Annapolis – The House Republican Caucus today announced a legislative package aimed to correct the problems in Maryland’s pension system. The package calls for honest accounting of the pension fund obligation, full annual funding of the pension fund, and limiting risky investment with pension fund dollars. The plan also includes giving state employees more choice in their retirement planning and providing adequate representation for counties on the Pension Board.
“The current state of Maryland’s Pension Fund is cause for alarm,” said Delegate Steven Schuh of Anne Arundel County. “Currently, Maryland is $21 billion short of fully funding its pension obligations. The consequences of this underfunding will not only impact current and retired state employees, but also the taxpayers of Maryland. The current shortfall translates into a hidden debt obligation of $8,750 for every household in the State.”
Currently, only $37 billion of the total $58 billion pension obligation is funded. This shortfall is due to chronic annual underfunding to the pension fund as well as overestimating the expected return on pension fund investments. Risky investment strategies including, hedge funds, junk bonds and private equity, have also contributed to the problem. Continued underfunding of pension obligations could require increased taxes or program cuts to cover the shortfall. If underfunding continues long-term, it is even possible that Maryland’s retirees could see their benefit reduced or eliminated.
Bills in this legislative package are sponsored by Delegates. Steven Schuh of Anne Arundel County, Andrew Serafini of Washington County, Gail Bates of Howard County, Nic Kipke of Anne Arundel County, Jeannie Haddaway-Riccio of the Eastern Shore, and Susan Aumann of Baltimore County.
“House Republicans believe that a promise made is a promise kept when it comes to employee pensions,” commented Del. Andrew Serafini of Washington County. “But, this is not a political issue. Democrats and Republicans can come together to solve this issue to keep the State’s commitment to its employees. This legislative package will put Maryland’s pension fund back on solid ground so that our state retirees will never have to worry if their pension check is going to clear and will give all state employees flexibility in how they structure their retirement planning.”
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