Legislation to create an investment division within the State Retirement Agency has proceeded smoothly through the Maryland Senate. The change would bring Maryland’s System into line with many other state pension systems of similar size, and could save costs in the long term.
On Thursday, March 15, a bill to create an internal investment division within the State Retirement Agency passed the Maryland Senate on what is called “second reader.” After a quiet hearing in the House, the bill passed that chamber with only a few technical amendments, and all signs now indicate that the bill will pass the General Assembly this year.
Additional amendments were described on the floor of the Senate on Thursday by Senator Guy Guzzone, Co-Chair of the Joint Committee on Pensions. The Senate’s amendments would establish an objective criteria committee to assist the State Pension Board in setting compensation for the Chief Investment Officer and positions in the investment division created by the bill.
As described in the fiscal note on the bill, compensation and operating expenses of the investment division are subject to appropriation from the accumulation fund of each system and are not paid by participating employers. Administrative fees, including those paid by county governments who participate in the State system, will continue to be used to support other divisions of the State Retirement Agency.
This legislation marks a major change in the State Retirement Agency, and one that could be prudent financially, resulting in better returns for the System. As described by Senator Guzzone,
“What we are trying to do is help the division perform better in each asset class. So we are giving them some authority to hire and raise salaries, commensurate with the industry. Hopefully that will lead to some success in those areas.”
For more information, see: SB 899 State Retirement and Pension System – Investment Division