Appeal from the Order of the Court of Common Pleas of Beaver County in case of Daniel J. Liston v. Borough of Beaver, No. 1182 of 1979.
Norman S. Faulk, Borough Solicitor, for appellant.
Dennis F. Wolford, Panner, Holland, Autenreith and Wolford, P.C., for appellee.
President Judge Crumlish, Jr. and Judges Williams, Jr. and Doyle, sitting as a panel of three. Opinion by Judge Williams, Jr.
[ 76 Pa. Commw. Page 620]
The Borough of Beaver (Borough) appeals from a final decree of the Court of Common Pleas of Beaver County directing the Borough to include overtime compensation with salary when computing a retired police officer's (appellee)*fn1 monthly pension benefits as a fraction of his monthly average salary earned during the last sixty months of employment with the Borough.
The stipulated statement of facts, as adopted by the common pleas court, establishes that Mr. Liston was employed continuously by the Borough as a full-time police officer from January 1, 1949, to October 18, 1976. In 1957 the Borough enacted, pursuant to the Act of May 29, 1956, P.L. (1955) 1804, as amended, 53 P.S. §§ 767-788, Ordinance No. 441 which established an "Insured Police Pension Annuity Plan" and in language mirroring Section 771 of the Act, 53 P.S. § 771, provided that "[m]onthly pension or retirement benefits shall be one-half the monthly average salary of such member during the last sixty (60) months of employment." Section 9 (emphasis added).
In 1970 the Borough enacted Ordinance No. 535 which repealed Ordinance No. 441, and, regarding
[ 76 Pa. Commw. Page 621]
pension benefit computation, stated that each participating retiree, "shall be entitled to receive a pension payable in equal monthly installments . . . in an amount equal to one-half (1/2) of his Final Monthly Compensation. . . ." Article 3, Section 3.2 (emphasis added). "Final Monthly Compensation" is defined as "the average monthly basic salary earned . . . during the last five years immediately preceding retirement." Article 1, Section 1.9 (emphasis added).
From the fund's inception and continuously thereafter, appellee's pension fund contributions were calculated solely as a percentage of his basic forty hour per week salary with payment for work in excess of forty hours excluded from his salary base. Further, as the Borough asserts in its brief, notwithstanding the enactment of Ordinance No. 535 in 1970, the Borough, from the establishment of the police pension fund in 1957, has continuously excluded participants' overtime payments when calculating monthly pension benefit amounts.
Mr. Liston retired on October 18, 1976, after almost twenty-seven years of employment as a Borough police officer. Upon receiving monthly pension benefits calculated as a fraction of his average monthly salary (excluding overtime earnings) of $896.21 rather than as a fraction of his average monthly salary (including overtime earnings) of $1,024.04, appellee filed a complaint in equity seeking to compel the Borough to include overtime payments within his base salary. Following the submission of factual stipulations and legal memoranda by counsel, the chancellor ordered in his decree nisi that the Borough compute appellee's monthly pension benefits as a fraction of his ...