Pension Vote is a Win for Maryland Retirees and Taxpayers

Mar 20, 2019

ROCKVILLE, MD (March 20, 2019) — The Maryland House of Delegates last week unanimously passed legislation requiring greater transparency into fees paid to Wall Street investment managers by Maryland’s State Retirement & Pension System (MSRPS), which provides retirement benefits for 400,000 current and former state employees.


The Maryland Public Policy Institute applauded the vote and encouraged the State Senate to do the same to give the public greater understanding of the exorbitant fees Maryland pays for inadequate long-term investment returns.


“State employees and taxpayers deserve to know how much of their money goes back into the pockets of Wall Street investment managers, especially when those managers often produce subpar investment returns for our current and former state pension beneficiaries,” said Christopher B. Summers, president and chief executive officer of the Institute.


HB 821 requires the MSRPS to disclose annually the carried interest it pays to its Wall Street investment managers. Carried interest is a share of profits that investment managers receive for their services and can often reach 25 percent of profits.


“This bipartisan bill shines a light on the full scale of public funds we lose to Wall Street every year,” said Jeffrey C. Hooke, Senior Fellow at the Institute and principal author of the Institute’s pension fee research. “Greater transparency will enable the public and their elected representatives to more fully consider alternatives to high-cost Wall Street investment managers, such as shifting a portion of our pension portfolio to low-cost index investing.”   


The Institute has produced years of research on Maryland pension fees, estimating that the State pays upwards of $570 million each year to investment managers. The exact total cannot be calculated, however, because MSRPS refuses to disclose all fees it pays.


The Institute has also found that states that pay the highest fees as a percent of assets, including Maryland, see inferior investment returns in their state pension portfolios, which means less money available to fulfill their long-term obligations to current and former state employees. For more on the Institute’s pension fee research, read the 2018 State Pension Fund Investment Report.


The bill, sponsored by Delegate Kumar Barve (D) of Montgomery County and Delegate Robin Grammer (R) of Baltimore County, will give taxpayers, state pension beneficiaries, and policymakers better understanding of the full costs they pay to investment managers for inferior long-term investment returns.


To read the bill passed unanimously by the House of Delegates, visit HB 821, State Retirement and Pension System – Carried Interest – Reporting.


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.  Learn more at