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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)



Opinion No. 5846

January 22, 1981


County retirement plan--unisex retirement benefit tables


County retirement plan--unisex retirement benefit tables


'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:

(1) Are unisex early retirement benefit tables legally mandated for county pension plans?

(2) Under section 12a of 1851 PA 156, MCLA 46.12a; MSA 5.333(1), may a county pension board adopt a unisex early retirement benefit schedule which is derived by use of a formula or approximate actuarial equivalent as opposed to an exact actuarial equivalent method?

(3) Would adopting an actuarially equivalent early retirement benefits schedule necessitating up to a .2 percent of payroll increase in the amount of the county's contribution to the plan constitute 'increasing the cost of the plan' contrary to section 12a of 1851 PA 156?

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:

'(a) It shall be an unlawful employment practice for an employer

(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin; . . ..' (1)

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

'. . . [t]he thrust of the Manhart opinion envisaged a single rate, hereafter unisex rate, of sufficient size to pay for both sexes. The Court found it would be fair that women as a class . . . be subsidized, to some extent, by the class of male employees.'

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:

'. . . Manhart's disapproval of the use of sex based longevity tables in a defined benefit plan extends to the defined contribution plan challenged here.'

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:

'(1) An employer shall not:

'(c) Segregate, classify, or otherwise discriminate against a person on the basis of sex with respect to a term, condition, or privilege of employment, including a benefit plan or system.'

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:

'(b) . . . A plan may also pay early retirement benefits at 55 years of age or older to the extent of actuarially equivalent benefits not increasing the cost of the plan.' (2)

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

'. . . benefit of equal value when computed upon the basis of such mortality and other tables as may be adopted by the retirement board.' [Emphasis supplied.]

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

'. . . clearly has reference to the mathematical calculations to be made relative to a member's accumulated contributions--calculations made in order to distribute those accumulated contributions on a monthly payment basis over the remainder of his or her life.'

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:

'[u]sed in the sense of an estimate merely, meaning more or less, but about and near the amount, quantity or distance specified. . . . Near to; about; a little more or less; close . . .. [M]eaning very nearly, but not absolutely.' (Citations omitted.) (p 132).

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

Attorney General

(1) The Civil Rights Act of 1964, supra, was amended by the Equal Employment Opportunity Act of 1972, 86 Stat 103, 42 USC 2000e(a), to include governments, governmental agencies and political subdivisions.

(2) Language substantively identical to the quoted language was first added to 1851 PA 156, Sec. 12a(1)(b), supra, by amendatory 1969 PA 262.


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