Employees to decide on switch from state to county pension plan

April 07, 1995|By James M. Coram | James M. Coram,Sun Staff Writer

In the next 10 days, about 1,440 county employees will decide if they want the county to set up its own pension program under a plan that could significantly increase their retirement pay.

If at least 50 percent of the workers agree, the plan will become a reality July 1, open to any employee who wants to switch from the state pension plan that now covers most county employees.

Those who opt to participate -- and county officials believe most will -- would receive from 40 percent to 62 percent more a year in retirement under the county plan than under the state plan.

The reason is that employees would have to contribute 2 percent of their annual income to the county plan. They don't contribute anything to the state plan. The county government's contribution would remain as it is now -- a little over 8 percent of an employee's annual income. Employee contributions would not be taxed as income.

Employees who decide not to join the county program would remain covered by the state pension plan. Those who switch to the county plan would carry over to the new system any retirement benefits they had earned under the state plan.

"It's a wonderful program," says County Administrator Raquel Sanudo of the proposed county-run pension plan. "It is really to the benefit of employees."

Union leaders tend to agree.

"In my opinion, it's a good plan," says Donald Armes, president of Local 3080 of the American Federation of State, County and Municipal Employees, the union representing the county's 90 correctional officers. "It is affordable both to the county and to employees. It almost doubles benefits at minimal cost."

Dale Chase, president of president of Local 3085 of the American Federation of State and County Municipal Employees, the union representing the county's 267 blue-collar workers, also thinks the county plan is a good one. But he is not quite ready to call it "wonderful."

"It's a good plan -- a better plan [than the one covering employees now], but it could have been even better," he said.

Although participation would be voluntary, Mr. Chase fears that some employees may stay with the state plan because they can't afford the 2 percent contribution required by the county plan.

"There have been layoffs and furloughs, and raises have been put on hold" at various times in the past four years, Mr. Chase said. "Employees are still trying to catch up. My biggest problem [with the county pension plan] is that without a cost of living

increase, employees may not be able to afford the contribution."

He also lamented the fact that employees have only until April 17 to make an irrevocable decision whether to enter the new program or stay with the old one. "That's a small window for people who have to choose between putting food on the table and making good decisions for their future," he said.

The deadline, the finality of the decision, and the 50 percent participation requirement are conditions imposed by state law.

The new plan will not apply to teachers -- who are required to participate in the state plan -- or to police and firefighters. County police and firefighters developed their own pension plan five years ago.

"Howard County has a good track record with the police and fire plan," Ms. Sanudo said. "It is well managed, and the fund is well invested."

The plan being proposed for other county workers "is clearly a better benefit" than the state plan because of its larger retirement payments, Ms. Sanudo said.

There are about 100 employees covered by an earlier version of the current state program who probably would not switch to the county plan because the state's older retirement program offers them superior benefits, Ms. Sanudo said.

Employees have been given individual printouts showing the amount of retirement benefits they would receive under the current plan and the amount they would receive if they changed to the county plan.

In general, employees under the state program receive 24 percent to 35 percent of their average salary after a 30-year career. Under the county plan they would receive 39 percent to 49 percent of their average salary after a 30-year career.

An employee making an average annual salary of $35,000, for example, would receive a minimum of $8,400 a year under the state program but would get a minimum of $13,650 under the xTC county plan. A person with that salary would receive a maximum of $12,250 a year under the state program and $17,150 under the county plan.

Between now and the April 17 deadline, county personnel workers will discuss pension options with any employee who asks, Ms. Sanudo said.

Presentations have already been held for employees at locations throughout the county.

"We got good feedback, and employees asked good questions," she said.

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