Baltimore County could be forced to dole out more than $19 million to pay back alleged “excess” pension contributions to older employees, actuaries said.
The estimate came in response to a federal age discrimination lawsuit filed against Baltimore County government for requiring older employees to make higher pension contributions than younger employees. The U.S. Equal Employment Opportunity Commission filed lawsuit in September claiming the county and six labor organizations discriminated against two named retired employees and others at least 40 years old.
Returning “excess” payments for 8,500 county employees from nearly a decade of contributions would cost upward of $19.2 million, according to a report filed in court records by Robert Burros, the county?s investment and debt management administrator.
“The EEOC apparently does not understand the huge economic impact its claims will have upon the employees? retirement system if successful,” Burros wrote.
EEOC officials allege the pension system has been illegal since its inception more than 60 years ago, requiring employees who are, for example, 20 years old to contribute about 4 percent of their pay and employees who are 50 to contribute 6 percent or more.
Contribution rates are individually tailored based not on age but how long they will likely work for the county before retiring, said county spokesman Don Mohler. Rates ranged from 4.4 percent to 11 percent.
“All of our actuaries say the time value of money is a long recognized principle of budget and finance,” Mohler said. “We are confident that we are right on this issue.”
Mohler qualified his remarks, saying that the county reformed its pension system last spring and that all new county employees contribute at the same 6 percent rate.
But the EEOC wants older employees, who make less take-home pay than their younger counterparts, reimbursed. EEOC attorney Maria Salacuse said the agency unsuccessfully negotiated with the county for a year before filing the lawsuit.
“From the beginning, we?ve always tried to resolve it so it wouldn?t bankrupt the county,” Salacuse said. “It?s not a defense.”
