Opinion
Argued March 14, 1980
June 5, 1980.
Retirement — Power to increase benefits — The Third Class City Code, Act 1931, June 23, P.L. 932 — Vested rights — Future benefits.
1. The Third Class City Code, Act 1931, June 23, P.L. 932, grants to the city the power to increase pension benefits for retired firemen, and no such power lies with a pension fund board, which may only recommend increases. [53]
2. A retired fireman may not be deprived of vested retirement benefits, and when an ordinance is enacted which provides for an increase in the amount of those vested benefits, the retiree cannot object that a subsequent ordinance freezes such benefits at the new level, as the receipt of increased benefits in one year does not create a vested right in future increases in subsequent year. [54]
Judge WILLIAMS, JR. dissented.
Argued March 14, 1980, before Judges MENCER, CRAIG and WILLIAM, JR., sitting as a panel of three.
Appeal, No. 1517 C.D. 1979, from the Order of the Court of Common Pleas of York County in case of M. Kenneth Lindsey v. York Paid Firemen's Fund Board of York City, Pennsylvania, No. 77-8-1325.
Complaint in assumpsit in the Court of Common Pleas of York County to recover pension benefits. Answer filed. Plaintiff filed motion for summary judgment. Motion granted. BUCKINGHAM, J. Board appealed to the Commonwealth Court of Pennsylvania. Held: Reversed.
Donald B. Hoyt, Assistant City Solicitor, for appellant.
James B. Leckrone, with him Carl H. Cordes, for appellee.
The York Paid Firemen's Pension Fund Board of York City (Board) appeals from an order of the Court of Common Pleas of York County which granted a summary judgment in favor of M. Kenneth Lindsey (Lindsey). We reverse.
The facts are undisputed. Lindsey retired as a paid fireman on February 11, 1969 and began receiving pension benefits, in the amount of $3,800 per year, pursuant to an ordinance which established pension benefits at one-half of a fireman's salary at the time of his retirement. On May 19, 1969, the City of York, upon recommendation by the Board, passed an ordinance which increased pension benefits to a level equal to one-half of the current salary being paid to firemen of the highest pay grade. For the years 1970-72, Lindsey received pension benefits at the increased rate.
On December 26, 1972, the City, without action or recommendation by the Board, enacted an ordinance repealing its May 19, 1969 ordinance. Thereafter, Lindsey's pension benefits for years 1973 to present remained at the 1972 level of $5,000 per year. The highest pay grade increased each year after 1972, and Lindsey sued to recover the difference between his benefit level and one-half of the highest pay grade. The lower court granted Lindsey's motion for summary judgment and this appeal followed.
The lower court's order was based upon its determination that the City of York did not have the statutory authority to revoke the proposed increases. The lower court, found that this authority had been delegated to the Board, pursuant to Section 4320 of The Third Class City Code (Code), Act of June 23, 1931, P.L. 932, as amended, 53 P. S. § 39320, which reads, in pertinent part, as follows: "All pension funds established under the provisions of this section shall be under the direction and control of a board of managers. . . . The fund shall be applied, under such regulations as the board of managers shall prescribe. . . ."
We disagree. Section 4322.1 of the Code, 53 P. S. § 39322.1, provides:
Any city may, at any time, at its discretion, upon the recommendation of the persons having custody and management of the firemen's pension fund, increase the allowances of persons receiving allowances of any kind from the fund by reason of and after the termination of the services of any member of the fund. (Emphasis added.)
This language clearly indicates that the discretion to increase benefits lies exclusively with the City and not with the Board, which may only recommend increases. Likewise, the power to refuse to grant pension increases lies solely within the discretion of the City. Frederick v. City of Butler, 45 Pa. Commw. 621, 405 A.2d 1343 (1979). The lower court's reliance on Bassler v. Firemen's Pension Fund Board of Managers, 42 Pa. D. C.2d 371 (Luz. 1967), for a holding to the contrary is misplaced, since Bassler did not consider the power of a city to fix or increase the level of pension benefits, nor did the court discuss Section 4322.1. Thus, we find that the City had the power to refuse to continue the increase in pension benefits.
Lindsey argues, however, that, by rescinding or revoking its May 19, 1969 ordinance, the City has impinged upon his vested rights to receive pension benefits. Our Supreme Court has likened the vesting of pension benefits for public employees to a contract, holding that, when the conditions of retirement eligibility have been satisfied, retirement pay has "ripened into a full contractual obligation" and become a vested right. Retirement Board of Allegheny County v. McGovern, 316 Pa. 161, 169, 174 A. 400, 404-05 (1934). Here, Lindsey retired at a time when he was entitled to a pension in the amount of one-half his yearly salary at the time of his retirement. His right to receive those benefits was clearly vested by that time, and no subsequent legislation could reduce them. Harvey v. Allegheny County Retirement Board, 392 Pa. 421, 141 A.2d 197 (1958); McBride v. Allegheny County Retirement Board, 330 Pa. 402, 199 A. 130 (1938).
The City, by rescinding its May 19, 1969 ordinance, effectively froze Lindsey's pension benefit level at his 1972 level, which was an amount higher than that to which he was entitled when he retired. Consequently, Lindsey is not here complaining that the City is attempting to reduce his pension level; rather, he argues that he has acquired a vested right in future increases in pension benefits by virtue of the fact that he has received increases in the past pursuant to the May 19, 1969 ordinance. We disagree. The City is under no obligation to increase the benefit level, Wright v. Allegheny County Retirement Board, 390 Pa. 75, 134 A.2d 231 (1957); Frederick, supra; Section 4322.1 of the Code, and we do not believe that the receipt of increased benefits in one year creates a vested right in future increases in subsequent years. With respect to the proposed future increases, Lindsey had only "a mere expectancy created by law, and liable to be revoked or destroyed by the same authority." Pennie v. Reis, 132 U.S. 464, 471 (1889) (emphasis in original).
Order reversed.
ORDER
AND NOW, this 5th day of June, 1980, the order of the Court of Common Pleas of York County in the above captioned case, dated July 6, 1979, is hereby reversed.
Judge WILLIAMS, JR. dissents.