PRINTER'S NO. 788
No. 707 Session of 1989
INTRODUCED BY MOWERY, VAN HORNE, CESSAR, GODSHALL, FLEAGLE,
TIGUE, MRKONIC, SEMMEL, FOX, S. H. SMITH, PHILLIPS, STAIRS,
JACKSON, BUSH, JOHNSON, MORRIS, HESS, G. SNYDER, DEMPSEY,
COY, GLADECK, HERSHEY, McCALL, STABACK, TRELLO, DIETTERICK,
B. SMITH, FARGO, DeLUCA, CLYMER, ROBBINS, LEVDANSKY, HERMAN,
RAYMOND, SCHULER, GEIST, MARSICO, GANNON, BUNT, REBER,
D. W. SNYDER, WOZNIAK, GRUPPO, BELFANTI, E. Z. TAYLOR,
ROBINSON, VROON, BOYES, CORNELL, ARGALL, LEH, LASHINGER AND
MICOZZIE, MARCH 13, 1989
REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, MARCH 13, 1989
AN ACT
1 Amending the act of June 11, 1968 (P.L.149, No.84), entitled "An
2 act relating to volunteer firemen's relief associations,
3 clarifying their purposes and objectives, establishing
4 criteria and standards for the conduct of their affairs,
5 providing for their formation, recognition, continuing
6 operation, and for their dissolution in appropriate
7 circumstances and the distribution of their funds," providing
8 for volunteer firefighters' money purchase deferred benefit
9 plans.
10 WHEREAS, In the tragic event of death due to participation in
11 the volunteer fire service, a death benefit is paid to the
12 survivors of a volunteer firefighter in the amount of $50,000
13 under the Public Safety Officers' Benefit Act of 1976 (Public
14 Law 94-430, 90 Stat. 1346, 42 U.S.C. § 3793 et seq.) and the
15 death benefit in the amount of $25,000 is paid under the act of
16 June 24, 1976 (P.L.424, No.101), referred to as the Emergency
17 and Law Enforcement Personnel Death Benefits Act. A statutory
18 percentage of at least the average weekly wage in the
1 Commonwealth is provided for under the act of June 2, 1915
2 (P.L.736, No.338), known as The Pennsylvania Workmen's
3 Compensation Act. A death benefit also may be paid either
4 directly or through insurance bought by the volunteer firemen's
5 relief association under the act of June 11, 1968 (P.L.149,
6 No.84), known as the Volunteer Firemen's Relief Association Act;
7 and
8 WHEREAS, In the tragic event of injury due to participation
9 in the volunteer fire service, benefits are payable to the
10 injured volunteer firefighter under The Pennsylvania Workmen's
11 Compensation Act, and benefits may be paid to the injured
12 volunteer firefighter, or the firefighter's family, or both,
13 either directly or through insurance bought by the volunteer
14 firemen's relief association under the Volunteer Firemen's
15 Relief Association Act; and
16 WHEREAS, In order to reduce the frequency of death and the
17 frequency and severity of injury to volunteer firefighters,
18 volunteer firemen's relief associations are permitted to pay for
19 both safeguards and training under the Volunteer Firemen's
20 Relief Association Act; and
21 WHEREAS, The General Assembly finds that there is a need to
22 preserve the invaluable service provided by the volunteer fire
23 service by increasing its ability to attract and retain
24 volunteer firefighters by providing for a money purchase
25 deferred benefit.
