2013 Maryland Code
STATE PERSONNEL AND PENSIONS
§ 29-432 - Computation of adjustment.

§29-432.

(a) Each fiscal year, the Board of Trustees shall adjust an allowance by multiplying the allowance for the preceding fiscal year, exclusive of any additional voluntary annuity, by a rate that:

(1) is obtained by dividing the consumer price index for the calendar year ending December 31 in the preceding fiscal year by the consumer price index for the calendar year ending December 31 in the second preceding fiscal year; and

(2) does not exceed:

(i) 2.5%, if for the calendar year ending December 31 in the preceding fiscal year, the total investment performance of the several systems equals or exceeds the assumed rate of investment return established by the Board of Trustees in accordance with § 21-125(c) of this article; or

(ii) 1%, if for the calendar year ending December 31 in the preceding fiscal year, the total investment performance of the several systems does not equal or exceed the assumed rate of investment return established by the Board of Trustees in accordance with § 21-125(c) of this article.

(b) The adjustment under subsection (a) of this section shall begin the second July 1 after the day preceding the retiree’s date of retirement or the former member’s effective date for receipt of a vested allowance.

(c) (1) Except as provided in paragraph (2) of this subsection, the total allowance payable in each fiscal year shall be the sum of:

(i) the annual rate of allowance paid during the preceding fiscal year;

(ii) the adjustment in allowance provided for under this section; and

(iii) any additional annuity.

(2) (i) In this paragraph, “zero-adjustment fiscal year” means any fiscal year when the allowance adjusted as provided in subsection (a) of this section is less than the allowance paid for the preceding fiscal year.

(ii) For any fiscal year, the allowance payable may not be less than the allowance paid for the preceding fiscal year.

(iii) 1. This subparagraph applies only to a fiscal year that is not a zero-adjustment fiscal year.

2. Subject to subsubparagraph 3 of this subparagraph:

A. for a fiscal year that follows immediately after a zero-adjustment fiscal year, the allowance payable as provided in paragraph (1) of this subsection shall be reduced by the difference between the allowance paid in the preceding fiscal year and the allowance that would have been payable for the preceding fiscal year if the allowance for that fiscal year had been calculated without regard to subparagraph (ii) of this paragraph; and

B. for a fiscal year that follows immediately after 2 or more consecutive zero-adjustment fiscal years, the allowance payable as provided in paragraph (1) of this subsection shall be reduced by the difference between the total of the allowances paid in each consecutive zero-adjustment fiscal year preceding the fiscal year and the total allowances that would have been payable for each of those fiscal years if the allowance for each of those fiscal years had been calculated without regard to subparagraph (ii) of this paragraph.

3. If the amount of the reduction required for any fiscal year under subsubparagraph 2 of this subparagraph exceeds the difference between the allowance as provided in paragraph (1) of this subsection for the fiscal year and the allowance paid in the preceding fiscal year, the excess shall be deducted in future years, subject to subparagraph (ii) of this paragraph, until the difference is fully recovered.