Maryland state pension gap grows to $17.5 billion
From Sunshine Review
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November 4, 2009 Maryland's pension funds are missing the $17.5 billion more than the state has put aside (a total of $28.6 billion).[1]
[edit] Pensions
Maryland will likely have to add $189 million to its teacher and employee pension funds by next year. Lawmakers learned this on November 4 as officials with the State Retirement Agency explained results from fiscal 2009.
The $17.5 billion needed to close the gap is in addition to the approximately $28.6 billion that the pension office already has set aside.
This knowledge was announced at a meeting of the General Assembly’s Oversight Committee on Pensions. It will likely have a big effect on the state’s budgeting process next year.
Although Maryland already has a deficit of more than $2 billion, officials will likely need to increase contribution to the pension funds from $1.2 billion to $1.4 billion.
[edit] Future
Murray Levy, D-Charles, said the state would need to put aside an additional $541 million to the established $189 million it will contribute next year (but expressed doubt that this would happen). This would bring the state’s pension contributions close to $2 billion in fiscal 2010.
“I don’t think we’re even going to do the $189 million,” Levy said.
The liabilities over a 25-year span, but there oversight committee members differ about how quickly the state should catch up. Del. Melony Griffith, D-Prince George’s, the House chairwoman, said it’s not wise nor feasible to put aside much more than what is required next year.
“It’s far too early to make changes to the way that the system is funded,” Griffith said.
The big drop comes largely from an $8 billion investment loss last year. The state’s pension investments took a big hit during a year of market unease.
“The markets were very mean to us last year. There’s nothing that can change that,” said Brian Murphy, president of Gabriel Roeder Smith and Co, who works as an actuary for the state. “The markets were mean to everybody who was in them.
The state’s funded ratio measures how much the state has put aside compared to its estimated need, or liability. Maryland's funded ratio has fallen to 65 percent. It was 78.6 percent last year and has fallen gradually since 2003.
In 2003, the state began a program that allowed the state to slow down its contribution rates, pending the pension program was funded between 90 and 110 percent. This “corridor” payment method also slows down the state's ability to get back up to that level, which largely accounts for the difference between Levy’s figure and the $189 million that the state will likely pay.[1]
[edit] External links
- Maryland government website
- General Assembly’s Oversight Committee on Pensions
- Gabriel Roeder Smith and Co website
- Maryland State Retirement and Pension System website
- Maryland State Teachers Association website
[edit] References
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