Updated October 7, 2026. Quick answer: A member retiring from the City of Baltimore Employees’ Retirement System chooses among six payment options, with the maximum allowance as the default and every survivor choice permanently reducing the monthly benefit. The form of payment and the beneficiary become permanent 30 days after the retirement date. A member who leaves before vesting gets a refund of contributions with interest, and a lump-sum cash-out is available only when its value is $12,500 or less. The summaries read describe no DROP.
Baltimore City sworn fire and police members belong to a separate city system with its own rules: Baltimore fire and police retirement decisions.
Montgomery County employees belong to a separate county system with its own rules: Montgomery County Maryland retirement decisions.
What this page covers and what it does not
This page works from four documents published by the City of Baltimore Employees’ Retirement System (ERS, also called BCERS): the Summary of Retirement Benefits for Class C Members and the matching Class D summary (both as of June 2023), the ERS Retirement Pension Planning Checklist dated 08/11/2026, and the Service Retirement Application Packet. Any figure here is from those documents or is labeled as a computed example.
ERS sorts members by hire date: “Class C (individuals hired between July 1, 1979 and June 30, 2014)”, and “Class D (individuals hired on or after July 1, 2014)”. The Class C summary is the main source because it carries the full set of payment options; Class D differences are near the end. The summary itself says “this Summary is intended solely for informational purposes and is not a legally binding document”, so where the newer checklist and packet differ from it, the newer papers are used and the difference is noted.
Maryland taxes on pension income are on Maryland retirement taxes and does Maryland tax pensions, and the state system is on Maryland state pension retirement decisions.
When a Class C pension can start and what the formula pays
The summary gives the service retirement test as “Earlier of 30 years of service credit or age 65 with 5 years of service credit”. An earlier start is possible: “Class C members may retire as early as age 55 with at least 5 years of membership service credit”. The cost: the summary says “your retirement benefits are reduced approximately 6.7% per year for each of the first 5 years of retirement between the ages of 60-65 (maximum reduction of 1/3) and an additional 3.3% per year for each year of retirement between the ages of 55-60 (maximum additional reduction of 1/6)”. Its example begins “If you are age 55 and would have been entitled to an annual retirement benefit of $25,000 under retirement rules” and ends “In this example, your annual retirement benefit would be reduced to $12,500”. Recomputed, $25,000 times 6.7% times 5 plus $25,000 times 3.3% times 5 comes off $25,000, leaving a computed $12,500, which matches the summary.
The pension itself comes from a formula: “Your retirement benefit is calculated based on 1.60% of your average final compensation (AFC) multiplied by your years of credited service”. For service past 30 years it adds “1.85% x AFC for each year of credited service in excess of 30 years”. A further piece applies to pay above Social Security covered compensation, so the first figure in an estimate depends on pay level. The pay used is an average: “the average annual earnable compensation on January 1 for three successive years of service during which earnable compensation was highest”.
A computed example from the summary’s own sample, not a new ERS figure: for an average final compensation of $75,000 below covered compensation and 35 years of service, 1.6% times $75,000 times 30 years is a computed $36,000, and 1.85% times $75,000 times 5 more years is a computed $6,937.50, for a computed $42,937.50 a year.
The election: six payment options
Every retiring member picks how the pension is paid. “You may choose from six service retirement benefit payment options that will suit different family circumstances”. The trade: “The maximum allowance option provides the highest benefit amount to the member, while other options provide lower amount to member and increased amount to the beneficiary”. The table uses the summary’s own example of a $1,000 monthly maximum retirement benefit, so each figure is ERS’s example, not an estimate for any member.
