As reported earlier on Conduit Street, the Maryland State Retirement and Pension System Board of Trustees recommended legislation to remove a deduction for administrative fees charged to some employers in the pension system.  The Special Joint Committee on Pensions introduced the proposal as SB 475, which would have resulted in additional actual costs for county governments who participate in the Maryland Employees’ Retirement and Pension Plans.

MACo had raised concerns with the bill, and especially with a systemic reliance on administrative fees to support the State Retirement Agency’s budget.  Administrative fees were instituted during the great recession, and were driven by the State’s budgetary needs.  As described in MACo’s testimony:

The administrative charge began in FY12 for schools, and in FY13 for the participating government units, which includes employees of 12 county governments. . . MACo believes that the entire charge-back mechanism, originally driven by difficult budget times, should be a priority for elimination as the fiscal situation improves.

MACo had been joined by MML and the Maryland Association of Board of Education, sharing similar concerns.

The total annual fees for the twelve county participating governmental units are estimated by the State Retirement and Pension System to be over $1 million annually, and rising each year by approximately 3%. Withdrawal of the legislation means that county participating governmental units may continue to deduct administrative fees from their employer contributions in future years, resulting in no change in the effective program cost.

MACo had previously covered this proposal as it was revealed as possible legislation prior to the session: Locals In State Pension System May Face New Costs