Section 21-306.1 - Employer contributions - Law Enforcement Officers' Pension System. - Maryland Statutes

§ 21-306.1. Employer contributions - Law Enforcement Officers' Pension System.
 

(a)  In general.-  

(1) Each fiscal year, on behalf of its employees who are members of the Law Enforcement Officers' Pension System, a participating governmental unit shall pay an amount equal to or greater than the product of multiplying: 

(i) the aggregate annual earnable compensation of those members; and 

(ii) the sum of the normal contribution rate and the accrued liability contribution rate, as determined under this section. 

(2) Each fiscal year, in addition to the amounts required to be paid under paragraph (1) of this subsection, a participating governmental unit shall pay: 

(i) the special accrued liability contribution required by subsection (d) of this section; and 

(ii) any withdrawal liability contribution required by subsection (e) of this section. 

(3) The amounts determined under paragraphs (1) and (2) of this subsection shall be based on an actuarial determination of the amounts that are required to preserve the integrity of the accumulation fund of the Law Enforcement Officers' Pension System, using: 

(i) the entry-age actuarial cost method; 

(ii) actuarial assumptions adopted by the Board of Trustees; and 

(iii) the asset valuation method recommended by the actuary and adopted by the Board of Trustees. 

(4) The actuary shall compute the contributions payable under this section. 

(5) The amounts computed under this section are a charge against the participating governmental unit to be paid in accordance with § 21-309 of this subtitle. 

(b)  Normal contribution rate.-  

(1) As part of each actuarial valuation, the actuary shall determine the normal contributions, net of member contributions, on account of members of the Law Enforcement Officers' Pension System. 

(2) Except as provided in paragraph (3) of this subsection, the normal contribution rate for the Law Enforcement Officers' Pension System equals the fraction that has: 

(i) as its numerator, the sum of the normal contributions determined under this subsection; and 

(ii) as its denominator, the aggregate annual earnable compensation of the members of the Law Enforcement Officers' Pension System. 

(3) On the recommendation of the actuary, the Board of Trustees may adjust the normal contribution rate determined under this section to provide for: 

(i) experience gains and losses; 

(ii) the effect of changes in actuarial assumptions; and 

(iii) the effect of legislation enacted after July 1, 1999. 

(c)  Accrued liability contribution rate.-  

(1) The accrued liability contribution rate for the Law Enforcement Officers' Pension System shall be computed as the percent of the aggregate earnable compensation of the members of the Law Enforcement Officers' Pension System that is sufficient to liquidate over 40 years beginning July 1, 1999, the amount, as of June 30, 1999, by which the total liabilities of the Law Enforcement Officers' Pension System exceeded the sum of: 

(i) the assets in the accumulation fund and the annuity savings fund of the Law Enforcement Officers' Pension System; and 

(ii) the present value of future normal contributions, future special accrued liability contributions, future withdrawal liability contributions, and future member contributions. 

(2) On the recommendation of the actuary, the Board of Trustees may adjust the accrued liability contribution rate to reflect: 

(i) experience gains and losses; 

(ii) the effect of changes in actuarial assumptions; and 

(iii) the effect of legislation enacted after July 1, 1999. 

(d)  Special accrued liability contribution.-  

(1) In this subsection, "special accrued liability" means, as to any participating governmental unit, the liability of the Law Enforcement Officers' Pension System on account of the employees of the participating governmental unit who elect to become members under § 26-202(b) of this article. 

(2) Each participating governmental unit shall make a special accrued liability contribution on account of the participation of its employees in the Law Enforcement Officers' Pension System. 

(3) The special accrued liability contribution shall be determined by an actuarial valuation of the special accrued liability as of the date of approval of participation by the legislative body of the participating governmental unit. 

