At its October meeting, the Joint Committee on Pensions heard a presentation of legislative proposals submitted by the Maryland State Pension Board of Trustees. The proposals may be described as a collection of technical changes to the existing pension law, many of which serve to bring uniformity to the code.
The next meeting of the Joint Committee on Pensions will be held on November 19 in Annapolis. At this meeting, the Board will hear how the 2007 change in Title 37-203(f) of the pension transfer law has been implemented.
A brief description of a few of the Board of Trustee’s proposals:
Re-employment – Earnings Limitations
Extends the $25,000 cap on earnings to retirees of the Local Fire and Police System State Retirement Plan (LFP). The old cap on earnings was set at $10,000 so this raises the cap. The law will also reduce the number of years a retiree is subject to the cap from 9 year to 5 years for LFP retirees. The LFP plan was closed in 2004 so it was inadvertently overlooked when the cap was changed on other plans.
Law Enforcement Officers’ Pension System and State Police Retirement System DROP – Special Disability Retirement Allowance
If someone is awarded a special disability retirement from the State Police, that retiree cannot elect to participate in the DROP because it is not reasonable that the member would be permitted to continue working.
Former Non-Vested Members – Interest on Accumulated Contributions
An individual is still considered a member of the State Retirement and Pension System for four years after he or she leaves employment with a participating employer. However, four years after leaving employment with a participating employer in the State Pension System, a non-vested member will stop accumulating regular interest on his or her member contributions. The Board suggests codifying this practice.
Re-employment – Late or Non-Reporting Penalties
Currently, when a school system reports that a retiree is eligible to participate in the Retire/Rehire program when an employee is not actually eligible, the school system must pay the State Retirement Agency the reemployment earnings offset that would have been taken from that retiree if that individual was not reported as exempt. The school system pays a similar penalty for failing to report or reporting late that an individual is participating in the Retire/Rehire program. The State Retirement Agency has charged schools as much as $25,000 for failures to report in the past. The Board recommends changing this rule to charge a consistent penalty of $50 per month for each month the local school system fails to make a correct report, not to exceed $1,000 per employee.