Washington-area governments buckling under the burden of growing pension benefits for employees are looking to remodel money-draining retirement systems, a goal that analysts say would be achieved through reform used by companies. Just half of Montgomery County general government employees receive traditional pensions in which retirees receive a set monthly payment from retirement until death. Yet they account for 88 percent of taxpayer money -- $103 million -- to be pumped into the retirement system this fiscal year.

Montgomery cost increases during past decade
Position Retirement arrangement Fiscal 2002 annual retirement payment Fiscal 2011 annual retirement payment Increase Total benefits as percentage of salary
Firefighter grade three Pension $6,010 $22,410 273 percent 60 percent
Social worker grade one 401(k) $2,220 $4,950 123 percent 32 percent
Source: Montgomery County Office of Legislative Oversight
Montgomery government retirement plans (nonschool employees)
Retirement arrangement Enrollees Active members Fiscal 2011 tax-supported cost Employer contribution       as percentage of salary
Pension All unionized public safety employees/every worker hired before October 1994 4,635 $103.3 million Up to 38 percent
401(k)/hybrid All general government and non-unionized public safety employees hired after October 1994 4,214 $13.8 million Up to 10 percent
Source: Montgomery County Office of Legislative Oversight

In comparison, roughly the same number of workers enrolled in some form of a 401(k) arrangement -- employers and employees make a fixed contribution to the retirement system with no guaranteed payout -- will cost county residents roughly $13 million.

"Especially noteworthy is that during the past decade, the per-employee cost of a defined benefit pension increased at more than twice the rate of a defined contribution retirement plan," the county's Office of Legislative Oversight found in a recent report.

On the heels of filling a $1 billion shortfall, county taxpayers are on the hook for up to 38 percent of a retiree's final salary every year until death. If all government workers

were enrolled in a 401(k) arrangement, Montgomery would save $77 million this year alone, according to county estimates.

Recent market losses on pension plan investments, coupled with the ballooning obligations to employees, have forced officials at both the state and local levels to empty coffers to cover the mounting tab.

Maryland's ailing pension system is underfunded by $33 billion, a shortfall state lawmakers are expected to tackle during the General Assembly session that starts Wednesday. Gov. Martin O'Malley, however, said he would not pass any of the cost on to county governments -- as a commission he appointed proposed -- but would support raising the employee contribution rate.

Virginia Gov. Bob McDonnell is proposing that employees start paying 5 percent into their defined-benefit programs beginning in July. It would be partially offset by a simultaneous 3 percent raise.

Fairfax County, which guarantees all pensions, is facing a $1.7 billion unfunded liability. In response, the wealthy Virginia suburb has hired a consultant to study the potential savings of moving new employees to a 401(k).

"Too much of our total compensation cost goes to pensions," said Fairfax County Supervisor Pat Herrity, R-Springfield. "The problem with pensions is that governments take all the risk. And these pensions are not the attraction they used to be with such a mobile work force."

The county is expected to dole out $26.5 million more in retirement payments this fiscal year, a roughly 5 percent increase.

Elizabeth Kellar, president of the Center for State and Local Government Excellence, a nonprofit that analyzes government spending, said shortfalls in retirement funding are hardly unique to the Washington region, as last year ushered in the "biggest change to pension plans nationwide."

"We went from most state and local pensions plans being funded to now the median is around 78 percent," she explained. "It's actually going to look worse for a couple more years."

More localities, she said, have switched to a defined contribution plan, raised the employee contribution rate or increased the retirement age.

Over the last 10 years, Montgomery tax-supported pension costs have soared 226 percent, from $59.3 million to $193.4 million annually, when public safety and education employees are included.

But local public employees unions dismiss talks of widespread reform.

Gino Renne, president of Montgomery's Municipal and County Government Employees Organization, said agreeing to

a defined-contribution plan for his members -- more than 15 years ago -- was his "biggest mistake" as the union's leader.

"401(k) is a fool's approach to investing pensions assets that disproportionately favors the wealthier employees," he said. "That won't fix anything."