July 12, 1997
STATE WORKERS AND public-school teachers had better pay more attention to what's happening (or not happening) on their pension-retirement board. Some troubling developments indicate that far more public visibility of issues before the retirement panel might help avoid some embarrassing and costly pitfalls.
Take the exorbitant fees imposed on 35,000 state employees who put money into their private retirement savings accounts. For much of the past two decades, the board permitted the Public Employees Benefit Services Corp. to run the 401(k)-style program and get away with fees that were double what would be charged in the private sector. It was a bad deal for state workers that an earlier board had worked out with PEBSCO under a no-bid contract.
Now, after six years of pressure from state officials, a new contract is about to be awarded, with PEBSCO (the low bidder) offering to slash its charges by half. That will mean hundreds of dollars a year going into retirement accounts, not to PEBSCO. The question state workers ought to ask of pension-board members: How was such an outrageous situation allowed to persist since the mid-1970s?
Equally disconcerting were accusations by Richard N. Dixon, the state treasurer, concerning the state pension board. While his anger against a specific board member appears to be misplaced, Mr. Dixon's complaints about the board's failure to turn over major portions of its $24 billion portfolio to local investment firms bears careful scrutiny. Likewise, his complaint that the board has been reluctant to give local minority investment companies in the state a role in money management matters, turning instead to big-name New York firms.
Little of this has been aired in public. Few pensioners and those saving toward retirement were aware of these controversies. Thus, the board has conducted much of its business without attracting attention. And the results have not always been reassuring.
Maryland's pension board over the years has steered a conservative fiscal course, sometimes with great success. But it has done so with little notice from those most affected by these decisions. Recent controversies ought to convince teachers and state workers in the pension system that it is time to find out what is or is not going on when the board meets. Plenty of sunshine is often the best curative.
Pub Date: 7/12/97