(4) Except as provided in paragraph (5) of this subsection, the annual special accrued liability contribution of each participating governmental unit shall be the level annual payment that is sufficient to liquidate, over 25 years beginning on the date of approval by the legislative body of the participating governmental unit, the amount by which the special accrued liability of the participating governmental unit exceeds the sum of: 

(i) the present value, as of the date of approval, of future normal contributions, future accrued liability contributions, and future member contributions on behalf of or by members who are employees of the participating governmental unit; and 

(ii) any cash and securities transferred to the Law Enforcement Officers' Pension System in accordance with § 31-2A-05(b) of this article. 

(5) Subject to the approval of the Board of Trustees, a participating governmental unit may liquidate its unfunded special accrued liability: 

(i) over a period not to exceed 40 years; or 

(ii) subject to the actuary's concurrence, by means of annual payments other than level annual payments. 

(6) The expense of making the initial special accrued liability actuarial valuation shall be assessed against and paid by the participating governmental unit on whose account it is necessary. 

(e)  Withdrawal liability contribution; active participant funding ratio.-  

(1) (i) In this subsection the following words have the meanings indicated. 

(ii) "Active participant funding ratio" means the ratio determined by the actuary as provided under paragraph (3) of this subsection. 

(iii) "Complement of the active participant funding ratio" is a ratio equal to 1 minus the active participant funding ratio. 

(2) (i) On and after the date of a participating governmental unit's withdrawal from the Law Enforcement Officers' Pension System under § 31-302(c) of this article, the participating governmental unit and its employees are not required to make any further contributions to the Law Enforcement Officers' Pension System for those employees who elect to withdraw from the Law Enforcement Officers' Pension System. 

(ii) As of the effective date of withdrawal, the participating governmental unit shall continue to make any contributions required under subsection (a) of this section on behalf of those employees who do not elect to withdraw from the Law Enforcement Officers' Pension System. 

(iii) As of the effective date of withdrawal of a participating governmental unit from the Law Enforcement Officers' Pension System, 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 Law Enforcement Officers' Pension System as determined under paragraph (4) of this subsection. 

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

(ii) The active participant funding ratio shall be a fraction, not to exceed 1, that has: 

1. as its numerator, the assets to the credit of the participating governmental units in the accumulation fund and the annuity savings fund of the Law Enforcement Officers' Pension System as adjusted under subparagraph (iii) of this paragraph, decreased by the sum of the actuarial liabilities allocable to retirees of the Law Enforcement Officers' Pension System who retired from the service of the participating governmental unit and the designated beneficiaries of those retirees, former members of the Law Enforcement Officers' Pension System who are eligible for a vested allowance who separated from employment with the participating governmental unit, and members of the Law Enforcement Officers' Pension System who separated from employment with the participating governmental unit but who may become eligible to receive prior eligibility service credit under § 26-304 of this article; and 

2. as its denominator, the actuarial liabilities that are allocable to the employees of the participating governmental units who are members of the Law Enforcement Officers' Pension System. 

(iii) The assets to the credit of the participating governmental units as of the valuation date shall be increased by the sum of the outstanding balances of: 

1. the special accrued liability attributable to the participating governmental units under subsection (d) of this section; and 

2. the withdrawal liability attributable to the participating governmental units under paragraph (5) of this subsection. 

(4) (i) The assets that are allocable to the employees of a participating governmental unit who elect to withdraw from the Law Enforcement Officers' Pension System shall be computed by the actuary as provided in this paragraph. 

(ii) The actuary shall first multiply the active 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. 

(iii) The actuary shall reduce the amount determined under subparagraph (ii) of this paragraph by the outstanding balance of the special accrued liability contribution attributable to the participating governmental unit as of the effective date of withdrawal. 

(5) (i) The withdrawal liability contribution of a participating governmental unit shall be computed by the actuary as provided in this paragraph. 

(ii) The actuary shall multiply the complement of the active 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 Law Enforcement Officers' Pension System. 

(iii) The amount determined under subparagraph (ii) of this paragraph may not be less than zero. 

(iv) Except as provided in subparagraph (v) 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. 

(v) Subject to the approval of the Board of Trustees and the actuary's concurrence, a participating governmental unit may: 

1. 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. 
 

[1998, ch. 494.]