Pension plans for Howard and Anne Arundel county employees are protected and not at risk of being sapped dry, officials said.
Both counties said Friday they have enough of a financial cushion to brace for expected losses in stock market investments that help fund the pension systems.
“The plans are absolutely in no danger of not being able to fund retirement payments,” said Sharon Greisz, Howard’s finance director. “No one is immune from the downturn in the stock market, but it will not have an impact on benefits of our employees,” said John Hammond, Anne Arundel’s budget officer.
Howard officials said its investment portfolio between June and September lost 3.9 percent, or $17.6 million, of its value.
Howard’s payout to retirees this past fiscal year was more than half of what was collected, which means the county does not have to rely on selling its investments to fund the pension plan, Greisz said.
Anne Arundel has seen an 11.9 percent loss, or $150 million, during the same time frame, but Hammond said the county has seen $100 million in gains during the past few years that it has yet to recognize.
Those unrecognized gains could serve as a cushion if the market continues to tank, Hammond said.
Both counties also said the economic crisis hasn’t affected their bond sales, as they issued their bonds well before the stock market crisis.
Bonds help pay for large-scale construction and improvement projects.
Hammond said Anne Arundel is not in the bond market, but “right now, the municipal bond market is very tight and making it very difficult to issue bonds.”
Both counties have triple-A bond ratings, which have helped in the issuance of bonds, officials said.
Still, officials say a continuing slow market doesn’t overly concern them about the future of the pension plans.
“What’s going on here is another cycle in the market, and it has to be viewed in the overall history,” said Hammond, adding that the county’s pension plan is based on a five-year forecast.
Greisz said the erratic nature of the market makes it difficult to predict what will happen by the end of the fiscal year in June.
“Pension investing and funding is done over a long horizon,” she said. “The county would not be expected to make up for any losses all at once. It would done over many years.”
