The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)


STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5209

July 18, 1977

RETIREMENT SYSTEMS:

Township officers and employees.

TOWNSHIPS:

Contract pension plan.

In establishing its contract pension plan for its officers and employees, a township may, in its discretion, include officers serving on a per diem basis and part-time officers and employees but is not compelled to include them in the program.

Where a township erroneously failed to include an eligible full-time township officer or employee in a contract pension plan, the eligible person must be offered an opportunity to be included retrospectively. The eligible person may, however, elect not to participate.

Honorable Robert D. Young

State Senator

The Capitol

Lansing, Michigan

You have requested my opinion on the legality of a township adopting an ordinance that would provide a pension plan for the officials and employees of the township. In that connection, you have raised the following three specific questions:

'1. Does opinion number 4818 require that officials serving on a per diem basis be included in the Pension Plan?

'2. Must part time officials or employees be covered by the plan?

'3. Must the Township now offer retroactive benefits for the years in which they were not covered but should have been?'

OAG, 1973-1974, No 4818, p 155 (June 11, 1974), ruled that townships may, by ordinance, provide contract pension plans for their officials and employees. The opinion also held that such contract pension plans must apply equally to both township officials and full-time township employees. OAG, 1973-1974, No 4818, p 155, 159.

This request raises new questions that were not raised in the original request.

In addressing your first two questions, it must be observed that 1960 PA 27, Sec. 1; MCLA 41.901; MSA 5.48(1), provides:

'Any township may:

'(a) Establish a retirement system for its employees and provide for financing, funding and the payment of benefits in the same manner and to the same extent as permitted counties under section 12a of Act No. 156 of the Public Acts of 1851, as amended, being section 46.12a of the Compiled Laws of 1948; or to make contracts of insurance with any insurance company authorized to transact business within the state.

(c) Contract with any such company granting annuities or pensions for the pensioning of the officers and employees and for such purposes may pay any part of the premiums or charges for such insurance, prepayment plan coverage, annuities or pensions.' (emphasis added)

In addition, 1960 PA 27, supra, Sec. 3 provides:

'Any contract of insurance or arrangement for prepayment plan coverage procured pursuant to this act may provide that each elected or appointed officer or employee becoming eligible for insurance or coverage thereunder shall become insured or covered automatically when he becomes eligible, subject to any actively-at-work requirements specified in the contract or arrangement. . . .' (emphasis added)

In analyzing these statutory provisions, it is clear that a contract pension plan under 1960 PA 27, Sec. 1(c), supra, is a contract of insurance since the phrase '[c]ontract with any such company' in subsection 1(c) is a reference to the phrase 'any insurance company' in subsection 1(a). Thus, contract pension plans are 'subject to any actively-at-work requirements specified in the contract or arrangement' as set forth in 1960 PA 27, Sec. 3, supra.

In light of the foregoing, the conclusion is compelled that all full-time officers and employees of the township must be included in a contract pension plan since they obviously meet any actively-at-work requirements that could be specified in the contract. The township may, in its discretion, include officers serving on a per diem basis and part-time officers and employees in a contract pension plan but it need not do so. Thus, in response to your first two questions, it is my opinion that officers serving on a per diem basis and part-time officers and employees of a township need not be included in a township contract pension plan under 1960 PA 27, Sec. 1(c), supra.

Your third question poses the problem of retrospective inclusion for persons who should have been, but were not, included in a township contract pension plan. It is my opinion that, consistent with the statutory mandate to include all full-time officers and employees of the township in a contract pension plan, a township must provide retrospective inclusion in its contract pension plan for those full-time officers and employees that were erroneously excluded from the plan. However, in view of the response to the second question and assuming compliance with OAG, 1973-1974, No 4818, supra, it does not appear likely that any eligible township officers or employees have been excluded. Also, it should be observed that, pursuant to 1960 PA 27, Sec. 3, supra, township officers and employees may elect not to participate in a contract pension plan that requires contributions from the persons included in the plan.

Frank J. Kelley

Attorney General