Pension Plan

Long considered an executive perk, free financial advice may be coming to more 401(k) plans. International Business Machines Corp. unveiled plans last month to offer retirement, tax and insurance planning services to its 127,000-member U.S. work force through third parties as part of a package aimed at curbing the chill from its pension changes. Big Blue has weathered a storm of criticism and lawsuits as it switched to a cash-balance plan and later phased out its pension plan contributions for current workers.

LEGISLATION is needed to correct the deceitful corporate contortions known as cash-balance retirement plans, which more than 300 major employers have adopted as alternatives to traditional pensions.Traditional pension plans give the highest retiree payments to long-term employees, over-weighting the final years' salary and total years of service as a reward for loyalty. The cash-balance plan treats every worker-year equally, setting aside a percentage of pay for each employee. Workers get the accumulated cash savings plus interest whether they leave the company after three years or 30.Cash-balance plans aren't about an egalitarian system.

CHICAGO -- Montgomery Ward & Co. is terminating its pension plan and using some of the surplus money to help it emerge from bankruptcy.The move affects 30,000 Ward retirees and 22,000 current employees, Ward said.Ward doesn't yet know how much money it will recapture from ending the plan, said Ward spokesman Chuck Knittle.But given the size of Ward and the number of employees in the pension plan, it is probably millions of dollars and possibly, tens of millions, pension experts say.The retirees are being offered the option of receiving an annuity from an insurance company equal to the value of the pension they were receiving or a lump-sum payout.

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.Q: For the first part of last year, I was in the military. Since I left prior to 20 years' service, I am not eligible for a retirement pension. However, I was considered covered by a pension plan during the part of the year I was still in. From Aug. 1 to Dec. 31, I was not covered by a pension plan with my new employer. For the purpose of a deductible IRA contribution, am I or am I not considered covered by an employee plan for the tax year 1997?

An election-year bill that would significantly increase pension benefits for state workers and public school teachers cleared its first hurdle last night when the House Appropriations Committee approved the measure.The legislation, which is sought by the Maryland State Teachers Association and state employee labor unions, would increase the state's cost of funding the pensions by about $167 million a year, or about $3 billion over the next two decades.Under the plan, employees and teachers would be required to contribute to their retirement plans.

The Maryland Republican Party has begun airing a radio commercial on behalf of Ellen R. Sauerbrey that attacks Gov. Parris N. Glendening's trustworthiness, partly by quoting other Democrats.What the ad says: The 60-second spot, which is running in the Baltimore, Washington, Hagerstown and Salisbury markets, uses critical comments from fellow Democrats to attack Glendening. For example, it quotes Prince George's County Executive Wayne K. Curry saying, "People don't trust Parris Glendening."

Republican Ellen R. Sauerbrey is airing a new TV commercial that attacks Gov. Parris N. Glendening for a special pension he helped put in place for himself as Prince George's County executive. The ad also touts her plan to cut income taxes for some retirees.What the ad says: The 30-second ad reminds voters of the supplemental pension that Glendening and the Prince George's County Council crafted before he left office there in 1994. "Remember Glendening's pension scandal? First he left Prince George's County with a huge deficit, then was caught trying to give himself a pension he hadn't even earned," an announcer says.

WASHINGTON -- There were no cameras rolling. No microphones placed under the witnesses' chins so every word could be recorded. No cluster of reporters with notebooks in hand to take down every detail.Not for this congressional hearing.Three of the four witnesses were too male, too white and too old to make a good news story. Bill Tosheff, John Ezersky and Walt Budko played professional basketball in the 1940s and 1950s. They played when pro basketballers traveled from town to town in rickety buses, planes or trains and dressed in rundown locker rooms and were paid -- if they were lucky -- whopping four-digit salaries.

The Teamsters union and United Parcel Service of America Inc. have drawn a line in the sand over retirement benefits in the 11-day-old strike.The union and management both want control of pensions for UPS' 185,000 striking workers. Pensions cost the nation's largest package delivery company $1.1 billion a year, but UPS has little control over them.In a decades-long Teamsters tradition, the union operates its own multiemployer pension plan, which groups the UPS employees with other Teamsters members in 31 funds nationwide.

A decade-old Annapolis law that forbids city aldermen from receiving fringe benefits is obsolete, state officials say, clearing the way for the part-time council members to qualify for a pension.The state's personnel and pension laws supersede the 1988 city law, officials from the State Retirement and Pension System said recently.City lawyers agreed Thursday, saying: "The city cannot deny elected officials from participating in the pension plan."But for aldermen to be eligible to collect benefits, the city would have to pay as much as $28,000 to the state system to bring current pensions for aldermen up to date, according to city Administrator John L. Prehn Jr.The figure is "a very rough calculation" that city officials "might say our budget cannot possibly afford," Prehn said.

