Pension Program with a Plus

April 11, 1995

A new pension plan being offered to Howard County employees represents one of those seemingly rare occasions nowadays when an employer isn't asking its workers to give something back.

Whether in government or the private sector, the prevalent trend in compensation has been to have employees shoulder a larger share of the burden. Annual cost-of-living increases are no longer considered automatic. Also, workers are being asked to assume more responsibility in choosing -- and financing -- their health care and insurance coverages. The old "cradle-to-grave" system is an anachronism.

In that light, Howard County's decision to offer its workers a pension plan that allows them to invest their own, tax-free dollars seems a plus. It is believed that most of the county's 1,440 eligible employees will take advantage of the offer by the deadline next Monday.

Under the proposal, employees have the option of switching from the state pension system that currently covers most workers to a county plan that would increase annual retirement benefits by 40 to 62 percent. The county would continue its own contribution, about 8 percent of a worker's salary. But in order to switch, county employees would have to contribute 2 percent of their annual salary to the fund, a requirement that does not exist under the state system.

While reaction by union officials has been generally favorable, it has not been universal. Dale Chase, president of Local 3085 of the American Federation of State, County and Municipal Employees, which represents Howard's 267 blue-collar workers, argues that because raises have been sporadic, many workers will be unable to afford the contribution and will miss out on the higher benefits.

That might be a reasonable position if joining the new pension plan were mandatory. But the county is merely offering its workers something better atop the current system. Because of their contribution, workers will also likely be more inclined to pay closer attention to the investment performance of their pension plan. One drawback: The new plan does not include county teachers, who will continue to receive benefits under a separate state system overseen by the Board of Education. It offers less in benefits than the new plan. School officials should look into this disparity.

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