As reported by the Daily Record, recent reports by the Calvert Institute for Public Policy Research and the Maryland Tax Education Fund suggest a number of changes to the State’s pension system. Changes include shifting from defined-benefits plans, or pensions, to defined-contribution plans, like a 401(k) and using indexed investments to save the State what it spends on money managers.
Both sides of the equation — how the pension system is funded and managed, and how it is doled out — will be part of the discussion for members of the Public Employees’ & Retirees’ Benefit Sustainability Commission, which is scheduled to meet for the first time Oct. 7.Casper R. Taylor, the commission’s chairman and former speaker of the House of Delegates, said the commission will have to learn to look at the pension fund in the context of these tough economic times.
“I think by the very nature of pension systems that exist anywhere, public, private, whatever, some level of unfunding is acceptable in our current reality,” he said. “The question is at what point does unfunding become dangerous.”
Barbara Hoffman, a lobbyist and former chairwoman of the Senate Budget and Taxation Committee, said the commission will likely look at defined-contribution plans as an alternative for new workers.
A report by The Pew Center on the States, The Trillion Dollar Gap: Underfunded State Retirement Systems and the Roads to Reform, shows why states need to take action now. With respect to Maryland, the report finds, “Maryland’s management of its long-term pension liability is cause for serious concern and the state needs to improve how it handles its retiree health care and other benefit obligations.”
Additional cover of these reports can be found in the Gazette.