Court majority upholds decision that calculation of pension benefits is subject to collective bargaining agreement
For more than 20 years, the Macomb County Road Commision and the 16thJudicial Circuit Court calculated retirement benefits based on a statistical assumption that essentially maximized the cost and the benefit to retirees. In essence, in order to address differences in gender life expectancies, while not discriminating against either men or women, the pensions were calculated on the assumption that all women would select the "joint and survivor" pension option, but that no men would. This assumption resulted in a higher benefit calculation for men and women, and it was adopted despite the express warning by actuaries in 1982 that it would increase pension costs.
In 2006, the employers unilaterally adopted a new formula based upon a more accurate prediction of who would select "joint and survivor" pension options. The new formula reduced pension benefits for men and women, and of course saved money for the employers. The Michigan Nurses Association and other unions representing the affected employees charged an unfair labor practice and the Micigan Employment Relations Commission agreed. It held that such a change in pension calculations must be bargained and cannot be instituted unilaterally. The Court of Appeals upheld the decision of the agency and the Administrative Judge.