Curb on pension transfer proposed Lamb bill would raise cost of 'buy-backs'

September 09, 1993|By John Rivera | John Rivera,Staff Writer

It may soon cost more for Anne Arundel County employees who once worked for governments in other jurisdictions to transfer their years of service to the county's pension system.

County Councilwoman Maureen Lamb introduced a bill Tuesday night designed to end what an independent auditor called a "huge subsidy" to employees in both the general pension fund and the one for elected and appointed officials when they pay to transfer their previous years of service.

Currently, a county employee who previously worked for any other government in Maryland can receive credit for those years of service in Anne Arundel's pension fund by paying a "buy-back" fee.

The fee is based on the salary the employee earns at the time of transfer to the county system.

But because an employee's pension is based on an average of the person's highest salary, there is often a difference of thousands of dollars between the amount paid to get into the system and the benefit the employee will receive.

An audit last January by the W. F. Corroon Corp. estimated that the buy-back provisions have left the pension funds short by as much as $13 million.

"From a financial perspective, the arrangement is unfavorable to the plan and, therefore, the County taxpayers," the auditor's report said. It challenged the county "to ask itself if this is a benefit whose value to employees (and their morale and productivity) covers the price tag."

Ms. Lamb's bill adopts the advice of the actuary to delay figuring the buy-backs until the year of an employee's retirement, a practice followed in the state pension system and other subdivisions.

The ordinance would give employees the option of paying a lump sum determined by an actuary that will cover the expense of the additional benefits or having a minimum of 2 percent of their salary deducted each year with any necessary adjustments made when they retire.

According to the audit, the change could increase the cost to employees of the buy-back by as much as 80 percent, assuming an employee gets 6 percent pay raises throughout his or her career.

County Executive Robert R. Neall is working on his own pension legislation, which he hopes to send to the council before the next meeting.

That bill would close the troubled pension fund for elected and appointed officials and seek to roll back some of the generous benefits it granted.

Louise Hayman, a spokeswoman for Mr. Neall, said he was planning a second measure in October to deal with the buy-backs, but that he would wait to see how Mrs. Lamb's bill fares before drafting more pension legislation.

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