The General Assembly is weighing a proposal to change funding for the State Pension System that could provide additional funding for other parts of the budget over the next few years. The proposal would end the plan to reinvest savings from recent benefit reductions, but would accommodate a repeal of Maryland’s highly criticized corridor funding method in favor of the commonly used actuarial funding method.
As reported in the Baltimore Sun,
Warren Deschenaux, the legislature’s chief analyst, said years of strong investment returns have put the state on a path to reach the 80 percent goal by 2021. His department is proposing to scrap the supplemental payments and shift to actuarial funding in next year’s budget plan.
The effect of that change would be to reduce the state’s payments into the system next year and over the next several years. Deschenaux said the state could do so and still hit its original funding target date of 2023.
Michael Rubenstein of the Department of Legislative Services presented the proposal at the meeting of the House Appropriations Committee on Friday. According to discussion at the meeting, short-term savings of the proposal could result in additional costs in the long-term, unless a new amortization period is adopted.
The State Pension Board of Trustees will discuss the pension funding proposal on Tuesday.