Over the past few years, Baltimore City has made reforms to its public safety pension plans, and more recently made changes to its non-public safety employees pension plans and added a 401(k)-style plan to its benefit offerings.
As reported in the Baltimore Sun,
Rawlings-Blake initially called for all new municipal workers to be placed in a 401(k)-style plan. The deal approved by the council will give new workers the option of selecting a 401(k)-style plan or a “hybrid” plan that combines such an account with a traditional pension. The “hybrid” plan will be two-thirds traditional pension and one-third 401(k)-style plan, officials said.
Mayor Rawlings-Blake’s Ten-Year Financial Plan included pension reforms and other provisions to improve the City’s base. As described in the her Office’s Press Release when the plan was introduced,
Currently, Baltimore’s pension system for civilian workers is the only large system in Maryland that doesn’t require any employee contribution.
The legislation also calls for eliminating a “variable benefit” for civilian retirees, which siphons dollars out of the pension trust when the stock market is up, but makes no adjustment when the market declines. City pension costs have nearly doubled since FY2004, and without reform, costs are projected to grow by another 40% by FY2022. Reforms to the civilian pension plan for current employees are expected to save $53 million over nine years. . .
For a detailed description of the changes to the Baltimore City Pension Plan, see this Summary of the Amendments.
Also this spring, the 4th Circuit heard a case on the reforms made in 2010 to police and fire pension plans. The 2010 reforms made several changes to police and fire pension plans, including, replacing the “variable benefit” with a regular COLA. As described by the Mayor’s Office,
[R]eplacing the “variable benefit” with a regular COLA would be more consistent with the common practices among other public employers nationally and regionally. At the same time, this approach would provide retirees with more predictable post-retirement increases better aligned with expected cost-of-living growth, and would enable establishment of an enhanced minimum benefit for long-term retirees.
The lower court found that the termination of the variable benefit was unconstitutional. You may listen to the oral argument for the case in the 4th Circuit on May 14, 2014.
For more information, see our previous posts on Conduit Street, Baltimore City Asks School Employees to Contribute to Pensions and Baltimore City Council Approves $2.4 Billion Budget For Fiscal 2014.
Pension benefits and liabilities are a topic of discussion at this summer’s MACo Conference in August. For more information, and to register, see the MACo website.