Aрpellee brought this action against Appellants, who constitute the Board of Directors of the Teacher Retirement System of the State of Arkansas and its Executive Director.
Appellee was a public school teacher in Arkansas until 1959, when he became an employee of the Arkansas Department of Education. At this time he was contributing to the Teachers Retirement System, which he continued to do until 1961. Then his agency in the Department of Education was placed in another state agency, аnd this terminated his rights to make contributions to the retirement system, the job classification being other than a “Teacher” under Act 93 of 1957 as Amended.
Appellee became sixty years of age on January 31st, 1964, and applied for retirement benefits effective July 1st, 1964, having twenty-nine years service under the Teacher Retirement System. Appellants approved the application and made regular monthly annuity payments from July 1st, 1964. Appellee continued his employment with the State of Arkansas, and his agency is still not a pаrt of the Arkansas Department of Education. In 1964 Appellee was not eligible for membership in the State Employees Retiremеnt System.
Act 624 of 1969 placed a limitation on persons receiving annuities from the Teachers Retirement System who were emplоyed by the State of Arkansas in a position covered by the State Employees Retirement System. Appellee’s position wаs covered by the State Employees Retirement System by Act 480 of 1965, at a time when he was drawing his Teacher Retirement annuity.
Appellants discontinued the annuity payments to Appellee effective July 1st, 1969, under the authority of Act 624 of 1969, since Appellee worked full time for the State of Arkansas. Appellee then instituted this action, seeking a Declaratory Judgment construing his' rights under the Teachérs Rеtirement System, and for judgment for his annuity payments.
The Pulaski Circuit Court in the Declaratory Judgment action determined that Appellee’s rights tо the annuity under the Teachers Retirement System vested in 1964, prior to the legislative action in 1969, and could not be divested by this subsequent legislation. Thereupon, Appellee, was given judgment for the amount of the annuity payments unpaid after July 1st, 1969, and this Appeal resulted.
Thе question confronting this Court stated as simply as possible is:
“Once a member of the Teachers Retirement System qualifies for an annuity, can subsequent legislative action remove the member’s qualifications?”
Although we find no cases in this jurisdiction directly in point, and although we find a conflict in the answer from other jurisdictions, we have reached the conclusion that the Circuit Court correctly decidеd this matter and should be affirmed.
An attempt has been made to distinguish between the pension plans under which voluntary contributions are mаde by the member, or involuntary contributions are made as a part of employment; or to distinguish between pension plans which аre “money purchase plans” or “benefit formula plans”; or to distinguish between pensions and retirement benefits. We feel nonе of these distinctions have any bearing in this case. Plans in which both Employer and Employee contribute have been determined by this Cоurt to be compensation to the Employee. In Daggett v. St. Francis Levee District,
“It can not be doubted that a retirement allowance financed over a period ofyears by the joint contribution of the employer and the employees reрresents compensation rather than a mere gratuity.”
This was reaffirmed by us in Chandler v. Board of Trustees of the Teacher Retiremеnt System of the State of Ark.,
“A retirement allowance represents compensation paid to the recipient.”
See аlso Commissioner of Labor v. Renfroe, opinion delivered October 30, 1972.
We must come to the conclusion then that the plan tо which Appellee made contributions is contractual in nature and a part of the contract of employment betwеen Appellee, his employer, and the State of Arkansas.
To reach our conclusion it is necessary to find the retroаctive aspect of Act 624 of 1969 unconstitutional as applied to the situation in this case. This Court has consistently held that retroаctive laws are invalid if they impair the obligations of contracts or rights accruing thereunder. In Gillioz v. Kincannon, Judge,
“The rule appears to be well settled generally that retrospective laws as the one here, are unconstitutional if they interfere with substantive, or substantial rights, and are valid only when they effect remedies or procedure.” .
See also Coco v. Miller,
“...rights conferred by statute are determined according to statutes which were in force when the rights accrued, and are not affected by subsequent legislation. The Legislaturе has no power to divest legal or equitable rights previously vested.”
See also Talkington v. Turnbow,
As previously mentioned, there is conflict in the decisions from other States. An annotation in
“The Legislature may strengthen the actuarial fibers, but it cannot break the bonds of contractual obligatiоns. Permissible changes, amendments and alterations as provided for by the Legislature can apply only to the conditions in the future, and never to the past. According to the cardinal principle of justice in fair dealings between government and man, as well as between man and man, the parties shall know prior to entering into a business relationship the conditions which shall govern that relationship. Ex post facto legislation is abhorred in criminal law because it stigmatizes with criminality an act entirely innocent when сommitted. The impairment of contractual obligations by the legislature is equally abhorrent because such impairment changes the blue print of a bridge construction when the spans are half way across the stream.”
Affirmed.