Maryland is short about 38 percent of the estimated $58.5 billion in pension and other benefit payments owed to retired workers over the next 30 years, though it “ranks reasonably well” among all states in funding its government pension system, according to a study.
The state is due to dole out an estimated $44 billion in pension payments and $14.5 billion in other retiree benefits over the next few decades, according to a report released Tuesday by the Pew Center on the States. Maryland has $36 billion set aside for pension payments but almost no money planned for benefits.
“States have the means to control their destinies,” Katherine Barrett, co-author of the report, “Promises with a Price,” said Tuesday.
“For a state to succeed, it must use reliable data and good planning, carefully analyze whether proposed new benefits are affordable, and do its best to make full payments each and every year to reduce the long-term cost.”
The Maryland State Retirement and Pension System, though, has seen four straight years of investment returns on its plans. For the fiscal year ending June 30, 2007, the system generated 17.6 percent on invested assets ? the highest return in 10 years ? and closed the year with $39.4 billion in assets.
“Our approximately 347,000 current members and beneficiaries can be assured their benefits are safe and secure,” Nancy Kopp, state treasurer, said in a statement.
According to the Pew Charitable Trusts study, Maryland has $36 billion set aside to cover $44 billion in pensions owed over the next 30 years. With 82 percent of the pension bill funded, Maryland is on par with the national average among states.
It?s the $14.5 billion Maryland owes in other benefits that the state needs to address, according to the study. The study points out that very few states have put aside necessary funds for nonpension benefits. The five most populous states ? California, Texas, New York, Florida and Illinois ? haven?t set aside any money to pay for future nonpension benefits, the report said.
Thereport was the first 50-state analysis of its kind, said Susan Urahn, managing director of the Pew Center on the States. In all, states are short almost $731 billion of the estimated $2.73 trillion in payments owed to retirees over the next 30 years.
“Now we know the magnitude of this bill,” Urahn said.
Why it matters
As retiree health care costs are rising dramatically, the number of retirees will continue to grow. By 2030, 71 million Americans ? one of every five people ? will be over 65, according to projections from the Social Security Administration.
