53 Pa. Stat. § 881.404

Current through Pa Acts 2024-53, 2024-56 through 2024-111

Section 881.404 - Determination of municipal liability

The board shall, as soon as may be, determine the present value of the liability of each municipality for any prior service credits it has elected to extend to its original members, and shall establish an amount payable annually over a period not exceeding thirty years, through which payments such prior service liability may be funded. Each municipality shall have the option to spread the payment of such prior service liability over such period of years.

The municipal liability shall be based upon credit for those years of prior service toward the municipal annuity of each original member, for which the municipality has agreed to pay, plus any liability for payment of the member's contributions for the prior service or any portion thereof of each original member which the municipality has agreed to pay.

The board shall also determine, from time to time, the amount which shall be contributed annually by each municipality for service credits of original and new members subsequent to the time the municipality joined the system, and the additional amount which shall be contributed annually by each municipality toward a reserve account for disability allowance payable to original and new members, in order that all future service liability may be fully funded on an actuarial basis.

The amounts so determined by the board may be expressed in a percentage of the payroll of the municipality covering its contributing members.

The payments made by the State Treasurer to the treasurer of the municipality from moneys received from taxes paid upon premiums by foreign fire insurance companies for purposes of pension, retirement or disability benefits for municipal firemen shall be used as follows:

(i) to reduce the unfunded liability or, after such liability has been funded,

(ii) to apply against the annual obligation of the municipality for future service and disability reserve costs, and

(iii) to reduce member contributions. It shall be the duty of the governing body to apply such payments in accordance with the provisions of this act.

The payments made by the State Treasurer to the treasurer of the municipality from the moneys received from taxes paid upon premiums by foreign casualty insurance companies for purposes of pension, retirement or disability benefits for municipal policemen shall be used as follows:

(i) to reduce the unfunded liability or, after such liability has been funded,

(ii) to apply against the annual obligation of the municipality for future service and disability reserve costs, and

(iii) to reduce member contributions. It shall be the duty of the governing body to apply such payments in accordance with the provisions of this act.

The cost of making the valuations required by this section and in the transfer of any existing pension system of any municipality, shall be part of the costs of administration of this act.

53 P.S. § 881.404

1974, Feb. 1, P.L. 34, No. 15, § 404, effective in 90 days. Amended 1980, May 17, P.L. 135, No. 50, § 11, effective in 60 days.