What was once a hypothetical is now becoming reality: The first of Baltimore County's part-time elected officials is ready to retire at a relatively young age, and will collect a pension equal to his full salary for the rest of his life. County Councilman Vincent J. Gardina, a 54-year-old Democrat, is set to be the first person in county history to serve five council terms. That makes him eligible to collect his $54,000 council salary as a retirement benefit as long as he lives. It also means there's no financial incentive for him to run again, even if he had the desire.

Patrice Brown and Jerry Bannister don't know each other, but they're on opposite sides of an economic canyon that divides young from old and makes this recession different from any other in the last six decades. Even as employers lay off millions and unemployment soars, more people 55 and older hold jobs today than did a year ago. Folks such as Bannister, 67, the maintenance director at Mays Chapel Ridge retirement community, are working longer than they once expected because of disappointing pensions, stock-market losses or the need for health insurance.

The Dixon administration introduced legislation Monday that would halt future cost-of-living increases for Baltimore's retired police officers and firefighters, the latest turn in an ongoing effort to reform the city's ailing $1.6 billion public safety pension fund. City officials stressed that the new legislation is a "stopgap" measure intended only to prevent the already depleted fund from plummeting further while they fashion a broader fix that will ultimately include post-retirement increases.

City pension woes should be no shock I find Mayor Sheila Dixon's assertion that the board of trustees of Baltimore's Fire and Police Employees' Retirement System has been unwilling to "look at the bigger picture" humorous but not at all surprising ("Fry tapped to review police, fire pensions," April 5). It has indeed been the board's unwavering (and perhaps misplaced) concern for the "bigger picture" that has, in part, led to the difficulties the pension plan now faces. The board has, for five or more years, opted not to reduce the assumed rate of investment returns as recommended by our actuary in direct response to the fiscal impact that move would have had on the "bigger picture."

Three Baltimore public safety unions have reached an agreement with the Dixon administration to scale back lucrative retirement payouts for police officers and firefighters who work longer than 20 years. The compromise, fueled in part by the down economy, would save the city an estimated $4 million to $7 million yearly while preserving elements of a popular pension selection known as the deferred retirement option plan, or DROP. Under the plan, public safety officials receive a large lump-sum payment if they continue working past their traditional retirement date.

The Equal Employment Opportunity Commission has filed a lawsuit against the Baltimore County government, accusing it of age discrimination in requiring older employees to pay more for their pensions. The lawsuit, filed this week in U.S. District Court, says the county has for years illegally forced some workers older than 40 to contribute to the county's pension system at a higher rate than that required of younger workers. The lawsuit, filed on behalf of two retired county correctional officers, demands that they and other workers be reimbursed money that it says was illegally withheld from their paychecks.

A few facts on plan for officers Fraternal Order of Police head John Shippee's May 6 letter to the editor raised some important issues regarding retirement and disability plans offered to the law enforcement officers of the county sheriff's office. For purposes of clarification and future discussion, here are the facts regarding the retirement and disability plan benefits currently in place for those officers: 1. Retirement Plans: Unlike other jurisdictions, all county officers are enrolled in two local retirement plans: a traditional "defined benefit" pension plan that provides lifetime monthly payments after 30 years of service (or at age 62)

The Carroll County Sheriff's Office is pleading with the county commissioners to offer deputies a higher pension plan that would kick in after fewer years of service. Sheriff Kenneth L. Tregoning said a better pension could help his department recruit and retain more deputies -- a goal of his office as the county considers forming its own local police force. "What we're talking about here is a defined uniform pension, which is the industry standard for law enforcement," Tregoning said.

Long considered an executive perk, free financial advice may be coming to more 401(k) plans. International Business Machines Corp. unveiled plans last month to offer retirement, tax and insurance planning services to its 127,000-member U.S. work force through third parties as part of a package aimed at curbing the chill from its pension changes. Big Blue has weathered a storm of criticism and lawsuits as it switched to a cash-balance plan and later phased out its pension plan contributions for current workers.

Baltimore County officials are contemplating filing ethics charges against the longtime county auditor, who announced his resignation last week amid a policy dispute with the administration, an administration official said yesterday. Auditor Brian J. Rowe said the county's pension plan for former state employees, including himself, was a factor in his decision to leave. Rowe said yesterday he is prepared to sue the county over the plan, and he accused officials of trying to "smear" him. Administration officials accused Rowe of misleading the County Council in his research on a bill that would have enhanced the pensions.