26 The General Assembly of the Commonwealth of Pennsylvania
27 hereby enacts as follows:
28 Section 1. Section 3 of the act of June 11, 1968 (P.L.149,
29 No.84), known as the Volunteer Firemen's Relief Association Act,
30 is amended to read:
19890H0707B0788 - 2 -
1 Section 3. Statement of Purpose.--The purpose of the
2 Legislature in enacting this statute is to encourage individuals
3 to take part in the fire service as volunteer firemen, by
4 establishing criteria and standards for the orderly
5 administration and conduct of the affairs of firemen's relief
6 associations, so as to ensure, as far as circumstances will
7 reasonably permit, that funds shall be available for the
8 protection of volunteer firemen and their heirs:
9 (1) To provide financial assistance to volunteer firemen who
10 may suffer injury or misfortune by reason of their participation
11 in the fire service;
12 (2) To provide financial assistance to the widow, children,
13 and/or other dependents of volunteer firemen who lose their
14 lives as a result of their participation in the fire service;
15 (3) To provide, either by insurance or by the operation of a
16 beneficial fund, for the payment of a sum certain to the
17 designated beneficiaries of a participating member in such fund
18 following the death of such member for any cause, and to
19 establish criteria which members must meet in order to qualify
20 as participants in such death benefit fund;
21 (4) To provide safeguards for preserving life, health and
22 safety of volunteer firemen, so as to ensure their availability
23 to participate in the fire service;
24 (5) To provide financial assistance to volunteer firemen
25 who, after having actively participated in the fire service for
26 a specified minimum term, are no longer physically able to
27 continue such participation and are in need of financial
28 assistance;
29 (6) To provide funds to aid the rehabilitation of volunteer
30 firemen who have suffered an impairment of their physical
19890H0707B0788 - 3 -
1 capacity to continue to perform their normal occupations; [and]
2 (7) To provide money purchase deferred benefits to current
3 and future active volunteer firemen upon their separation from
4 active participation in the fire service and attainment of a
5 designated minimum age through the establishment and maintenance
6 of a volunteer firemen's money purchase deferred benefit plan;
7 and
8 [(7)] (8) In any event, to provide sufficient funds to
9 ensure the efficient and economical handling of the business of
10 the association in accomplishing the objectives hereinabove set
11 forth.
12 Section 2. Section 6 of the act is amended by adding a
13 heading and subsection (e) is amended by adding a clause to
14 read:
15 Section 6. Use of Funds.--* * *
16 (e) The funds of any volunteer firemen's relief association
17 may be spent:
18 * * *
19 (13) To establish and maintain a money purchase deferred
20 benefit plan as provided in section 9.
21 Section 3. Section 7(a) of the act is amended to read:
22 Section 7. Audits.--(a) The Department of the Auditor
23 General shall have the power, and its duty shall be, to audit
24 the accounts and records of every volunteer firemen's relief
25 association receiving any money under [the act of June 28, 1895
26 (P.L.408), as amended,] Chapter 7 of the act of December 18,
27 1984 (P.L.1005, No.205), known as the "Municipal Pension Plan
28 Funding Standard and Recovery Act," as far as may be necessary
29 to satisfy the department that the money received was expended
30 or is being expended for no purpose other than that authorized
19890H0707B0788 - 4 -
1 by this act. Copies of all such audits shall be furnished to the
2 Governor. These audits shall include revenues and expenditures
3 relating to money purchase deferred benefit plans either solely
4 or partially paid for with money obtained under the "Municipal
5 Pension Plan Funding Standard and Recovery Act."
6 * * *
7 Section 4. The act is amended by adding a section to read:
8 Section 9. Money Purchase Deferred Benefit Plan.--(a) (1)
9 A volunteer firemen's relief association may create a money
10 purchase deferred benefit plan beginning on January 1 of any
11 year after December 31, 1989, for its current and future active
12 members.
13 (2) If the relief association creates a money purchase
14 deferred benefit plan, the relief association also shall adopt a
15 plan document specifying all aspects of the arrangement between
16 the relief association and its members concerning the money
17 purchase deferred benefit provided.
18 (3) If a relief association creates a money purchase
19 deferred benefit plan, the relief association also shall create
20 a fund that shall be a fiscal and accounting entity with a self-
21 balancing set of accounts recording cash and other financial
22 resources, together with all related liabilities, and residual
23 equities or balances, and changes therein, that is segregated
24 for the purpose of accounting for assets held by the relief
25 association in a trustee capacity for the members and
26 beneficiaries of the money purchase deferred benefit plan.
