The System provides retirement, death and disability benefits in accordance with State statutes. Vesting
begins after completing 5 years of creditable service. A member terminating employment before attaining
retirement age but after completing 5 years of creditable service, becomes eligible for a vested retirement
allowance provided the member lives to age 60 (age 62 for the Pension Systems, age 50 for State Police) and does
not withdraw his or her accumulated contributions. Members of the Retirement System may retire with full
benefits after attaining the age of 60, or after completing 30 years of creditable service regardless of age. A
member of the Pension Systems may retire with full benefits after completing 30 years of eligibility service
regardless of age, or at age 62 or older with specified years of eligibility service. State Police members may retire
with full benefits after attaining age 50, or after completing 25 years of creditable service regardless of age.

The annual benefit for Retirement System members is equal to VBS of a member's high three-year average
salary times years of creditable service. A member may retire with reduced benefits after completing 25 years of
creditable service, regardless of age. A member of the Pension System shall receive upon retirement an annual
service retirement allowance based on the member's high three-consecutive-year average salary and years of
creditable service, with a provision for additional benefits for compensation earned in excess of the social security
wage base. A member may retire with reduced benefits after attaining age 55 and completing 15 years of
eligibility service. The annual retirement allowance for a State Police member is equal to 1/45 of a member's high
three-year average salary times the member's first 25 years of creditable service, plus 1/90 of the average final
compensation times the member's creditable years in excess of 25 years.

Members of the Employees' and Teachers' Retirement Systems are required to contribute to the System a
fixed percentage of their regular salaries and wages (e.g. 7%). Members of the Pension Systems are required to
contribute to the System 5% of their regular salaries and wages which exceed the social security wage base. State
Police members are required to contribute 8% of their regular salaries and wages to the System. All contributions
are deducted from each member's salary and wage payments and are remitted to the System on a regular, periodic
basis.

The State of Maryland, the University of Maryland Medical System, the Maryland Automobile Insurance
Fund, the Injured Workers' Insurance Fund and the participating municipal corporations make all of the
employer contributions to the System. In addition, the State of Maryland, which is a non-employer contributor to
the Teachers' Retirement and Pension Systems, makes virtually all of the non-employee contributions to the
Teachers' Systems. All contributions to the System are made in amounts required by State statutes.

No investment of the System in any one organization represented 5% or more of the net assets available for
pension benefits. There were no investments in, loans to, or leases with parties related to the System.

Funding Status and Progress:

The amount shown as "pension benefit obligation" is a standardized disclosure measure of the present value
of pension benefits, adjusted for the effects of projected salary increases, estimated to be payable in the future as a
result of employee service to date. The measure is the actuarial present value of credited projected benefits and is
intended to help users assess the Systems' funding status on a going-concern basis, assess progress made in
accumulating sufficient assets to pay benefits when due, and make comparisons among public employee
retirement systems. The measure is independent of the actuarial funding method used to determine contributions
to the System as described below.

The fiscal year 1991 pension benefit obligation was determined as a part of an actuarial valuation at June 30,
1991. Significant actuarial assumptions used include (a) a rate of return on the investment of present and future
assets of 7.5 percent per year compounded annually, (b) projected salary increases from 5 percent to 6 percent per
year compounded annually, attributable to inflation, (c) additional projected salary increases ranging from .94
percent to 6.82 percent per year, attributable to seniority/merit, and (d) postretirement benefit increases ranging
from 3 percent to 6 percent per year depending on the system.

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