HEARING ALERT: State Retirement Choice For The 21st Century Workforce

Important Legislation Addresses Maryland’s Unfunded Pension Liability and Creates a Sustainable Retirement System That Will Better Serve State Employees
Note: Senate Budget And Taxation to Hold Hearing on SB 540 on March 9, 2017, 1:00 PM

“Protecting the integrity of our pension system and keeping the promises made to our hardworking state employees will always be a priority of this administration.” - Governor Larry Hogan, January 30, 2017

Governor Hogan Has Taken Action To Shore Up Maryland’s Pension System

Governor Hogan Has Provided Over $3.1 Billion Toward Maryland’s Pension System; Funding For The Pension System Has Increased By 11% Since Governor Hogan Took Office. Since Governor Hogan took office, $3.11 billion in state funds have been allocated toward Maryland’s pension system; $1.49 billion in fiscal year 2016 and $1.62 billion in fiscal year 2017. Funding for the pension system has increased by 11% from fiscal year 2015 to fiscal year 2017; $1.46 billion in fiscal year 2015 to $1.62 billion in fiscal year 2017. (Maryland Department Of Budget And Management)
Governor Hogan’s Fiscal Year 2018 Budget Allocates $1.58 Toward Maryland’s Pension System. (Maryland Department Of Budget And Management)

Governor Hogan Has Recognized The Need To Reform Maryland’s Pension System

Maryland’s Pension System Is Only 70.5% Funded. (Maryland Department Of Budget And Management)
Maryland’s Current Pension System Has A $20 Billion Unfunded Liability. “The state’s current pension system has an estimated $20 billion unfunded liability, meaning the system lacks the assets necessary to pay approximately 30 percent of the benefits it owes to current and future retirees.” (Press Release, “Governor Larry Hogan Announces State Retirement Choice Act For The 21st Century Workforce,” Maryland General Assembly, 2/2/17)

State Retirement Choice For The 21st Century Workforce

The Governor’s Proposal Creates An Optional Defined Contribution Retirement Savings Plan For State Employees; Under The Plan State Employees And The State Would Each Contribute 5 Percent To The Employee’s Individual Retirement Account. “At the commencement of employment, an eligible employee shall make an election to either: participate in the State Retirement Choice Plan; or join the Employees’ Pension System in accordance with the provisions of this Division II applicable to that system… A participating employee’s contribution rate is 5% of the participating employee’s annual earnable compensation… On behalf of each participating employee, the employer shall contribute to the State Retirement Choice Plan 5% of the participating employee’s annual earnable compensation.” (“Senate Bill 540,”Maryland General Assembly, 2/2/17)