Bill seeks changes in county officials' pension fund Boschert, Lamb introduce measure to bring end to lucrative benefits

November 16, 1993|By John Rivera | John Rivera,Staff Writer

County Council members David G. Boschert and Maureen Lamb last night introduced a bill to end a lucrative pension plan for appointed and elected officials under which they could transfer years of service from other jurisdictions.

Under the bill, retirees would only gain benefits from the years they worked for the county and contributed to the pension plan.

Pensions for officials are currently calculated by a formula based on the number of years of service they have accumulated multiplied by their final salary.

The bill, which would set up a "defined contribution plan" for elected and appointed officials, was introduced as an alternative to legislation proposed in September by County Executive Robert R. Neall.

Mr. Neall's bill would end the financially troubled pension fund, freeze the benefits for current officials and merge them into the general employees' pension fund.

Both bills aim at fixing a pension fund with lucrative benefits but has less than half the money it should have.

A 1989 law passed by the council lowered the minimum retirement age to 50 with 16 years of service and raised the benefits by 20 percent for appointed officials. Those changes have since been repealed.

But the county is prohibited by the contract clause of the U.S. Constitution from repealing benefits accrued by current and former officials under the plan's old provisions.

Mr. Boschert and Ms. Lamb's bill would also freeze benefits for current appointed and elected officials. But rather than ending the appointed and elected officials fund, as Mr. Neall wants, the council members' bill would totally remake it.

County Auditor Joseph H. Novotny, who assisted in writing the bill, said it addresses the main flaw of the old pension plan -- the years of service that county officials transferred from state government.

Under Maryland law, an employee who transfers from the state to a local government must be given credit for his years of state service, but the state does not have to transfer what it contributed to the employee's pension.

Mr. Novotny points to the conclusion of Mr. Neall's independent auditor, who issued an opinion that the under funding of the plan was caused mainly by officials who transferred pension benefits to Anne Arundel from the state and not by the 1989 bill passed by the council.

Mr. Novotny said the Boschert-Lamb bill gets around this by not basing the amount of an official's pension on years of service.

"Years of service don't matter. It's like an IRA or Keogh account," he said. Future officials' pensions would be based on a 4 percent monthly contribution, which would be matched by the county. Employees would then decide how that money is invested, choosing from a safe money market fund to more risky investments like fixed income funds or equity funds.

"This shifts the onus over to the employee," Mr. Novotny said, relieving the county of the liability of risky investment. "It's the individual who takes the risk."

Mr. Neall's bill would raise current officials' contributions to the pension fund to 8 percent of their salary.

Mr. Novotny said he felt that was punishing current officials for lucrative benefits won by people who are no longer in county government.

The council approved amendments to Mr. Neall's bill last night that would spread out payments for the unfunded portions of the appointed and elected officials plan over 15 years, instead of 30 years. This would increase yearly payments by the county from $776,000 to $1,088,000.

The council also approved an amendment to Mr. Neall's bill introduced by Ms. Lamb that deleted the 8 percent contribution for the officials' plan, leaving it at its present 4 percent.

Public hearings will be conducted on the bills at a later date.

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