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Session Laws, 1971
Volume 707, Page 2628   View pdf image
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2628                                         Reports

The existing pension system is complementary to the existing salary
system but, in the view of the Commission, is not appropriate to be
continued in the future in its present form in light of the Commission's
other recommendations. The Commission does not favor a pension system
which would permit a pension of 100% of the highest annual compensation,
nor does it favor the receipt of full pension benefits by a retired member
prior to age 60 or one which would require a 15% contribution. The
principal purpose of a pension, in our opinion, should be to assure an
employee of some degree of financial stability during that period of his life
when his earning capacity is likely to be decreasing, not to supplement his
income during his peak earning years.

The Commission took into account the fact that the contributory
pension plan for judges (Article 26, Section 49(i) of the Maryland Code
(1970 Cumulative Supplement) ) requires a contribution of 6% of "annual
compensation" and that only in the event of disability may a retired judge
receive a pension prior to reaching the age of 60. The Commission was also
cognizant of the fact that the maximum percentage of "his maximum
salary" that a judge may receive as pension is 60%, and this may be received
only after service of 16 years. The legislative pension system should be
analogous, the Commission believes, to the judicial pension system, in
that the years of service as a judge and years of service as a legislator do
not cover a lifetime of employment.

It is interesting to note, by way of comparison, that the Employees'
Retirement System requires contributions of between 5% and 9% (on a
sliding scale depending upon age upon joining the system), with the aver-
age being 6%. Furthermore, it is impossible under that system to receive
a 100% pension because the credit for each year of service is l/60th* of
one's "average final compensation" and retirement becomes mandatory at
age 70. Full benefits are not payable before age 60, except in the case of
persons "appointed or elected to any State office" and certain unclassified
employees, unless an employee has 35 or more years of service. In the two
exceptional categories just mentioned, the employees may retire after 16
years of service at any age with no actuarial reduction of their pension
benefits. See Article 73B, Section 11(12).

The "vesting" requirements of these two plans provides an additional
point of comparison. There is immediate vesting provided for in the
judicial pension plan so that a judge with only a very few years of service
can nonetheless receive a small pension if retired at age 60, rather than

* The Commission was provided with information on high annual pension benefits
now being received by certain retired State employees. The relative data for five of
these employees is set out below:

Years                     Average         Maximum          Contribution

of                          Final             Annual                   by

Service                Compensation Allowance             Member

36 Yrs.,  10  Mos.             $22,457             $11,816             $30,824

34 Yrs.,    5  Mos.               24,947               11,981               23,342

51  Yrs.,    9  Mos.               16,002               11,801               19,644
47 Yrs.,    1  Mo.                 17,546               11,801               22,956

52  Yrs.,    1  Mo.                 15,791               11,749               19,183

Additional information was also supplied to the Commission on three plans not
yet mentioned (Pennsylvania Legislative Plan, Military Plan and Congressional Plan).
A chart describing the benefits of these three plans is attached to this Report as
Exhibit A and was considered by the Commission in reaching its conclusion. Also by
way of comparison, the highest paid elected or appointed State official receives an
annual salary of $36,100; with 30 such years of service, he could retire at any age
with an annual pension for life of $18,050.


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Session Laws, 1971
Volume 707, Page 2628   View pdf image
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