Maryland Budget Committee Reduces State’s Required Pension Payments

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Earlier this week, Maryland lawmakers approved a state budget that carries implications for the state’s pension fund.

Under the new budget, the state’s annual contribution to its pension system will be reduced by $75 million annually.

The state’s official actuarial contribution remained untouched; but the state had also promised to make supplemental contributions to the system, on top of the actuarially-required payments.

It’s the supplemental contributions that were slashed.

More from the Maryland Reporter:

The committee switched payments into the pension system to the full actuarial contribution but it did not totally eliminate a supplemental payment into the pension fund promised to state teachers and employees when their own salary contributions into the system were raised in 2011.

The state will now pay an extra $75 million into the pension fund each year, not the $150 million expected next year or the $300 million initially promised.

“We get to full 80% funding by 2023″ as planned, said Del. Ben Barnes, D-Prince George’s, chair of the pension subcommittee.

“I’m having heartburn for us not keeping our commitment,” Del. Mike McKay, R-Allegany.

“The actual funding is reasonable is if we were doing it the whole time,” said Del. Tony McConkey, R-Anne Arundel. “If we have a couple of bad years [on investment returns], we’re not going to be where we need to be.”

State Treasurer Nancy Kopp, chair of the State Retirement and Pension System Board of Trustees, expressed the board’s rather muted objections to the move.

“The board is concerned that, to the extent proposal for further changes deviate significantly from the reforms adopted [in 2014], such changes … might result in a pattern of reduced funding that threatens the viability of our shared goals to properly fund the System to ensure the full payment of all benefits that have been promised.”

The Maryland State Retirement and Pension System managed $45 billion in assets as of December 31, 2014.

 

Photo by TaxRebate.org.uk via Flickr CC License

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