Opinion of the Justices

Decision Date30 October 1973
Citation303 N.E.2d 320,364 Mass. 847
PartiesOPINION OF THE JUSTICES to the House of Representatives.
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

1. Summary of the order. The present order relates to a bill, House No. 7409, as reported by the Committee on Ways and Means, and certain proposed amendments thereto, pending in the General Court. The subject matter is the contributory retirement system for employees of the Commonwealth or subdivisions delineated in G.L. c. 32, §§ 1--28. The bill as reported has two distinct features. First, members of the retirement system who are veterans (as defined), having at least twenty years accumulative service in the government, could obtain 'creditable' service up to four years military service performed--which would have the effect of enhancing their ultimate benefits--on making certain contributions for an equivalent number of years in addition to their regular contributions. §§ 1, 3. Second, § 2 of the bill would increase from the present five per cent to seven per cent the rate of withholdings from the regular compensation of government employees who are or will hereafter become members of the retirement system. These withholdings represent the members' contributions to the funding of the system, the balance required being furnished by government appropriations.

The House makes no inquiry as to the provision for veterans, but as to the farreaching § 2 it asks whether that section, if enacted, would be constitutionally valid notwithstanding G.L. c. 32, § 25(5), establishing membership in the retirement system as a contractual relationship under which the rights of members from time to time retired for superannuation are guarded against impairment as there set forth.

The proposed amendments to House No. 7409, besides changing the title of the bill, would state that § 2 shall apply only to persons entering government service after January 1, 1974 (§ 3A), and would declare that it was the intent of the General Court to provide funds to reduce appropriations required for the payment of contributory pensions (§ 5).

The House asks whether § 2 would be constitutionally valid if given only the prospective operation just indicated.

2. Details of the order. The specific questions put are:

'1. Is it constitutionally competent for the General Court to enact legislation increasing from five (5) to seven (7) per cent, as provided in Section 2 of said bill, the amount to be withheld from the regular compensation of employees of governmental units who are presently members of the contributory retirement system, notwithstanding the provisions of subdivision (5) of Section 25 of Chapter 32 of the General Laws which established the contractual rights and obligations of certain members and governmental units in contributory retirement systems and protected such rights from impairment?

'2. Would the enactment of such legislation alter the nature and legal effect of an existing contract depriving said employees of property, privilege or estate without due process of law in violation of Articles 1, 10 and 12 of the Declaration of Rights of the Constitution of Massachusetts?

'3. Would the enactment of such legislation destroy or impair the obligation of a contract protected by Article 1, section 10 of the Federal Constitution?

'4. Would the enactment of such legislation deprive said employees of property rights in contravention of Article 14 of the Amendments to the Federal Constitution?

'5. Would it be constitutionally competent for the General Court to enact House No. 7409 if the provisions of Section 2 were to apply only to persons first employed by the Commonwealth or a political subdivision after January 1, 1974?'

The text of House No. 7409 is as follows:

'AN ACT RELATIVE TO ESTABLISHING THE VETERANS' RETIREMENT ACT OF NINETEEN HUNDRED AND SEVENTY-THREE.

'Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

'SECTION 1. The third subparagraph (h) of subdivision (1) of section 4 of chapter 32 of the General Laws is amended by adding the following sentence:--Any member who is a Massachusetts veteran as defined in section (1) having not less than twenty years accumulative service in the commonwealth or any of its political subdivisions shall be granted creditable service up to four years military service performed.

'SECTION 2. Subdivision (1) of section 22 of chapter 32 of the General Laws, as most recently amended by chapter 1012 of the acts of 1971, is hereby further amended by striking out paragraph (b) and inserting in place thereof the following paragraph:-- *

'(b) The treasurer or other disbursing officer in charge of payrolls in any governmental unit to which a system pertains, and the treasurer or other disbursing officer in charge of payrolls in any free public library the employees of which are eligible for membership in a system, shall, upon written notice from the board, withhold on each payday seven per cent of the regular compensation of each employee who is a member in service of the system, which is received on such day by such member on account of service rendered by him on or after January first, nineteen hundred and forty-six, and not later than the date of his attaining the maximum age for his group; provided, that in the case of any teacher such withholding shall be made upon written notice from the school committee, board of trustees or other employing authority, to the treasurer or other disbursing officer of the political subdivision by which such teacher is employed; and provided, further, that in the case of any person in the service of any institution or school in the department of mental health, the department of public health or the department of public welfare whose employment is not subject to chapter thirty-one and the rules and regulations made thereunder such withholding shall be made on account of salary payments during the first six months of service, but shall be held in escrow by the payroll authority until completion of said six months and, if employment terminates prior to completion of said six months, employing authorities are hereby authorized to make the proper refunds.

'SECTION 3. Any veteran eligible for creditable service pursuant to section one of this act shall pay in addition to his regular retirement contribution an amount equal to seven per cent of the starting salary of such position commencing with the year 1970 for each year of creditable service so desired.

'SECTION 4. The provisions of this act shall take effect of (sic) January 1, 1974.'

The proposed amendments to House No. 7409 read thus:

'Inserting after section 3 the following section:

"SECTION 3A. Section two of this act shall apply only to persons who enter the service of the commonwealth or a political subdivision thereof on and after January first, nineteen hundred and seventy-four.'.

'By adding at the end of the bill the following section:

"SECTION 5. It is the intent of the general court to provide funds to reduce appropriations required for the payment of contributory pensions.'.

'By striking out the title and inserting in place thereof the following title 'An Act providing creditable service for certain veterans under the contributory retirement system, and increasing the contributions required by all employees of said system.'.'

Section 25(5) of G.L. c. 32 states:

'The provisions of sections one to twenty-eight, inclusive, and of corresponding provisions of earlier laws shall be deemed to establish and to have established membership in the retirement system as a contractual relationship under which members who are or may be retired for superannuation are entitled to contractual rights and benefits, and no amendments or alterations shall be made that will deprive any such member or any group of such members of their pension rights or benefits provided for thereunder, if such member or members have paid the stipulated contributions specified in said sections or corresponding provisions of earlier laws.'

3. Impact of a general increase in the rate of withholdings. This court has referred to the 'great complexity' of the provisions of chapter 32 of the General Laws dealing with the subject of retirement of government employees and related topics. 1 Only the barest outline of the features of the retirement system relevant to the present opinion can be given here.

Administration of the retirement system is largely in the hands of over a hundred retirement boards severally covering groups of State employees or employees of particular counties, cities, towns, districts or authorities, with two boards--the State Board of Retirement and the State Teachers' Retirement Board--having by far the largest numbers of employee-members. With some variations, however, the system is uniform in its application to all these boards and their members. The system is predominantly 'compulsory' and 'contributory': most employees join the system automatically as the governmental unit which they serve accepts it, and they contribute to it by means of deductions automatically made from their salaries. Since the revamping of the system in 1945 (St.1945, c. 658, § 1), the rate of deductions has been fixed at five per cent of salary. The participating governmental units by annual appropriations, on a pay-as-you-go basis, furnish the rest of the wherewithal, that is, such amount as is required, over and above the contributions of members (augmented by investment),...

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