| Option | What the member receives in the example | What a survivor receives |
|---|---|---|
| Maximum allowance (default) | $1,000 monthly, no reduction | 40%: $400 monthly to an eligible spouse or minor children |
| Reserve guarantee | $860 monthly (reduced) | A lump sum to a beneficiary if benefits paid are below the benefit’s value; no monthly benefit |
| 100% survivorship | $820 monthly (reduced) | $820 monthly for life to the beneficiary |
| 50% survivorship | $900 monthly (reduced) | $450 monthly for life to the beneficiary |
| 100% pop-up survivorship | $770 monthly (reduced), back to $1,000 monthly if the beneficiary dies first | $770 monthly for life to the beneficiary |
| 50% pop-up survivorship | $870 monthly (reduced), back to $1,000 monthly if the beneficiary dies first | $435 monthly to the beneficiary |
These reductions are not a schedule. For the survivorship and pop-up options the summary says the reduction is “based on the difference between the age of the beneficiary and the age of the member”. Read as shares of the $1,000 example, the computed reductions are 14% for the reserve guarantee, 18% for 100% survivorship, 10% for 50% survivorship, 23% for 100% pop-up and 13% for 50% pop-up. The summary gives no ages for the example, so those percentages should not be applied to any other member. See single-life versus joint-and-survivor pension for the general trade and survivor benefit with a government pension for how survivor pensions interact with other benefits.
What each option does for a survivor
The maximum allowance is the default and pays the member in full. “Under this option, the beneficiary may receive 40% of the member’s retirement benefit upon the member’s death”. The eligible survivor is narrow: “1) the eligible spouse, to whom the retired member was married for at least one year before the member’s retirement date (to continue for life or until remarriage prior to age 70)”, or “minor children who are under age 18, or who are under age 22, if they are students”.
The reserve guarantee works differently. “The reserve guarantee benefit permanently reduces the member’s lifetime benefit to provide for a lump-sum payment to the beneficiary”. “The lump-sum payment is determined based upon the life expectancy of the member”. The summary states the risk: “if the member lives beyond the total years that is equivalent to the actuarial value of the annuity, there will be no remaining balance for the designated beneficiary”. In its example the member receives “$860 monthly (reduced)” against a $1,000 maximum, with expected lifetime benefits of “$113,520”. Dying four years in, the summary shows “48 (payments) x $860 (monthly benefit) = $41,280 (total benefits paid)”, leaving “$72,240 Payment to beneficiary”. Recomputed, 12 payments a year for 4 years at $860 is a computed $41,280, and $113,520 less that is a computed $72,240.
The survivorship options pay for life. Under the 100% option, “Upon the death of the member, the eligible beneficiary will receive for life 100% of the member’s retirement allowance, even if the beneficiary remarries”. Under the 50% option, “Upon the death of the member, the eligible beneficiary will receive for life 50% of the member’s retirement benefit”. Half of the $900 in the 50% example is a computed $450, matching the summary’s $450, and half of the $870 in the 50% pop-up example is a computed $435, matching its $435. The pop-up feature: “If the beneficiary dies before the member, the member’s benefit increases to the maximum retirement allowance and a new beneficiary cannot be designated”.
Health coverage follows the option. For the reserve guarantee the summary says “The beneficiary is not eligible for health insurance coverage”, while for the survivorship and pop-up options it says “The beneficiary is also eligible for health insurance coverage”. The packet words it as eligibility to apply for retiree health benefits through the City’s employee benefits office, so confirm coverage there before choosing.
What is permanent, and how to file
The choice closes quickly. “You have 30 days after your retirement date to change your option for payment and your beneficiary; after 30 days, your form of payment and beneficiary become permanent and cannot be changed”. The exception: “(If you elect the Reserve Guarantee Option, you may change your beneficiary at any time.)”. The packet’s option page puts it as “The beneficiary cannot be changed 30 days after the member has retired”.
The packet tells members “If you wish to choose a different eligible service retirement option other than the Election of Maximum Retirement Allowance, please notify ERS by email immediately so that the proper form can be emailed/mailed to you timely”, so the maximum allowance is what the paperwork assumes unless the member asks for another form.
Filing has a window, and it changed. The 2023 summary said “you must file your retirement application with the ERS office no more than 90 days and no less than 30 days in advance”. The current packet says documents “must be received by ERS as early as 90 days and no later than 60 days prior to your expected retirement date”, and that the application and option form “must be signed, dated and notarized in the presence of a notary public”. If missed: “your Service Retirement application will NOT be processed for your expected retirement date”. “You will have to reapply for the next retirement payroll cycle with no retroactive retirement benefit”. The 2026 checklist uses the same 90 to 60 day window.
