Council may revamp ailing pension funds Neall hopes to cut costly benefits

October 18, 1993|By John Rivera | John Rivera,Staff Writer

The Anne Arundel County Council, beset by complaints its pension system is out of control, is scheduled to considers three bills tonight that would end one financially troubled fund, prohibit future council members from collecting benefits for their time in office and make it more expensive to transfer service credits.

The changes come after independent auditors reported that some county pension policies have cost the funds millions of dollars.

The most widely publicized financial difficulties prompted County Executive Robert R. Neall to introduce a bill that would merge the appointed and elected officials' pension fund with the general employees' pension fund. Changes in 1989 that lowered the minimum retirement age to 50 with 16 years of service and raised the benefits by 20 percent for appointed officials have left the pension only about half-funded.

Those changes have since been repealed.

Mr. Neall's legislation would make the elected and appointed officials' fund less attractive for participants by freezing benefits for current officials and doubling the contribution for those who transfer to the general fund from 4 percent to 8 percent of their salary. Any future elected or appointed officials must join the employees' pension fund.

The proposed changes would also keep 11 former officials who left county government before the 1989 changes were adopted from collecting benefits before they are 60. Because they left government before the changes were made, they are not legally entitled to them, county lawyers have ruled.

Combining the two pension funds should save the county about $1.2 million in the first year.

The council will hear testimony on two other proposals: Council President David G. Boschert's bill that would prohibit future council members from earning a pension from their time in office, and Councilwoman Maureen Lamb's proposal to charge more for county employees to transfer their years of service in other local or state governments to the county's pension system.

A county employee who has 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 that usually includes higher salaries, 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 in January by the W. F. Corroon Corp. estimated that the buy-backs have so far left the pension funds $13 million short.

Mrs. Lamb's bill adopts the advice of the county's actuary, the Corroon Corp., 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 to 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.

Although the council will hear testimony on the bills, no votes will be taken, Mr. Boschert said.

"The council should not do anything until we have heard from the Pension Oversight Committee and we haven't heard from them yet," he said.

The council will meet at 7:30 p.m. in the council chambers at the Arundel Center in Annapolis.

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