State Pension System Status Triggers Debate

A debate over the State Retirement and Pension System’s funding was covered recently in the Maryland Reporter.

An article by Charlie Hayward of the Reporter states,

The Maryland State Retirement System suffers from chronic underfunding—facing an actuarial shortfall for existing participants of $19.6 billion as of July 1, 2014. Fixing the shortfall will require decades of contributions’ discipline even while major demographic impediments and a clear risk of economic downturns (during the next 25 years) loom.

Hayward discounts market downturns as the reason for the System’s underfunded status, pointing instead to “political complacency and a lack of contributions’ discipline.”

In response, the Executive Director of the State Retirement Agency Dean Kenderdine writes,

While we can certainly agree with Mr. Hayward’s opening statement that the Maryland State Retirement and Pension System “suffers from chronic underfunding,” we must part company with his assertion that reforms to the System over the last four years have not addressed the problem.

Executive Director Kenderdine states, “. . .thanks to the reforms enacted by the legislature in 2011 and its subsequent action in 2013 to return the System to an actuarial required contribution—by phasing out of the “corridor funding” methodology over 10 years—the fund is on a trajectory to full funding.”

For more information, see the both pieces in the Maryland Reporter here.

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