27 (b) (1) A volunteer firemen's relief association annually
28 shall determine how much money, if any, to contribute to its
29 money purchase deferred benefit fund. In any calendar year, a
30 volunteer firemen's relief association shall not contribute to
19890H0707B0788 - 5 -
1 its money purchase deferred benefit fund more than one-half of
2 the money it received during the previous calendar year under
3 Chapter 7 of the act of December 18, 1984 (P.L.1005, No.205),
4 known as the "Municipal Pension Plan Funding Standard and
5 Recovery Act."
6 (2) A volunteer firemen's relief association may match its
7 contribution to the money purchase deferred benefit plan under
8 clause (1) up to and including a dollar-for-dollar basis by
9 using any of the balance obtained by adding together the
10 balances in the unrestricted cash, cash equivalent and
11 investment accounts of the relief association at the close of
12 business on December 31 of the previous year and subtracting
13 from that both the balances in all liability accounts of the
14 relief association on that December 31 and the money it received
15 during that previous calendar year under Chapter 7 of the
16 "Municipal Pension Plan Funding Standard and Recovery Act." The
17 assets, liabilities and equities of any money purchase deferred
18 benefit fund existing on that December 31 shall be excluded from
19 this calculation.
20 (c) A relief association may make an annual contribution to
21 a money purchase deferred benefit plan only for a volunteer
22 fireman who in the previous year accumulated at least fifty
23 eligibility points. A volunteer fire company covered by a money
24 purchase deferred benefit plan established by a volunteer
25 firemen's relief association shall adopt an eligibility point
26 system that grants points for activities that the volunteer fire
27 company designates from among the activities specified below.
28 The volunteer fire company may designate less than all the
29 activities specified below as activities for which the
30 eligibility points specified below may be earned.
19890H0707B0788 - 6 -
1 Notwithstanding any other provision of this subsection, a
2 volunteer fireman shall not accumulate eligibility points with
3 respect to activities described in clause (2), (4) or (5) with
4 respect to more than one volunteer fire company in one year.
5 Activities shall be selected from the following:
6 (1) Training courses, a maximum of twenty-five eligibility
7 points shall be awarded as follows: (i) courses under twenty
8 hours' duration, one eligibility point per hour, with a maximum
9 of five eligibility points; (ii) courses of twenty to forty-five
10 hours' duration, one eligibility point per hour for each hour
11 over the initial twenty hours, with a maximum of ten eligibility
12 points; and (iii) courses over forty-five hours' duration,
13 fifteen eligibility points per course.
14 (2) Drills of at least two hours, a maximum of twenty
15 eligibility points shall be awarded, one eligibility point per
16 drill (minimum two-hour drill).
17 (3) Sleep-in or standby, a maximum of twenty eligibility
18 points shall be awarded for (i) sleep-in, one eligibility point
19 each full night; (ii) standby, which is line-of-duty activity of
20 the volunteer fire company, lasting for four hours, not falling
21 under one of the other categories in this subsection, one
22 eligibility point for each four hours.
23 (4) Elected or appointed position, a maximum of twenty-five
24 eligibility points shall be awarded for (i) completion of one-
25 year term in an elected or appointed position, and (ii) being
26 elected, as an active volunteer fireman, to serve as a delegate
27 to a firemen's convention.
28 (5) Attendance at meetings, a maximum of twenty eligibility
29 points shall be awarded for attendance at an official meeting of
30 the volunteer fire company, at the rate of one eligibility point
19890H0707B0788 - 7 -
1 per meeting.
