Baltimore County, Towson, Md., sold $256 million of 30-year pension obligation bonds to cover the cost of reducing the Baltimore County Employees' Retirement System's assumed rate of return on investments, Kevin Kamenetz, county executive, said in a statement Friday.
The $256 million is the estimated present value of the pension obligations. That amount will be contributed now, instead of over 30 years.
On July 12, the board of trustees of the $1.96 billion pension fund voted to lower the rate of return to 7.25% from 7.875%. That change would have cost the system an additional $759 million in contribution obligations, to be paid over 30 years. The pension bond sale was at a 30-year rate of 3.43%, which is lower than the expected 4.25% rate, and combined with the upfront $256 million pension contribution, will save the county an estimated $343 million over 30 years, Mr. Kamenetz said in the statement.
“Funding the pension fund in this manner protects employee benefits and shows taxpayers that we are serious about managing our budget,” Mr. Kamenetz said in the statement.