§ 21-305.5

Maryland § 21-305.5

• Jurisdiction: Maryland
• Article gsp: State Personnel and Pensions
• Title: 21

Text

(a) (1) In this section the following words have the meanings indicated.

(2) “Complement of the participant funding ratio” is a ratio equal to 100% minus the participant funding ratio, and may not be less than zero.

(3) “Employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System.

(4) “Noncontributory participating governmental unit” means a participating governmental unit that did not elect to provide its employees with the contributory pension benefit or the Alternate Contributory Pension Selection as provided in § 31–116 of this article.

(5) “Noncontributory system funding ratio” means the ratio determined by the actuary as provided under subsection (e) of this section.

(6) “Participant funding ratio” means the ratio determined under subsection (d) of this section.

(7) “Transition amount” means the amount determined by the actuary as provided under subsection (i) of this section.

(b) This section applies only to a participating governmental unit that on or after July 1, 2001, elects to withdraw from participation in the employees’ systems and transfer to a local pension system all employees of the participating governmental unit who consent to the withdrawal.

(c) (1) On and after the date of a participating governmental unit’s withdrawal from the employees’ systems under § 31–302(1) of this article, the participating governmental unit and its employees are not required to make any further contributions to the employees’ systems for those employees who elect to withdraw from the employees’ systems.

(2) As of the effective date of withdrawal, the participating governmental unit shall continue to make any contributions required under § 21–305(b)(1) and (2) of this subtitle on behalf of those employees who do not elect to withdraw from the employees’ systems.

(3) As of the effective date of withdrawal of a participating governmental unit, the Board of Trustees shall transfer to the administrative board of the local pension system the assets that are allocable to the employees of the participating governmental unit who elect to withdraw from the employees’ systems as determined under either subsection (f) or (g) of this section.

(d) (1) This subsection applies to a participating governmental unit that elected to provide its employees with the contributory pension benefit or the Alternate Contributory Pension Selection as provided in § 31–116 of this article.

(2) As of June 30 of each fiscal year, the actuary shall determine the participant funding ratio for the participating governmental units as provided in this subsection.

(3) The participant funding ratio shall be a fraction that has:

(i) as its numerator, the assets to the credit of the participating governmental units in the accumulation fund and the annuity savings fund of the employees’ systems as adjusted under paragraph (4) of this subsection; and

(ii) as its denominator, the actuarial liabilities of the participating governmental units.

(4) The assets to the credit of the participating governmental units as of the valuation date shall be:

(i) increased by the sum of the outstanding balances of:

1. the special accrued liability attributable to each participating governmental unit under § 21–305.3 of this subtitle;

2. the deficit allocated to each participating governmental unit under § 21–305.4(c) of this subtitle; and

3. the withdrawal liability contribution attributable to each participating governmental unit under subsection (h) of this section; and

(ii) decreased by the sum of the outstanding balances of the surplus allocated to each participating governmental unit under § 21–305.4(b) of this subtitle.

(e) (1) This subsection applies to a noncontributory participating governmental unit.

(2) As of June 30 of each fiscal year, the actuary shall determine the noncontributory system funding ratio for the noncontributory participating governmental units as provided in this subsection.

(3) The noncontributory system funding ratio shall be a fraction that has:

(i) as its numerator, the assets to the credit of the participating governmental units in the accumulation fund and the annuity savings fund of the employees’ systems as adjusted under paragraph (4) of this subsection; and

(ii) as its denominator, the actuarial liabilities of the participating governmental units calculated as if all of the participating governmental units are noncontributory participating governmental units.

(4) The assets to the credit of the participating governmental units as of the valuation date shall be:

(i) increased by the sum of the outstanding balances of:

1. the special accrued liability attributable to each participating governmental unit under § 21–305.3 of this subtitle;

2. the deficit allocated to each participating governmental unit under § 21–305.4(c) of this subtitle; and

3. the withdrawal liability contribution attributable to each participating governmental unit under subsection (h) of this section; and

(ii) decreased by the sum of the outstanding balances of the surplus allocated to each participating governmental unit under § 21–305.4(b) of this subtitle.

(f) (1) This subsection applies to a participating governmental unit that elected to provide its employees with the contributory pension benefit or the Alternate Contributory Pension Selection as provided in § 31–116 of this article.

(2) The assets that are allocable to the employees of a participating governmental unit who elect to withdraw from the employees’ systems shall be computed by the actuary as provided in this subsection.

(3) If the participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit is less than 100%, the actuary shall multiply the participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit by the actuarial liability allocable to the employees of the participating governmental unit who elect to withdraw.

(4) If the participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit is 100% or greater and less than 110%, the actuary shall multiply the actuarial liability allocable to the employees of the participating governmental unit who elect to withdraw by 100%.

(5) If the participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit is 110% or greater, the actuary shall multiply the actuarial liability allocable to the employees of the participating governmental unit who elect to withdraw by the difference between the participant funding ratio and 10%.

(6) Any assets computed under paragraph (3), (4), or (5) of this subsection shall be reduced by the sum of:

(i) the outstanding balance of the deficit allocable to the participating governmental unit as of the effective date of withdrawal;

(ii) the outstanding balance of the special accrued liability contribution allocable to the participating governmental unit as of the effective date of withdrawal; and

(iii) any transition amount as determined under subsection (i) of this section.