2 (6) Participation in department responses, fifteen
3 eligibility points for responding on the minimum number of calls
4 shall be awarded as outlined below:
5 Total number of calls Minimum number of calls
6 volunteer fire company volunteer fireman must
7 responds to annually run annually in order
8 other than emergency to receive fifteen
9 rescue and first aid eligibility points
10 squad calls (ambulance
11 calls)
12 0 to 500 10%
13 500 to 1000 7.5%
14 1000 to 1500 5%
15 1500 and up 2.5%
16 Total number of calls Minimum number of calls
17 emergency rescue and volunteer fireman must
18 first aid squad run annually in order
19 (ambulance) responds to receive fifteen
20 to annually eligibility points
21 0 to 500 10%
22 500 to 1000 7.5%
23 1000 to 1500 5%
24 1500 and up 2.5%
25 (7) Miscellaneous activities, a maximum of fifteen
26 eligibility points shall be awarded for participation in
27 inspections or other activities described in section 1 of the
28 act of June 24, 1976 (P.L.424, No.101), referred to as the
29 Emergency and Law Enforcement Personnel Death Benefits Act, and
30 not otherwise listed at the rate of one eligibility point per
19890H0707B0788 - 8 -
1 activity.
2 (d) (1) A volunteer firemen's relief association shall
3 allocate its annual contribution to its money purchase deferred
4 benefit fund as provided in this subsection. Each eligible
5 volunteer fireman shall be given one hundred service credits. As
6 provided in clause (2), an eligible volunteer fireman also may
7 be given not more than one hundred additional service credits to
8 recognize past service. The service credits for all eligible
9 volunteer firemen shall be added together to determine the grand
10 total of the service credits. The grand total of the service
11 credits shall be divided into the total volunteer firemen's
12 relief association contribution to determine the contribution
13 per service credit. The contribution per service credit shall be
14 multiplied by each eligible volunteer fireman's total service
15 credits to determine the contribution amounts to be allocated to
16 member accounts.
17 (2) During the first ten years that a money purchase
18 deferred benefit plan is in effect, a volunteer fire company may
19 implement a uniform procedure to give eligible volunteer firemen
20 ten additional service credits for each year of service prior to
21 the effective date of the money purchase deferred benefit plan.
22 A volunteer fire company shall not give additional service
23 credits to an eligible volunteer fireman for more than ten years
24 of prior service.
25 (e) (1) The plan document shall specify that the ultimate
26 deferred benefit payable to a member shall be payable only from
27 the balance in the individual member's account. The plan
28 document shall not define the relief association's contribution
29 as a dollar amount per member.
30 (2) A member's rights in the terms of entitlement to the
19890H0707B0788 - 9 -
1 money purchase deferred benefit shall vest immediately upon the
2 volunteer firemen's relief association making its contribution,
3 crediting the investment earnings, crediting gains or debiting
4 losses on the sale of investments, etc. At all times, the amount
5 owed to a member shall equal the assets of the member's money
6 purchase deferred benefit account.
7 (3) A member shall receive payments from a money purchase
8 deferred benefit plan only after separation from active
9 participation in the fire service and attainment of a designated
10 minimum age of at least fifty-five as specified in the plan
11 document.
12 (4) The deferred benefit shall be paid only from the
13 accumulated assets in the member's account and shall not be the
14 liability of any other fund of the volunteer firemen's relief
15 association or the contractual or other liability of the
16 volunteer fire company, the municipality or the Commonwealth.
17 (5) A money purchase deferred benefit payable from the plan
18 to an individual receiving or entitled to receive a deferred
19 benefit shall be exempt from any Commonwealth or municipal tax,
20 may not be assigned by the member, shall not be subject to
21 garnishment, judgment, execution, or other legal process other
22 than legally obligated support of minor children or a spouse or
23 any indebtedness due the relief association arising out of
24 embezzlement or fraudulent conversion by a member against the
25 relief association.
26 (f) (1) The governing body of a volunteer firemen's relief
27 association and the designated plan administrator under clause
28 (4), if any, shall act solely in the interest of the money
29 purchase deferred benefit plan's participants and beneficiaries.
30 Subject only to the provisions of this act and the plan
19890H0707B0788 - 10 -
1 document, the governing body may accept, hold, invest in and
2 retain an investment as long as the governing body exercises the
3 degree of judgment and care, under the circumstances then
4 prevailing, that persons of prudence and intelligence exercise
5 in the management of their own affairs, not in regard to
6 speculation but in regard to permanent disposition of their
7 funds, considering the probable income to be derived and the
8 probable safety of the capital. Subject only to the provisions
9 of this act and the plan document, the designated plan
10 administrator under clause (4) may accept, hold, invest in and
11 retain an investment as long as the designated plan
12 administrator exercises that degree of judgment, prudence,
13 skill, diligence and care, under the circumstances then
14 prevailing, that persons of prudence, discretion and
15 intelligence acting in a similar capacity and familiar with that
16 activity would exercise in the conduct of an enterprise of a
17 similar character and with similar aims.
