Locals In State Pension System May Face New Costs

A legislative proposal supported by the Joint Committee on Pensions in their meeting this week would eliminate the ability of participating governmental units to deduct administrative fees from their annual employer contributions.  As described, this legislation is intended to “prevent the underfunding of the SRPS [State Retirement and Pension System] by the amount of the administrative fees.”

According to the proposal,

The 2011 pension reform included provisions that require participating governmental units to pay their prorated share of the administrative costs of SRA, based on the number of their employees who are members of the Employees’ Pension System or the Employees’ Retirement System. . . However, section 21-316(e)(6) further states that a participating governmental unit may then deduct the total amount paid in administrative fees from the total amount of the annual employer contributions made by that participating governmental unit. . . The Board is requesting legislation to repeal section 21-316(e)(6) which allows a participating governmental unit to deduct its administrative fees from its annual employer contributions.

An estimate provided by the Maryland State Retirement and Pension System indicates that 2013 administrative fees for county governments who are participating governmental units in the Employees’ system will be about $1 million total statewide.

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