STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5846

January 22, 1981

CIVIL RIGHTS:

County retirement plan--unisex retirement benefit tables

RETIREMENT SYSTEMS:

County retirement plan--unisex retirement benefit tables

WORDS AND PHRASES:

'Actuarial equivalent'

Adoption of a sexually-neutral retirement table by a county pension board would comport with federal and state laws.

A county's sexually-neutral retirement plan, in the case of early retirement, must provide for benefits which are actuarially equivalent and of equal value to those provided for other eligible retirants who do not retire early based on the accumulated contribution of such early retirant.

An early retirement benefit schedule which would require a higher contribution rate on the part of the county is contrary to statute.

Mr. John A. Smietanka

Prosecuting Attorney

Berrien County

County of Berrien Courthouse

St. Joseph, Michigan 49085

You advise me that the Berrien County Pension Board is considering adoption of unisex, or sexually-neutral, early retirement tables. Thus, you have requested my opinion on three questions which may be phrased as follows:

With respect to your first question, it is noted that the United States Supreme Court in City of Los Angeles Dept of Water & Power v Manhart, 435 US 702; 98 S Ct 1370; 55 L Ed 2d 657 (1978), held that even though women as a class live longer than men, the practice of requiring female employees to make larger contribution to a pension plan than male employees where both receive equal retirement benefits, is violative of Title VII Sec. 703(a)(1) of the Civil Rights Act of 1964, 78 State 255, PL 88-352, 42 USC 2000e-2(a)(1). The statute there in issue, in pertinent part, provided:

The Court held that fairness to the individual rather than fairness to classes is the focus of the Civil Rights Act of 1964, Sec. 703(a)(1), supra. The Court further held that although a statistically valid basis for disparate treatment of women as a class for pension purposes founded on their longer life expectancy has been repeatedly proven, there exists no means to demonstrate the validity of that disparate treatment as to any particular female member of the class. Any particular woman may or may not live in accordance with the average for her class.

It must be stressed the United States Supreme Court expressly declined to provide any retroactive relief.

While Manhart, supra, involved an employee pension contribution plan requiring greater contributions from female employees, the high court's reasoning and analysis was found equally applicable in Spirit v Teachers' Insurance & Annuity Association, 475 F Supp 1298 (SDNY, 1979), where female employees received smaller monthly annuity payments than male employees due to separate mortality tables for female and male employees under a retirement pension plan operated in behalf of a university. The court found unlawful sex discrimination in violation of the Civil Rights Act of 1964, Title VII, Sec. 703(a)(1), supra.

In Equal Employment Opportunity Commission v Colby College, 589 F2d 1139, 1145 (CA 1, 1978), the Court of Appeals concluded

In Peters v Wayne State University, 476 F Supp 1343, 1350 (ED Mich, 1979), the district court held the rationale of Manhart, supra, applied to a defined contribution plan in which the university made equal contributions for both sexes, but women received from the university's private annuity provider smaller monthly annuity payments based on sex-segregated life expectancy tables:

It has also been held that a state retirement plan providing for the calculation of that portion of retirement benefits from employee contributions based upon two life expectancy tables, one for men and one for women, and resulting in unequal retirement benefits for men and women although both groups made the same contributions, was in violation of the Civil Rights Act of 1964, Title VII, supra, since the use of sex-segregated life expectancy tables in calculating retirement benefits is prohibited thereunder. Henderson v State of Oregon, 405 F Supp 1271 (D Or, 1975). See, also, Wengler v Druggists Mutual Insurance Co, 445 US ----; 100 S Ct 1540; 64 L Ed 2d 107 (1980); Norris v Arizona Governing Committee, 486 F Supp 645 (D Az, 1980); ARP v Workers' Compensation Appeals Board, 19 Cal 3d 395; 563 P2d 849; 138 Cal Rptr 293 (1977); Tomarchio v Township of Greenwich, 75 NJ 62; 379 A2d 848 (1977); Passante v Walden Printing Co, 385 NYS2d 178; 53 App Div 2d 8 (1976).

Further, it must be noted that the Elliott-Larsen Civil Rights Act, 1976 PA 453, Sec. 202(1)(c), MCLA 37.2202(1)(c); MSA 3.548(202)(1)(c), which also applies to counties, provides in pertinent part:

It is, therefore, my opinion, in response to your first question that adoption of a sexually-neutral retirement table by the Berrien County Pension Board would comport with federal and state law.

Turning to your second question, county pension plans adopted by ordinance are governed by the provisions of 1851 PA 156, Sec. 12a(1); MCLA 46.12a(1); MSA 5.333(1)(1), which provides, in pertinent part:

The term 'actuarially equivalent' is not defined in the statute. In King County Employees' Ass'n v State Employees Retirement Board, 54 Wash 2d 1; 336 P2d 387, 391 (1959), the Washington Supreme Court considered a statute which defined the term 'actuarial equivalent' as any

So defined, the Court held the term 'actuarial equivalent'

The reasoning of the Washington Supreme Court is helpful in determining the meaning of 'actuarially equivalent' in 1851 PA 156, Sec. 12a(1)(b), supra. 'Equivalent' may be interpreted as meaning a benefit of equal value based on accumulated contributions, as actuarially determined to be paid eligible early retirants under the statute.

By employment of the adjective 'equivalent' in the actuarial sense, instead of 'approximate', it may be concluded that the Legislature intended that early retirement benefits be equivalent to those available to retirants who are not early retirants. Black's Law Dictionary (Rev 4th Ed) defines 'equivalent' as '[e]qual in value, force, measure, volume, power, and effect or having equal or corresponding import, meaning or significance; alike, identical.' (Citations omitted.) (p 636). On the other hand, Black's, supra, defines 'approximate' as:

The statutory right of early retirants to receive the actuarial equivalent of their accumulated contributions is not safeguarded where such early retirants receive an approximate actuarial equivalent benefit, or any benefit actuarially derived which is other than equivalent. The well-established right of retirants to receive vested benefits as they come due must be interpreted, in the context of early retirement under 1851 PA 156, Sec. 12a(1)(b), supra, to encompass receipt of benefits of equal value, and not approximate value, with reference to those benefits enjoyed by other retirants, based on accumulated contributions. Cf Kosa v State Treasurer, 408 Mich 356, 371; 292 NW2d 452 (1980).

In response to your second question, it is therefore my opinion that a county's sexually-neutral retirement plan adopted under 1851 PA 156, Sec. 12a(1)(b), supra, must, in the case of early retirement, provide for benefits which are actuarially equivalent and of equal value to those provided for other eligible retirants who do not retire early, based on the accumulated contributions of such early retirant.

Turning to your third question, the information you have provided indicates that the exact actuarially equivalent benefit schedule, which you refer to as the 'unisex schedule' would not, according to your actuary, necessitate any increase in the level of the county's contribution calculated as a percentage of payroll.

Because the early retirement provision of 1851 PA 156, Sec. 12a(1)(b), supra, speaks of both actuarially equivalent benefits and no increase in the cost of the plan, the Legislature has established that each provision, as separate and distinct requirements of an early retirement plan, must be satisfied.

It is, therefore, my opinion, in response to your third question, that the adoption by the Berrien County Pension Board of any early retirement benefit schedule which would require a higher contribution rate on the part of the county, however small the rate, would be contrary to the mandate language of 1851 PA 156, Sec. 12a(1)(b), supra, which requires that actuarially equivalent benefits not increase the county's cost of the plan.

Frank J. Kelley