Request By:
John Scott McGaw, Esq.
City Attorney
City of Madisonville
P.O. Box 705
Madisonville, Kentucky 42431
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Thomas R. Emerson, Assistant Attorney General
Your letter raises a question concerning the calculation of retirement benefits under KRS 95.773.
That statute provides in part that upon such retirement the board of trustees shall order the payment to a disabled police officer or fire fighter a sum equal to one-half of the monthly salary the person was receiving at the date of his retirement.
In the situation you are facing the eligible employee did not earn any overtime wages in the month of his retirement. He maintains, however, that he is entitled to have his retirement benefits calculated on his average wages over a period of time which would reflect earnings from overtime wages in other months.
As far as the undersigned Assistant Attorney General can determine there is no reported case construing that portion of KRS 95.773 with which you are concerned.
In McQuillin Mun. Corp. (3rd Ed.), Vol. 3, § 12.157 (1990 revised volume), the author deals with the amount of the pension payable to municipal officers or employees. The following appears in part:
. . . Under many statutes and charters, the amount of pension is measured by the rank, or grade of official standing, of the pensioner at the time the right to a pension accrues, and the pension board has no discretion with respect to the amount allowed. For example, the pension rights of a police officer or firefighter, discussed subsequently in detail, are frequently based upon the salary of his or her rank at the time of his or her retirement, or his or her rank and salary during some specific period preceding the date of retirement . . . .
KRS 95.773 refers to a sum equal to one-half of the monthly salary such member was receiving at the date of his retirement. KRS 95.560(1) provides for a monthly pension of 50 percent of the person's monthly salary at the time of retirement.
Note, however, that under KRS 95.859, the rate of retirement annuity shall be 2 1/2 percent of average salary, as defined in KRS 95.851(13), for each year of total service up to and including thirty years, subject to a maximum of 75 percent of average salary.
As noted in the case of Policemen's and Firemen's Retirement Fund of the City of Newport v. Shields, Ky. 521 S.W.2d 82 (1975), the rights of persons participating in a pension plan are governed entirely by the terms of the pension plan and the statutes under which it is operated.
In the situation with which you are concerned, the applicable statute refers to a pension equal to one-half of the monthly salary at the date of retirement. The court, in Smith v. Board of Trustees of the Policemen's Pension Fund of the City of Des Moines, Iowa, 25 N.W.2d 858 (1947), said in part as follows:
By the use of the words 'monthly, ' 'amount,' and 'salary, ' it would seem that the legislature intended a definite meaning, and so far as appears from the statute, that that meaning is their ordinary signification. They are words of common use meaning. According to Webster's New International Dictionary, monthly means 'continued, or in, a month; done, happening, payable, published, etc., once a month, or every month;' amount means 'the sum total of two or more sums or quantities; the aggregate,' and is synonymous with 'rate;' salary means 'the recompense or consideration paid, or stipulated to be paid, to a person at regular intervals * * *; fixed compensation regularly paid, as by the year, quarter, month or week'.
Since the statute in question refers to a pension equal to one-half of the monthly salary at the date of retirement, the pension cannot be calculated on the person's average wages over a period of several months.