18 (2) The volunteer firemen's relief association or the
19 designated plan administrator under clause (4), whichever is
20 applicable, shall provide volunteer firemen who participate in a
21 money purchase deferred benefit plan maintained under this act
22 with a summary of the plan document's provisions, including the
23 plan document's provisions relating to the participation
24 requirements, and the plan's contribution formula. This summary
25 shall be provided to each money purchase deferred benefit plan
26 participant within six months from the date on which plan
27 participation commences. In addition, a material modification to
28 the plan document provisions shall be provided in writing to
29 each participant within six months after the date the
30 modification is adopted or the date on which it is effective,
19890H0707B0788 - 11 -
1 whichever is later. A copy of the plan document, a summary of
2 the plan document, and relevant documents related to the funding
3 or investment of the assets of the plan and of contracts or
4 agreements with service providers to the plan shall be made
5 available for inspection or copying by a plan participant, a
6 beneficiary or a member of the public at the office of the
7 volunteer firemen's relief association.
8 (3) Before July 1, the volunteer firemen's relief
9 association or the designated plan administrator under clause
10 (4), whichever is applicable, shall provide volunteer firemen
11 and their beneficiaries who participate in a money purchase
12 deferred benefit plan maintained under this act with a statement
13 indicating the balance in that individual's account at the
14 beginning of the previous calendar year, increases and decreases
15 in the account during the previous calendar year aggregated by
16 general sources and applications, and the balance in the account
17 at the end of the previous calendar year.
18 (4) The governing body of the relief association shall be
19 permitted to contract with any insurance company that has
20 qualified and is authorized by the Insurance Department to
21 transact business in this Commonwealth, or with any bank,
22 savings and loan association or trust company approved by the
23 Department of Banking, or with an investment adviser registered
24 under the Investment Advisers Act of 1940 (Public Law 76-768, 54
25 Stat. 847, 15 U.S.C. § 80b-1 et seq.), which is registered as an
26 investment adviser by the Pennsylvania Securities Commission to
27 be designated as the money purchase deferred benefit plan
28 administrator. The governing body of the relief association may
29 delegate the power to administer the money purchase deferred
30 benefit plan in its entirety, including the power to receive and
19890H0707B0788 - 12 -
1 invest all moneys deposited into the money purchase deferred
2 benefit fund and such other powers as are vested in the
3 governing body. The contract shall require the deferred benefit
4 plan administrator annually to disclose to the relief
5 association all expenses of operating and administering the
6 money purchase deferred benefit plan.
7 (5) The assets of the money purchase deferred benefit plan
8 shall be held in trust by the volunteer firemen's relief
9 association or by a qualified third party under contract with
10 the volunteer firemen's relief association for the purpose of
11 providing benefits to participants and their beneficiaries in
12 conformance with this act or for the purpose of defraying the
13 necessary and reasonable expenses of the operation and
14 administration of the plan. If the money purchase deferred
15 benefit plan and the related trust are not tax qualified within
16 the meaning of sections 401 and 501 of the Internal Revenue Code
17 of 1986 (Public Law 99-514, 26 U.S.C. §§ 401 and 501), the trust
18 referred to in this clause may provide that the assets held
19 thereunder may be subject to the claims of general creditors, if
20 any, of the volunteer firemen's relief association or may
21 contain any other terms and provisions that are necessary to
22 insure that the participation by a volunteer fireman in the
23 money purchase deferred benefit plan does not result in taxable
24 income under the Internal Revenue Code of 1986 prior to the
25 payment of deferred benefits.
26 Section 5. This act shall take effect immediately.
A26L53CHF/19890H0707B0788 - 13 -