Pension Plans

The statute covering Pension Plans for Township officers and employees is Public Act 77 of 1989, as amended (MCL 41.110b). This statute specifically authorizes a Township to “contract with a company that grants Annuities or pensions for the pensioning of the officers and employees and for that purpose pay any part of the premiums or charges for insurance, prepayment plan coverage, Annuities or pensions.”

At subsection (3) of the statute, automatic coverage under the Plan for “each elected or appointed officer or employee” is authorized as soon as the person becomes eligible under the Plan and provided the individual does not give written notice that he does not wish to be covered.

The statute permits the Township to pay the full cost of the premiums or to share the costs with the employee or elected official.

The statute does not provide for any referendum concerning the Plan and no general statute authorizes such procedure.

The following ordinance has been requested as a result of Attorney General Opinion No. 4818 of 1974, which relates to Township Pension and Group Insurance Plans. The purpose of the ordinance is to provide a suggested guideline of the types of items that should be included within an ordinance creating either a Pension or Group Insurance Plan. Certainly no form can be a substitute for legal judgment and certainly no form should be used unless, after careful review, it is the professional judgment of an attorney that the use of the form will accomplish the particular objectives and intentions of his/her client Township. Although the forms are the result of much thought and effort, neither the authors nor the distributors assume any responsibility for the results of use in individual cases.

Section 3 of the ordinance attempts to enumerate every possible Township official and employee. A township may delete, where appropriate, those classes of officers or employees who are not to be covered under this Plan.

This ordinance should be made effective on the date of its publication. The ordinance must be published in a newspaper of general circulation within 30 days after its adoption by the Township Board, and the ordinance must also be placed in the official ordinance book of the Township within seven days after its adoption under the Clerk’s certificate of adoption.

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An ordinance to create and establish an Annuity or Pension Plan for the officers and employees of Township and to authority the Township Supervisor and the Township Clerk to contract, in the name of the Township, for such Plan; to define those classes of officers and employees who shall be covered by such Annuity or Pension Plan; to set forth the respective per centum shares which _______ Township and the officers and employees shall contribute to further provide for the deduction of contributions from officers’ and employees’ compensation; to establish the time at which existing and future employees shall become eligible for such Plan and to further establish the normal retirement date for all employees; to provide a method for non-coverage of an officer or employee of the Annuity or Pension Plan; to set forth a date wherein each person covered under the Annuity or Pension Plan shall have a vested right or interest in such Plan; to ratify and confirm the validity of any Annuity or Pension Plan in existence on the effective date of this ordinance; and to repeal all ordinances or parts of ordinances in conflict herewith.

THE TOWNSHIP OF _______, ________ COUNTY, MICHIGAN, ORDAINS:

Section 1:
This ordinance shall be known and cited as the _________ Township Pension Plan Ordinance.

Section 2:
Pursuant to Public Act 77 of 1989, as amended, the Township of hereby creates and establishes an Annuity or Pension Plan and program for the pensioning of its officers and employees, and for such purposes, also hereby authorizes the Township Supervisor and the Township Clerk to contract, in the name of the Township Board, with any company authorized to transact such business within the State of Michigan for Annuities or Pensions.

Section 3:
The Annuity or Pension Plans created, established and contracted for under this ordinance shall cover each person within the following classes of officers and employees:

( ) All members of the Township Board
( ) All members of the Township Zoning Board
( ) All members of the Township Planning Commission
( ) All members of the Township Zoning Board of Appeals
( ) All members of the Township Construction Board of Appeals
( ) All members of the Township Board of Review
( ) All members of the Township Park Board
( ) All members of the Township Library Board
( ) All members of the Township Recreation Board
( ) All Township Constables
( ) All Township Building Inspectors and their assistants (if an employee)
( ) The Township Unsafe Buildings Hearing Officer (if an employee)
( ) All Township Fire Chiefs
( ) All Township Police Chiefs
( ) All Township employees who are employed for more than twenty (20) hours per week on a regular basis
( ) All Township Firefighters
( ) All Township Emergency Medical Personnel
( ) All Township Ambulance Drivers or Attendants
( ) All Township Police Officers
( ) The Township Attorney (if an employee)
( ) The Township Engineer (if an employee)
( ) The Township Accountant (if an employee)
( ) All Township Assessors (if an employee)

Section 4:
A. The Township of ______ shall annually contribute ___ per centum of that portion of the premium or charges arising under such Annuity or Pension contract for each person within the class of officers and employees enumerated in Section 3. Such contributions shall be secured from the general fund of the Township. Each person within such class of officers and employees shall be responsible for the remainder of the premium or charges and the Township Treasurer is hereby authorized to deduct the same from each person’s pay, salary, or compensation and to apply the same to such person’s responsibility.

