ROCKVILLE, MD (December 11, 2017) –Anne Arundel County is considering a promising new plan to give county employees greater flexibility to save for their retirement while lowering taxpayers’ exposure to massive pension obligations in the future. The Employee Retirement Savings Plan, which was introduced in November, would give eligible employees the option of vesting in just five years while selecting a defined contribution plan similar to 401(k)s widely used in the private sector. 

“Nearly 77 million Americans have defined contribution retirement plans similar to the proposal offered by County Executive Schuh,” said Christopher B. Summers, president and chief executive officer of the Institute. “With a $20 billion cumulative shortfall facing our state and county employee pension system, Maryland needs strong leaders with creative ideas to protect both government employees and taxpayers. We applaud County Executive Schuh for offering a balanced plan to offer county employees more retirement choices while protecting taxpayers from excessive debt in the future.”   

The Employee Retirement Savings Plan requires County Council approval. Under the plan, participating employees would vest in just five years compared to the current 10 years and would be able to choose from a broad spectrum of investment options. The county’s contribution to each employee’s retirement plan would be lowered from 9.4% to 8%.

The Capital Gazette praised the proposal, writing, “The upside for the county is the potential to reduce its obligation for benefits when an employee retires, which can be as high as 20 percent. Funding those liabilities is one of the biggest worries of government finance officials.”

The Maryland Public Policy Institute has published groundbreaking research into Maryland’s public employee pension obligations. Read our latest findings at https://www.mdpolicy.org/research/policy-area/pension-reform

About the Maryland Public Policy Institute: Founded in 2001, the Maryland Public Policy Institute is a nonpartisan public policy research and education organization that focuses on state policy issues. The Institute’s mission is to formulate and promote public policies at all levels of government based on principles of free enterprise, limited government, and civil society.  Learn more at mdpolicy.org.

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