A 401(k) for Baltimore City?

As reported in the Baltimore Sun, Mayor Stephanie Rawlings-Blake plans to introduce legislation to switch new city employees from the a traditional pension system to a 401(k)-style plan.  As described,

By implementing the switch, the city expects to save $1 million in fiscal year 2014, with increased savings each year until 2022, when city officials say they will save $7.8 million.

Under the proposal, new city employees would be required to contribute 5 percent of their salaries to their retirement accounts, with the city contributing an additional 4 percent. New employees would have the option of contributing an additional 2 percent, which would cause the city to contribute an additional 1 percent, according to the plan.

Mayor Rawlings-Blake has continued to seek ways to reduce the costs of the City’s pension plan, which faces serious financial difficulties.  As reported in the Sun, the City Council recently enacted the Mayor’s plan to requires current city workers to start contributing part of their salaries to their pension fund.

In the Employees’ Retirement System Comprehensive Annual Financial Report for the year ending June 30, 2012, the Baltimore System reported an increase in actuarial unfunded liabilities from $530.2 million in 2011 to $681.6 million in 2011, with a funded ratio declining to 72.7% over the course of the fiscal year.

For more information, see the full story from the Sun and our past coverage of this topic on Conduit Street:

Baltimore Considers Employee Pension Contributions

Baltimore Mayor Seeks to Close Pension Deficit

Latest Ruling Props Pieces of Baltimore City Pension Overhaul

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