Marital paperwork is part of the file: “All members must complete, sign and have notarized the Marital Status Affidavit and submit a copy of their marriage certificates and/or divorce decrees as part of the application process”. The reason: “your ex-spouse may be entitled to a portion of your ERS retirement benefit”. The documents read describe no separate spousal consent form for choosing the maximum allowance.
Lump sums: what ERS offers and what it does not describe
The documents read describe a lump sum in one situation, a small benefit for someone who has left: “You may elect a lump-sum cash-out instead of a monthly retirement allowance if the cash-out amount is $12,500 or less”. The catch: “A member who receives a lump-sum cash-out is not entitled to any other retirement benefits from ERS or the City, and cannot transfer the service to another pension system”.
The summary’s example is a member who leaves at 35 with “Years of service: 7” and an “Average final compensation: $25,000”, whose annual benefit at 65 is $2,800 and who could take “Cash-out lump sum option: $1,544.55 paid immediately”. A computed check: 1.6% times $25,000 times 7 years is a computed $2,800, so the $2,800 is an annual amount, and the lump sum is a computed 55% of one year of it. The example does not say how the lump sum was set.
The summaries and packet read describe no DROP, no partial lump sum and no lump-sum option for a member who retires with an immediate benefit; the list below repeats that. Any lump sum paid out is covered by the IRS rules below and by 20% withholding on a pension lump sum and pension lump sum versus monthly annuity break-even.
Leaving before retirement: refund or keep the pension
Vesting decides the choice. “Class C members are vested after 10 years of service credit prior to reaching age 55, or after 5 years of service credit after reaching age 55”. “If you leave City employment after you are vested, but before you are eligible for normal retirement, your benefit is deferred until you reach normal retirement age (or early retirement age, if you choose)”.
Before vesting the member is paid back: “If you leave City employment before you are vested, you will receive a refund of your employee contributions (with interest)”. The overview puts the interest at “Non-vested members (contributions plus 3% interest)”. Contributions are described as “employee contributions (5% of their annual base pay)”.
A refund can cost service later. For employees rehired after the parity period the reemployment sheet says they “do not retain prior service credit for contributory years if they received a refund of their contributions unless they purchase it back under the rules for purchasing the 1st year of service”. See pension refund versus leaving it for the general trade.
Buying service credit
Service credit multiplies the formula. The summary says “an employee may purchase service credit for his/her first year of City employment (prior to ERS membership)”. The price: “the employee’s annual salary at the time of purchase times the contribution rate at the time of purchase times the number of years or part of a year to be purchased”. Terms: “The purchase must be made in a single payment”, and “The contribution rate is subject to change every July 1”. The 2026 checklist lists “To purchase non-credited service time” among the six-months-before steps. The documents read give no price table, so the cost comes from an ERS estimate; the method for judging a purchase is on the pension buyback calculator page.
Class D members: a smaller formula plus the RSP
Class D follows the same option and refund structure with a smaller formula: “Your retirement benefit is calculated based on 1.0% of your average final compensation (AFC) multiplied by your years of credited service”. Class D members also have the Retirement Savings Plan: “Participate in ERS and RSP, with contributions starting one year after hire date”. Before vesting, the Class D summary says: “If you separate from service before you are vested in your defined benefit component, you will receive the contributions you made to the ERS plus interest in a lump-sum distribution”. The RSP has its own rules, so the Class D summary should be read in full.
Cost-of-living adjustments
Retirees receive annual adjustments: “The amount of the COLA is the greater of 1.5% or the amount of the COLA awarded by Fire and Police Retirement System of the City of Baltimore”. Timing: “Retirees and beneficiaries receive their COLA on the January 1 following the June 30 in which they have been receiving benefit payments for at least 12 consecutive months”. The overview lists a different rate, “Age 65 and older 2%”, so confirm the current rate with ERS.
