen retiring pursuant to provisions of the Asheville Policemen’s Pension and Disability Fund?
Conclusion:
Yes.
Asheville policemen are members of the Asheville Policemen’s Pension and Disability Fund, pursuant to Chapter 188 of the 1977 Session Laws, amended by Chapter 429 of the 1979 Session Laws. The question has arisen whether longevity pay should be taken into account in computing disability payments for policemen suffering disability in the line of duty.
Section 3(a) requires the deduction of "five percent (5%) of the monthly salary of every member of the policemen’s fund" as a mandatory contribution to the Asheville Policemen’s Pension and Disability Fund. The term "monthly salary" is not defined anywhere in the Act. Service retirement benefits and benefits for disability not incurred in the line of duty are computed according to a formula based upon the member’s total earnings in the last twenty years of service for service retirement or since beginning service with the Asheville Police Department for Disability not incurred in the line of duty. A member who is disabled while acting in the line of duty or as a result of the performance of duties as a member of the Asheville Police Department is entitled to "receive monthly a sum equal to seventy percent (70%) of his monthly salary as then paid by the City of Asheville. . . ." Section 9(a), Chapter 188, 1977 payments shall be taken into consideration in computing seventy percent (70%) of the monthly salary, or what constitutes the police officer’s monthly salary for purposes of computing the seventy percent (70%) for disability retirement benefits.
Employees of the City of Asheville who have completed five or more years of service are eligible for longevity pay bonuses, at a graduated rate according to the number of years of service. Longevity pay bonuses are paid annually, during the second pay period during the month of December. The "Longevity Pay Plan Administration Guidelines for Fiscal Year 1978-79" included a statement that longevity pay bonuses are classified by the Internal Revenue Service as part of an employee’s normal income for the current calendar year and that, as such, the bonuses were subject to the normal deductions, including federal and state income tax, social security, and applicable retirement and pension plans. In other words, contributions to the Asheville Policemen’s Pension and Disability Fund have been deducted from these annual longevity payments. The Guidelines for administration of the longevity pay plan for the fiscal year 1978-79 include methods for computing the bonus on a pro-rata basis for each month of service for employees on leave without pay during part of the fiscal year and for employees who retired during the fiscal year. However, it appears that contributions to the Asheville Policemen’s Pension and Disability Fund have not been deducted for longevity pay bonuses paid on a pro-rata basis to employees who have retired or applied for disability retirement on the basis of a disability incurred in the line of duty or as a result of the performance of their duties even though these pro-rate longevity pay bonuses have been paid for the period during which these policemen were in active service.
Given all the facts and circumstances, it appears that a portion of the longevity bonuses which represent one month’s employment should be included in the member’s monthly salary" in order to compute seventy percent (70%) of the monthly salary of a policeman retiring on disability incurred in the line of duty or as a result of performance of duties. Although contributions to the Asheville Policemen’s Pension and Disability Fund are not deducted from longevity pay bonuses made after the employee ceases to work because of disability, normally pension fund contributions are deducted from longevity pay bonuses. It does not appear reasonable to conclude that "monthly salary" includes longevity pay bonuses for purposes of determining deductions from one’s salary, but not for purposes of computing seventy percent (70%) of the salary for benefits. Barring specific statutory provisions to the contrary, funds from which disability and pension fund contributions are deducted should be included in the basis for computing a disability and pension fund benefit. There, it is our opinion that longevity pay bonuses should be taken into consideration in computing seventy percent (70%) of an Asheville policeman’s salary for purposes of determining monthly benefits for a police officer who becomes disabled in the line of duty or as a result of the performance of duties as an Asheville police officer.
The same conclusion would not necessarily hold true for persons retiring from the Asheville Policemen’s Pension and Disability Fund on a line of duty disability basis when the provisions as amended in 1979 control. The 1979 amendments, in Chapter 429 of the Session Laws, provide for a line of duty disability in the amount of seventy percent (70%) of the member’s "basic monthly salary rate as then paid by the City of Asheville." The change in language for line of duty disability, with no change in the language directing the deduction of five percent (5%) from the member’s "monthly salary," requires the conclusion that the basis upon which the line of duty disability is figured will differ from the compensation from which the mandatory five percent (5%) employee contribution is deducted.
Rufus L. Edmisten Attorney General
Norma S. Harrell Assistant Attorney General