Legislation would mean higher rates over the next few years and help participating governments avoid a large rate increase in 2022.
The Executive Director of the State Retirement Agency recently held regional outreach meetings with county and local members of the State Pension System. The purpose of the outreach was to share information about legislation to alter contribution rates of local members of the state system.
The Maryland State Retirement and Pension System Board of Trustees has asked the Joint Committee on Pensions to introduce legislation that would amend the current funding policy for the System’s participating governmental units, which include many municipalities and eleven county governments. The legislation would increase the employer contribution rate for the participating governments beginning with the FY2018 billings, as compared to the rates projected for the same period under the current law.
During the outreach meetings, Executive Director Kenderdine shared a powerpoint presentation on the proposed change, a letter from the State’s auditors, and the following charts that compare cost projections under the current funding policy with those under the proposed legislation. The two charts capture projections for FY 2018, when the changes would first take effect, and in FY 2022, when a dramatic increase in the rates takes place under the current policy.
The proposed change will mean slightly higher contribution rates over the next few years, but will avoid a large increase in rates in 2022. For example, here are the projections for Allegany County:
Under current policy:
- Allegany County will pay a projected $1.13M to the State Pension System in 2018
- Allegany County will pay a projected $1.70M to the State Pension System in 2022
Under the proposed policy:
- Allegany County will pay a projected $1.20M to the State Pension System in 2018
- Allegany County will pay a projected $1.26M to the State Pension System in 2022
For detailed projections for county and municipal members of the State Pension System, see the following charts:
- FY2018 cost projections comparison between current and proposed funding policies
- FY2022 cost projections comparison between current and proposed funding policies
For background information, see our previous post, Retirement Agency Performs County Outreach on Legislation Affecting Contribution Rates.