What the IRS adds on tax
A refund or lump sum from a public pension is a distribution, so the IRS rules apply on top of ERS’s own. On withholding, the IRS says that a taxable eligible rollover distribution paid to you “is subject to mandatory income tax withholding (generally at a rate of 20%), even if you intend to roll it over later”, and that if you roll it over yourself “you’ll have to add funds from other sources equal to the amount withheld”. The packet’s tax instructions point to a separate IRS form for a lump-sum pension payment that is an eligible rollover distribution. The rollover clock, if the money is paid to you: “you have 60 days from the date you receive it to roll it over to another eligible retirement plan”.
On early distributions the IRS says “the law imposes a 10% additional tax on certain early distributions from certain retirement plans”. Its list of exceptions includes “Distributions made to you after you separated from service with your employer after attainment of age 55” and “Distributions made to a qualified public safety employee from a governmental plan” if the employee separated from service during or after the year they attained age 50 or 25 years of service under the plan, whichever is earlier. Whether an exception fits a particular refund depends on your own plan and facts, so confirm it with a tax preparer before you take one.
What this page could not settle
- The pages read do not state any ERS partial lump sum, DROP or lump-sum choice for a member who retires with an immediate benefit.
- The pages read do not state the factor behind each option reduction, only that it depends on the age difference; the percentages above come from one $1,000 example with no ages.
- The 2023 summaries give a 30 to 90 day application window while the 2026 checklist and packet give 90 to 60 days; confirm the current window with ERS.
- The overview lists a 2% COLA at age 65 and older while the COLA section gives the greater of 1.5% or the Fire and Police system’s COLA; the pages read do not reconcile them.
- The summary’s covered compensation sample prints a subtotal that does not equal its own two lines, and its cash-out example shows benefits for a 7 year member although vesting needs 10 years before age 55.
- The refund application packet on the ERS forms page is a scanned image whose text could not be read, so the refund process and forms are not described, and the pages read state no spousal consent rule for a single-benefit option.
Common mistakes
- Treating the option choice as reversible; the summary says the form of payment and beneficiary become permanent 30 days after the retirement date.
- Letting the default stand; the packet assumes the maximum allowance, which pays a survivor only 40%.
- Choosing the reserve guarantee for a spouse who needs health coverage; the summary says that beneficiary is not eligible.
- Missing the filing window; an application not received at least 60 days before the retirement date is not processed for that date.
Related on this site: pension refund versus leaving it, single-life versus joint-and-survivor pension, pension buyback calculator, 20% withholding on a pension lump sum, pension lump sum versus monthly annuity break-even, survivor benefit with a government pension, Maryland state pension retirement decisions, Maryland retirement taxes, does Maryland tax pensions and public pension retirement decisions by system.
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Answer againSources
- City of Baltimore Employees’ Retirement System, Summary of Retirement Benefits for Class C Members (as of June 2023): https://www.bcers.org/wp-content/uploads/2024/07/Summary-of-Benefits-Book-7.1-revision.pdf
- City of Baltimore Employees’ Retirement System, Summary of Retirement Benefits for Class D Members (as of June 2023): https://www.bcers.org/wp-content/uploads/2023/06/Summary-of-Benefits-Book-Class-D-6-1-revision.pdf
- City of Baltimore Employees’ Retirement System, ERS Retirement Pension Planning Checklist for Active Employees, Class C and Class D (dated 08/11/2026): https://www.bcers.org/wp-content/uploads/2026/09/Retirement-Pension-Planning-Checklist-Class-C-D-Members_Final.pdf
- City of Baltimore Employees’ Retirement System, Service Retirement Application Packet (service retirement options summary printed Rev. 09/15/2020): https://www.bcers.org/wp-content/uploads/2026/09/Service-Retirement-Application-Packet-Updated_Rev-02092026_Final.pdf
- IRS, Topic no. 413, Rollovers from retirement plans (irs.gov): https://www.irs.gov/taxtopics/tc413
- IRS, Topic no. 558, Additional tax on early distributions from retirement plans other than IRAs (irs.gov): https://www.irs.gov/taxtopics/tc558
Sources: the primary documents linked above, read on October 7, 2026. General information from each system’s own published materials, not legal, tax or financial advice. Your own member statement and the system’s current rules decide your benefit, and a pension counsellor at the system or a fee-only adviser is the right place to confirm anything consequential.