Analysis: Legislative pensions will be frozen, but still better than most

January 10, 2010 at 5:13 pm

By Len Lazarick
Len@MarylandReporter.com

Mayor Sheila Dixon, 56, gets to collect an $83,000 pension for the rest of her life, despite her plea-bargained resignation, and that pension will go up if the salary of future mayors increases.

Baltimore County Councilman Vince Gardina, 54, retires this year at his current full pay after 20 years in office. He will get $54,000 a year for what could be another 30 years of life or more.

Some constituents are understandably outraged. Benefits like these are extremely rare in the private sector, and even for most government employees.

The pensions for Maryland legislators are not so generous. The payments to retired legislators will likely remain frozen as they have been since 2006. Retired lawmakers get at most two-thirds of the $43,500 legislators currently receive.

Senate President Mike Miller and House Speaker Michael Busch were quick to bat down Tuesday’s recommendation by the General Assembly Compensation Commission that legislators get a $2,000 pay raise three years from now. But the compensation commission did not recommend changes for increasing pensions, so they will remain the same. The commissioners did toy with cost-of-living increases, but felt more comfortable leaving things as they are.

Still, Maryland legislators fare better than most of the people they work for, and they fare better than legislators in most other states.

For one, like most government workers, they get “defined benefit” pensions. That means their retirement income is guaranteed by their employer based on previous earnings.

According to last year’s National Compensation Survey by the U.S. Bureau of Labor Statistics, only 62 percent of all workers in the Mid-Atlantic States get any kind of retirement benefits at all. Only 27 percent of them get a defined-benefit pension, the highest proportion of any region in the country.

Nationally, only 32 percent of part-time workers get offered any kind of retirement benefit, and just 11 percent get a defined-benefit plan.

Because of the hazards and uncertainty of guaranteeing a benefit that is years from being paid, most employers have switched to defined-contribution plans for everyone. They put aside a certain percentage in a 401(k) and then workers are on your own.

What’s unusual about our retired legislators, retired Baltimore mayors and retired governors in Maryland is that their pension checks are based on a percentage of those currently holding the office, not what they actually made during their tenure.

The average Joe or Jane who works for the state earns $47,415 a year, and the average retiree from the state’s 1980 system gets $905 a month or $10,860 a year. The averaged retired legislator is five years older and gets $1,421 a month.

But compared to other states, Maryland legislators do well. They have the 11th-highest salaries and the 10th-highest pensions. But it is also a rich state with a high cost of living.

Commission member Jack Sprague, a former lobbyist well acquainted with legislature and its ways, said it was “patently untrue” that Maryland has “a part-time [legislature] in the classic sense.”

Officially the General Assembly meets for 90 calendar days, but that really translates into only about 65 work days.  However, almost all lawmakers put in a lot of time outside of session. For 41 legislators it is their only job, and many others struggle to juggle other professional responsibilities. Some of the lawyers, business owners and other professionals who serve in the legislature could be making far more in their chosen occupations.

But however you put it, getting two-thirds of a $43,500 salary after 22 years of service is not bad.

Judges in Maryland do even better than legislators. They qualify for pensions representing two-thirds of the salary of a current judge after just 16 years of service. There are currently 297 district, circuit and appeals court judges in Maryland with an average age of 57 and an average salary of $135,577.

The 348 retired judges have an average age of 76 and get pensions of about $68,000 a year.

Judges are a special case, of course. They are all lawyers, generally appointed by the governor in the 40s and 50s, when they are often earning high incomes, and they must officially retire at age 70, though many continue to hear cases and collect a partial salary.

To pay the high pensions of this small group of highly-paid professionals, the state must put away 59 percent of their salaries next year. This is only $5 million more than last year, a tiny sum compared to the $1.4 billion the state must contribute to teacher and employee pensions in fiscal 2011.

But it is just one of the many the reasons the state is $17 billion in the hole for defined-benefit pensions it has promised to pay.

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