WILLIAM DONALD SCHAEFER, Governor

Ch. 6

No changes are made.

(TT) VESTED ALLOWANCE.

"VESTED ALLOWANCE" MEANS AN ALLOWANCE THAT IS NOT PAYABLE AT THE
TIME OF SEPARATION FROM EMPLOYMENT WITH A PARTICIPATING EMPLOYER, BUT
IS DEFERRED UNTIL THE FORMER MEMBER BECOMES ELIGIBLE FOR IMMEDIATE
PAYMENT.

REVISOR'S NOTE: This subsection formerly was Art. 73B, § 1-101(y).

The term "separation" is substituted for "withdrawal" to conform to Division
I of this article.

The only changes are in style.

Defined terms: "Allowance" § 20-101
"Former member" § 20-101
"Participating employer" § 20-101

REVISOR'S NOTE TO SECTION:

In this section, the definitions for "allowance", "annuity", and "pension" are
modified to reflect how the three types of benefits are computed under current law. An
allowance is based on a formula depending on the system and the type of allowance. The
part of an allowance that is attributable to member contributions is an annuity. The part
of an allowance attributable to the employer contributions is a pension. The part of an
allowance attributable to additional contributions is an additional annuity. The change in
terminology reflects a change in the way the terms are used. When the first systems were
created in 1927 (for the Teachers' Retirement System) and 1941 (for the Employees'
Retirement System), the annuity and pension were separate and distinct. The pension
was a defined benefit (i.e., one-seventieth of average final compensation times the
number of years of service). The annuity, however, was the actuarial equivalent of the
accumulated contributions of a member. Under current law, the distinctions are blurred
since the entire allowance, exclusive of any additional annuity, is a defined benefit that
differs among the several systems.

Former Art. 73B, §§ 4-101(a), 5-101(a), 6-101(a), 7-101(a), and 8-101(a), which
were standard introductory language to definition sections, are deleted as unnecessary in
light of the consolidation of definitions in this section.

Former Art. 73B, § 1-101(1), which defined the term "funds", is deleted in light of
the comprehensive term "assets", which does not need a definition to amplify its meaning.

Former Art. 73B, § 1-101(u), which defined the term "several funds", is deleted as
unnecessary since the phrase "funds of the several systems" can be substituted without
requiring a definition.

Former Art. 73B, §§ 2-101(f), 3-101(e), 6-101(g), and 7-101(d), which defined the
term "membership service", are deleted to reflect that "service" is no longer a defined
term.

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