(g) (1) This subsection applies to a noncontributory participating governmental unit.

(2) The assets that are allocable to the employees of a noncontributory participating governmental unit who elect to withdraw from the employees’ systems shall be computed by the actuary as provided in this subsection.

(3) If the noncontributory system funding ratio for the fiscal year preceding the effective date of withdrawal of the noncontributory participating governmental unit is less than 100%, the actuary shall multiply the noncontributory system funding ratio for the fiscal year preceding the effective date of withdrawal of the noncontributory participating governmental unit by the actuarial liability allocable to the employees of the noncontributory participating governmental unit who elect to withdraw.

(4) If the noncontributory system funding ratio for the fiscal year preceding the effective date of withdrawal of the noncontributory participating governmental unit is 100% or greater and less than 110%, the actuary shall multiply the actuarial liability allocable to the employees of the noncontributory participating governmental unit who elect to withdraw by 100%.

(5) If the noncontributory system funding ratio for the fiscal year preceding the effective date of withdrawal of the noncontributory participating governmental unit is 110% or greater, the actuary shall multiply the actuarial liability allocable to the employees of the noncontributory participating governmental unit who elect to withdraw by the difference between the noncontributory system funding ratio and 10%.

(6) Any assets computed under paragraph (3), (4), or (5) of this subsection shall be reduced by the sum of:

(i) the outstanding balance of the deficit allocable to the noncontributory participating governmental unit as of the effective date of withdrawal;

(ii) the outstanding balance of the special accrued liability contribution allocable to the noncontributory participating governmental unit as of the effective date of withdrawal; and

(iii) any transition amount as determined under subsection (i) of this section.

(h) (1) The withdrawal liability contribution of a participating governmental unit shall be computed by the actuary as provided in this subsection.

(2) The actuary shall:

(i) multiply the complement of the participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit by the actuarial liability allocable to the employees of the participating governmental unit who elect to remain members of the employees’ systems; and

(ii) reduce the amount determined under subparagraph (i) of this paragraph by the outstanding balance of the surplus allocable to the participating governmental unit as of the effective date of withdrawal.

(3) The amount determined under paragraph (2) of this subsection may not be less than zero.

(4) (i) Except as provided in subparagraph (ii) of this paragraph, the annual withdrawal liability contribution of a participating governmental unit shall be the annual payment that is sufficient to liquidate, over not more than 25 years, the withdrawal liability contribution by means of annual payments that increase each year based on the actuarial assumptions adopted by the Board of Trustees on the recommendation of the actuary.

(ii) Subject to the approval of the Board of Trustees and the actuary’s concurrence, a participating governmental unit:

1. may liquidate the withdrawal liability contribution by means of level annual payments or over a term of less than 25 years; or

2. prepay all or a portion of the withdrawal liability contribution.

(i) (1) This section applies only to a participating governmental unit with a deficit as determined under § 21–305.4(c) of this subtitle.

(2) The transition amount of a participating governmental unit shall be computed by the actuary as provided in this subsection.

(3) The actuary shall determine the pre–June 30, 1995 status and the post–June 30, 1995 status of a participating governmental unit using the assumptions that:

(i) the participating governmental unit elects to withdraw from the employees’ systems as of June 30, 1995;

(ii) the employees of the withdrawing participating governmental unit who are members of the Employees’ Retirement System elect to remain in the employees’ systems; and

(iii) the employees of the withdrawing participating governmental unit who are members of the Employees’ Pension System elect to withdraw from the employees’ systems.

(4) The pre–June 30, 1995 status of a participating governmental unit is an amount equal to the difference between:

(i) the assets transferable to a participating governmental unit that are allocable to the employees of the participating governmental unit who elect to withdraw from the employees’ systems as determined by the actuary applying the provisions of former § 21–305(f) of this subtitle as of June 30, 1995; and

(ii) the withdrawal liability of a participating governmental unit that is attributable to the employees of the participating governmental unit who elect to remain members of the employees’ systems as determined by the actuary applying the provisions of former § 21–305(f) of this subtitle as of June 30, 1995.

(5) The post–June 30, 1995 status of a participating governmental unit is an amount equal to the difference between:

(i) the assets transferable to a participating governmental unit that are allocable to the employees who elect to withdraw from the employees’ systems as determined under subsection (d) of this section as of June 30, 1995; and

(ii) the withdrawal liability of a participating governmental unit that is attributable to the employees of the participating governmental unit who elect to remain in the employees’ systems as determined under subsection (f) of this section as of June 30, 1995.

(6) (i) Subject to subparagraph (ii) of this paragraph, the transition amount of a participating governmental unit is the amount determined by the actuary as of June 30, 1995, equal to the difference between:

1. the post–June 30, 1995 status of the participating governmental unit as determined under paragraph (4) of this subsection; and

2. the pre–June 30, 1995 status of the participating governmental unit as determined under paragraph (3) of this subsection.

(ii) The transition amount of a participating governmental unit may not be less than zero.

(7) As of June 30 of each fiscal year, the transition amount of a participating governmental unit shall decrease by writing down the transition amount in equal annual installments over the 25–year term beginning on July 1, 1995.

(8) On the recommendation of the actuary, the Board of Trustees shall adopt regulations that are necessary to carry out this section, and that set forth a schedule reflecting:

(i) any transition amount allocable to a participating governmental unit; and

(ii) the outstanding balance of the transition amount each year.