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Friday, January 6, 2023

Court Reverses Pension Board’s Calculation of Benefits

In June 2013, the former fire chief of a fire protection district (District), and the District entered into a three-year employment contract that included a 3% annual salary adjustment. In August 2015, the chief was placed on paid administrative leave, and the District and the chief entered into a retirement agreement stating that the chief would continue to be on paid administrative leave until his deferred retirement date of January 4, 2016. 

In October 2017, the chief (now 50 years old) submitted an application for a retirement pension. In his application, he listed his last day of work as January 4, 2016 (his deferred retirement date after paid administrative leave) and his annual pensionable salary as $186,449 (including the employment contract’s 3% annual salary adjustment).  The Board of Trustees for the District (Board) submitted paperwork indicating that the chief's final date of service was August 20, 2015 (prior to the paid administrative leave) and that his annual salary was $181,200 (not including the 3% adjustment not included).

In August 2018, the Public Pension Division of the Illinois Department of Insurance (Department) provided an advisory opinion regarding the chief's pension calculation  pursuant to 40 ILCS 5/1A-106.  The Department opined that section 4-108(a) the Pension Code bars unpaid leave exceeding 30 days from being included in creditable service. Since the statute does not address how to treat paid leave, the Department found it would “be reasonable that a paid leave of absence would count toward creditable service.” However, the Department concluded that the chief was not a “firefighter” during his paid administrative leave, meaning that the retirement agreement voided the chief's earlier employment contract, including the provision regarding the 3% annual salary adjustment.  As a result, the Department concluded that the chief's pension should be calculated based on his salary on August 21, 2015. 

In May 2019, the Board entered a written decision relying on the Department’s advisory opinion and awarded pension benefits without the 3% salary increase or taking into account any creditable service for the period of paid leave. The chief filed a complaint for administrative review, and the circuit court upheld the Board’s decision.

On appeal, the Appellate Court reversed the Board’s decision and ruled in favor of the chief. Brucki v. Orland Fire Protection DistrictThe Appellate Court first noted that the Department’s advisory opinion was of limited value, and was not binding on the court. Next, the Court determined that the Department’s interpretation of “firefighter” was too restrictive and contrary to the principle that the provisions governing firefighter's pensions must be liberally constructed in favor of the applicant.  In addition, the Court held that the 2015 retirement agreement did not negate the 2013 employment contract because the chief's final paycheck (dated January 11, 2016) included the 3% adjustment, and the final payments to the chief for unused sick and vacation days was calculated based on the 3% adjustment. 

The Appellate Court concluded that a mistake had been made in the pension calculation and instructed the Board to award pension benefits to the chief based on a final date of service of January 4, 2016 and an annual salary amount that includes the 3% adjustment. 

Post authored by Molly Anne Krebs & Julie Tappendorf, Ancel Glink


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