Baltimore County's retirement board has lowered its projections on how much it will earn on investments, a move that will cost the county an additional $15 million annually starting next year.
The board of trustees of the Baltimore County Employees Retirement System voted unanimously Tuesday to reduce its assumed investment earnings rate, which determines what the county must contribute each year to the system.
County officials said the move, which takes effect immediately, would not change how much public employees must contribute to their retirement benefits. The reduction in the rate — from 7.875 percent to 7.25 percent — was made after the board received information from the county's pension consultant and actuary regarding the system's projected earnings, they said.
- Legislation brings Kamenetz, unions' relationship to light
- Pension bill opposed by unions stalls in Baltimore Co. Council
- Baltimore County unions oppose Kamenetz pension bill
- Maryland's 2014 candidates for governor [Pictures]
- Photos: 2016 presidential possibilities
- Race for Governor 2014: Who's raised the most? [Pictures]
See more photos »
- Pension and Welfare
- Interior Policy
See more topics »
Towson, MD, USA
The county had not changed the rate since 1994, county spokeswoman Ellen Kobler said.
Public pension systems throughout the nation are examining their assumed rates of return, said Ron Snell, a senior fellow at the National Conference of State Legislatures who studies pension issues.
On the state level, pension systems typically use a rate of 8 percent, while their actual rates of return over the past decade have been about 5.7 percent, Snell said.
"It is a national debate," Snell said. "It goes on with every pension plan. There has been a very, very gradual trend toward lowering these figures."
Snell said the county board's rate reduction is very significant compared with reductions other public systems have made. "That's a big change in comparison with those I have seen," he said.
The county now contributes $72.8 million a year to the retirement system, Kobler said. Beginning next July, the county will need to contribute an additional $15 million annually, but officials have not determined how the county will cover the cost because budget plans have not yet been drawn up, she said.
In a statement, County Executive Kevin Kamenetz called the move "fiscally prudent."
"Study after study cites that unrealistic investment earnings rates are placing public pensions at serious risk across the country," Kamenetz said. "In Baltimore County, we will not let that happen. Today's action by the board of trustees sends a very strong message that we are serious about protecting both our employee benefit structure and the cost to our taxpayers."