B. Each employee who is employed on the effective date of the Annuity or Pension Plan shall be eligible for coverage on that day provided he/she then meets the following requirements, otherwise to be eligible on the first policy anniversary on which he/she meets them:

1. He/she has completed at least ____ years of continuous employment.

2. His/her age (nearest birthday) is at least ____ years and not more than years.

Every employee who becomes subsequently employed shall be eligible on the first policy anniversary on which he/she meets the following requirements:

1. He/she has completed at least ____ years of continuous employment.

2. His/her age (nearest birthday) is at least ____ years and not more than ____ years.

An employee’s normal retirement date shall be the policy anniversary of the Annuity or Pension Plan nearest his/her birthday.

C. Any person desiring not to be so covered shall give written notice to the Township Clerk that he desires not to be covered, and if the notice is received before the person has become covered under the contract, he/she shall not be covered thereunder. If the notice is received after the individual has become covered, his/her coverage under the contract shall cease as provided for in the contract.

Section 5:
Each person so covered under the Annuity or Pension Plan shall have a vested right or interest in such Plan months from the date the Plan becomes effective for such person.

Section 6:
The Township of ________ hereby ratifies and confirms the validity of any Annuity or Pension Plan in existence on the effective date of this ordinance.

Section 7:
This ordinance shall take effect on the date of its publication. All ordinances or parts of ordinances in conflict herewith are hereby repealed.

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SAMPLE AMENDMENTS TO PENSION PLAN ORDINANCE FOR TOWNSHIPS WITH COLLECTIVE BARGAINING AGREEMENTS

An ordinance to amend Section 3 and Section 4 of the _______ Township Pension Plan Ordinance, being Ordinance Number ____.

THE TOWNSHIP OF________, ________ COUNTY, MICHIGAN, ORDAINS THAT SECTION 3 AND SECTION 4 OF THE SAID PENSION PLAN ORDINANCE NUMBER ____ ARE HEREBY AMENDED TO READ AS FOLLOWS:

Section 3:
The Annuity or Pension Plans created, established and contracted for under this ordinance shall cover each person within the following classes of Officers, Trustees and Employees:

Class I: All members of the Township Board and full-time employees of the Township not covered by collective bargaining agreements.

Class II: All full-time employees of the Township covered by collective bargaining agreements, each bargaining unit constituting a separate class.

Section IV
A. For those persons in Class I, the Township of ______ and each individual in Class I shall contribute annually to said Pension Plan an amount equal to the percentum of each person’s pay, salary or compensation as hereinafter set forth:

Township of _______. As determined from time to time by resolution of the________ Township Board

Class I Individuals. As determined from time to time by resolution of the Township Board.

For those persons in Class II, the Township of __________ and each individual in Class II shall contribute annually to said Pension Plan an amount equal to the percentum of each person’s pay, salary or compensation as hereinafter set forth:

Township of ________ As determined by the applicable collective bargaining agreement

Class II Individuals. As determined by the applicable collective bargaining agreement

Such contributions by the Township shall be secured from the general fund of the Township Each participant within the above classes shall be responsible for the remainder of the premium or charges and the Township Treasurer is hereby authorized to deduct the same from each person’s pay, salary or compensation and apply the same to each person’s responsibility.

B. Each employee who is employed on the effective date of the Annuity or Pension Plan shall be eligible for coverage on that day, provided he/she then meets the following requirement, otherwise to be eligible on the first policy anniversary on which he/she meets them:

1. His/her age (nearest birthday) is at least _____ years.

C. Every employee who becomes subsequently employed shall be eligible on the first policy anniversary on which he/she meets the following requirement:

1. His/her age (nearest birthday) is at least ______ years.

An employee’s normal retirement date shall be the policy anniversary of the Annuity or Pension Plan nearest His/her birthday.

D. Any person desiring not to be so covered shall give written notice to the Township Clerk that he/she desires not to be covered, and if the notice is received before the person has become covered under the contract, he/she shall not be covered. If the notice is received after the individual has become covered, his/her coverage under the contract shall cease as provided for in this contract.

Section A: Publication
A copy of this Ordinance shall be published in a newspaper circulated within _________ Township, ________ County, Michigan, within ten (10) days following the adoption hereof.

Section B: Effective Date
The amendment to this Ordinance Number _____ shall become effective thirty (30) days after the last required publication.

Section C: Repeal
All ordinances or parts of ordinances in conflict herewith are hereby repealed.

Section D: Severability and Saving Clause
Should any section, clause or provision of this ordinance be declared by the courts to be invalid, the same shall not affect the validity of this ordinance as a whole or any part thereof, other than the part declared to be invalid.

The purpose of this sample ordinance is to provide a suggested guideline for the types of items that should be included within an ordinance. Certainly, no sample ordinance should be used unless, after careful review, it is the professional judgment of your legal counsel that using the sample will accomplish the particular objectives and intentions of your Township. Although these sample ordinances are the result of much thought and effort, neither the authors nor the Michigan Townships Association assumes any responsibility for the results of using these samples word-for-word in individual cases.