Maryland Retirees To Stop Receiving Pension "Checks"

August 11, 2003 ( - Beginning next month, retirees in the State Retirement and Pension System of Maryland will be receiving all their payments via direct deposit.

That means that unless the retiree has a compelling reason not to use the electronic option, no checks will be sent out. This comes after a nine-month campaign by the $26.7-billion pension system to prepare retirees for the mandatory direct deposit into their bank accounts, according to a Baltimore Sun report.

The move by the state pension system is one for greater security and convenience for the pensioners – protecting against identity theft and loss of their checks, according to the pension fund’s spokesman Joseph Coale . While there is some cost savings associated with the move – an estimated 40 cents for payments made electronically instead of with a check – these savings are marginalized because the state system will still mail out a statement in lieu of a check.

So far, the vast majority of Maryland’s retirees are on board with the system, based on the more than 91,000 of the plan’s 93,000 retirees that responded to entreaties to move to direct deposit. However, the idea has not been without its detractors, with the policy change prompting some “nasty letters,” Coale said.

“Some people don’t like it because it’s a change and it represents a break from what some people are used to,” Coale said.

At least one advocate for older Americans agrees with the dissenters and opposes mandatory direct deposit even while they acknowledge it has advantages. Donna DeLeno, advocacy representative for AARP Maryland, said the organization believes the question of whether to use direct deposit should be left to individual pensioners. “Our members feel that choice is essential to financial independence in all aspects of how they manage their finances,” she said.

Coale said the decision was not made on a whim or without representation. The direct deposit policy has the support of the entire pension board, including its retiree representatives.

Further, the direct deposit decree is not absolute, with retirees able to receive a waiver if they can show it would create an undue hardship. Coale said about 600 exemptions have been granted and that waivers are automatic for retirees who don’t have bank accounts.

Otherwise, a final notice will go out with the August 31 check. Those who do not respond will not receive their September 30 checks, with the money being held by the retirement agency until the retirees make direct deposit arrangements or secure a waiver.