Maryland pension commission seeks AG opinion on legality of reducing COLAs for existing retirees

Md. pension panel requests attorney general opinion on retiree COLAs

Associated Press   July 7

ANNAPOLIS, Md. — A state commission voted Thursday to seek an attorney general’s opinion on whether Maryland law would allow the state to reduce cost-of-living adjustments for retirees.

The Public Employees’ and Retirees’ Benefit Sustainability Commission, which has been studying ways to address unfunded pension and benefit liabilities, made the recommendation in its final report to Gov. Martin O’Malley and the Maryland General Assembly. Casper Taylor, the commission chairman, said the panel is trying to be as comprehensive as possible in its recommendations.

“We don’t want to mislead the public into believing that the future is safer and more secure than it really is, and therefore this issue of the COLA is an issue that must be faced up to, and I would suggest, I think we all would suggest, the sooner the better,” Taylor said.

Reductions in retiree cost-of-living adjustments to help address budget problems have led to court challenges in three other states. Maryland officials have questioned whether state law would allow it. However, judges in Colorado and Minnesota last week threw out legal challenges by retirees who had their cost-of-living adjustments reduced in those states.

Maryland Treasurer Nancy Kopp, who is a member of the state commission, still questioned whether Maryland law would allow it. “My understanding is that our law is quite different from either of the other two states,” Kopp said.

The commission is not going so far as to recommend that the state reduce cost-of-living adjustments for retirees, if it is determined to be a legal option. The recommendation only calls for considering reductions if further action is needed to address unfunded liabilities.

In April, lawmakers approved a variety of state pension and retiree health benefit reforms that aim to increase Maryland’s funding of its pension system from 64 percent to 80 percent by 2023. The amount of money state employees pay for retirement went up from 5 percent to 7 percent in July. State employees hired after July 1 will be vested in the retirement plan after 10 years, instead of five.