The city council approved a new contract that bumps police chief William Fraher’s salary to $210,632 while capping his retirement payout to $150,000.

The agreement increases Fraher’s salary through two-percent retroactive pay increases going back to February 1st, 2012, according to the agreement. The accord entitles the chief 400 hours of leave time, 40 hours of personal leave per year.

Fraher is also entitled to “unlimited sick leave up to a maximum of one year,” reads the agreement.

“I think it’s a reasonable settlement,” said Kenneth Morris, councilman at-large, on Tuesday evening. He and seven of his colleagues voted in favor of the contract.

Julio Tavarez, 5th Ward councilman, was absent.

“His package is not high,” said Mohammed Akhtaruzzaman, 2nd Ward councilman, who chairs the council’s public safety committee. “He’s not asking for much.”

Fraher has been working in the city’s police department for 41 years. He became acting police chief on February 1st, 2012, after police chief James Wittig retired.

Fraher’s new contract runs from July 1st, 2011 through February 1st, 2016.

The chief will turn 65 next January reaching New Jersey’s mandatory retirement age for police officers.

Ruby Cotton, 4th Ward councilwoman, wondered why the city will be paying for Fraher’s health coverage after he retires.

Business administrator Nellie Pou answered every city employee who retires after 25 years of service is entitled to health benefits.

“Paid by the city? And not the state?”

“That’s correct the city,” said Pou.