Harvey Bartle, III, Atty. Gen., Thomas J. Mangan, Jr., Asst. Atty. Gen., Harrisburg, for appellants.
John J. Bingler, Jr., Pittsburgh, for McKenna and Weir.
Judd N. Poffinberger, Pittsburgh, for Pa. Bar Assoc.
O'Brien, C. J., Roberts, Nix, Larsen, Flaherty and Kauffman, JJ. Nix and Flaherty, JJ., filed concurring opinions. Larsen, J., filed a concurring opinion in which Flaherty and Kauffman, JJ., join.
This is a class action brought by appellees, Judge J. Frank McKenna and Judge Frederic G. Weir, on behalf of all state court judges who were active and had ten or more years of service as of June 22, 1972. The class members contend that their benefits under the State Employees' Retirement Code of 1959 have been unconstitutionally impaired by actions of the Commonwealth Compensation Commission taken on June 22, 1972, and by provisions of the revised State Employees' Retirement Code, enacted in 1974. The Commonwealth
Court agreed with class members' contention and directed appellant, the State Employees' Retirement Board, to recalculate class members' benefits. 54 Pa. Commw. 338, 352, 421 A.2d 1236, 1243 (1980). This record compels the conclusion that the Commonwealth Court correctly granted class members relief. Hence, we affirm.
The Retirement Code of 1959 establishes a comprehensive retirement system for state employees, including class members.*fn1 Class members' participation in the system is mandatory, taking effect upon commencement of judicial service. § 201(1). Under this mandatory system, class members and the Commonwealth are required to contribute to a Retirement Fund. §§ 301 & 304. Assets of the Fund are reserved for the payment of contributors' benefits. § 801. These benefits include the "superannuation retirement allowances" and "withdrawal allowances" which class members contend have been impermissibly impaired.*fn2
Before 1972, when the Compensation Commission took its now-challenged action, a class member's benefits under the Code of 1959 were determined by two factors: years of service on the bench and "final average salary." Final average salary is defined as the highest annual compensation received by a contributor during any five nonoverlapping periods of twelve consecutive months. § 102(19). Benefits were calculated by multiplying the member's first ten years on the bench by the member's final average salary and then by a multiplier of 0.04. Added to this figure was the
product of the member's additional years on the bench, final average salary, and a multiplier of 0.03.*fn3
Salaries of most class members had been increased in 1966 to $30,000.*fn4 Final average salaries as of June 22, 1972, thus were $30,000.
The retirement benefits of a hypothetical class member with fifteen years of service and a final average salary of $30,000 would be calculated under the Code of 1959 as follows:
Illustration No. 1 Multiplier Salary Years Benefits
First 10 years (0.04) X ($30,000) X (10) = $12,000
Years beyond 10 (0.03) X ($30,000) X (5) = $4,500
Because class members had served ten or more years as of June 22, 1972, under the Code of 1959 they had the right to separate from service and still leave contributions credited to their account. Upon reaching the "superannuation retirement age" of sixty, § 102(14), class members who chose to exercise this right would have been eligible to receive their retirement allowances. This right is termed "vesting."*fn6 Additionally, because of their ten or more years of service, class members were eligible as of June 22, 1972, for withdrawal benefits if service terminated involuntarily. See §§ 402(2)(c) & (d).
The Commonwealth Compensation Commission was a group of five private citizens who were directed by the
Legislature to make an "exhaustive study" of the salaries and retirement benefits of public officers, including
"the Governor, the Lieutenant Governor, the cabinet officers (including the Auditor General and the State Treasurer), the justices and judges of the Supreme Court, the Superior Court, the Commonwealth Court, the courts of common pleas, the Municipal Court of Philadelphia and the Traffic Court of Philadelphia, and the offices and members of the General Assembly."
Act of June 16, 1971, P.L. 157, § 2(b), 65 P.S. Appendix at p. 59 (Supp. 1980). The first Report of the Commission was to take effect ...