HARRISBURG - A group of Lower Merion Township retired police officers had to pay Social Security taxes on township contributions, an appeals court recently ruled, and therefore those contributions should have been included in their pensions, it said in remanding their lawsuit back to the lower court that ruled against them earlier.
On Aug. 30, the Commonwealth Court of Pennsylvania sided with Bernard A. D’Amour, William C. Boegly, Francis M. Higgins, Joseph Arrell, William Albany, George Clement, Henry Hasson, James Herzog, William Raquet and John Sheehan in their lawsuit against the township and its boards of commissioners and trustees of the Township of Lower Merion Police Pension Fund.
The Court of Common Pleas of Montgomery County had denied the officers' complaint for declaratory judgment, agreeing with the defendants that the township contributions should not be included as salary. The officers appealed that decision, arguing the lower court misapplied state and federal regulations.
Additionally, the defendants argued, even if the officers were correct that the contributions should have been included, the statute of limitations on filing that claim had long since expired.
The Commonwealth Court disagreed.
“We agree with retirees and reverse and remand this matter to the trial court to determine ... what past contributions are owed to the pension fund and when the cause of action accrued for each retiree to ascertain whether any claims are barred by the applicable four-year statute of limitations,” said the court.
The court said the pension fund in question needs to be perceived as salary because the officers had to contribute to the fund based on the compensation where Social Security taxes are paid. “Because those taxes are payable on the township contribution, the township contribution is salary for pension purposes,” the court said.
A state law passed in 2008 outlined the requirements for pension plans, along with federal tax law.
While the township has not included the township contribution in the salary in the past, the court said, Lower Merion's pension fund policy and its Deferred Compensation Plan’s regulations, which align with fiscal code, indicate it should have.
"We cannot conclude that the township was not statutorily and contractually required by the fiscal code, the pension fund ordinance, and Deferred Compensation Plan to include the township contribution as salary, despite its past practice to the contrary,” the court said.
The court remanded the matter back to the lower court. It also decided that neither side was owed attorney fees.
Judge Renée Cohn Jubelirer ruled on the case. Judge Michael H. Wojcik and Bonnie Brigance Leadbetter concurred.