8 Pa.C.S. § 1105

(a) General rule.--A borough may provide, by ordinance, to appointees and employees of not less than ten years of satisfactory service and who are not less than 60 years of age upon termination of active employment with the borough, a proportion of the compensation last paid to them but not in excess of 50% of the compensation, including benefits received under the Social Security Act (49 Stat. 620, 42 U.S.C. § 301 et seq.), if any, as fixed in the ordinance or amendment of the ordinance.

(b) Postretirement compensation.--Any arrangement to provide postretirement compensation to retired appointees and employees under this section shall be a pension plan within the meaning of that term under the act of December 18, 1984 (P.L.1005, No.205), known as the Municipal Pension Plan Funding Standard and Recovery Act, and the borough establishing such plan shall provide funding of the pension plan in an amount sufficient to meet the minimum obligation of the municipality with respect to the pension plan under that act.

(c) Funding.--The expenditures authorized in this section shall be paid out of the general tax levy for the current expenditures of the year and not by any special tax.

(d) Construction.--Nothing in this section shall be construed to preclude an appointee or employee of the borough from joining in any pension system or municipal retirement system that the borough may adopt.