More than 63,000 state retirees would have their cost-of-living adjustments rescued this year under a plan approved by a Senate committee Tuesday.

Whether the plan will be a long-term solution, however, depends on the retirement system’s assets earning 10 percent more.

The increases, which would be 3.4 percent this year and are based on inflation, are in peril because of mounting debt in the S.C. Retirement System, which enrolls thousands of current and former employees.

But some say the Senate proposal doesn’t go far enough to ensure future retirees will get cost-of-living adjustments.

The plan, which passed the Senate Finance Committee by a 15-7 vote, would put more money into the system by requiring working retirees to contribute 6 percent of their pay. They now don’t contribute anything.

The changes also would lift the cap on how much of the pension system’s $24 billion in assets can be invested in stocks. That now is limited to 40 percent, with 60 percent invested in bonds.

The recommendations come after weeks of meetings by a five-member Senate panel given the task of improving the pension plan’s long-term health.

But Sen. Greg Ryberg, R-Aiken, who voted against the bill, called it a “Band-Aid solution.”

“We’ve got half a loaf, and I’ll sign on when we get the other half in the oven,” said Ryberg, who wanted to ax the TERI program, which allows state employees to retire but continue working.

Supporters say the plan has the potential, over time, to reduce the system’s debt by $2.3 billion.

That assumes moving more money into stocks will increase the rate of return to 8 percent. It is now set at 7.25 percent.

But the state’s actuary testified on Tuesday that an 8 percent rate is “overly optimistic” and cautioned that missing that mark could force the state to pour more money into the system to make up for the shortfall.

Another controversial change would create a board of financial appointees who would be charged with handling all the pension system’s investments. Currently, the State Treasurer’s office oversees the bond portion of the investments.

Trav Robertson, a spokesman for state Treasurer Grady Patterson, said placing all the system’s assets in the hands of non-elected officials is a bad idea.

“Someone’s got to be held accountable for that money,” Robertson said. “Retirees in this state should be scared as hell.”

The bill will be considered by the full Senate in coming weeks and then will go on to the House.

Will Folks, a spokesman for Gov. Mark Sanford, said the bill has some “positive developments” but needs improvement. For example, relying on an 8 percent return could prove unrealistic.

Lawmakers only have a couple of months to pass some type of pension reform before June, when the State Budget and Control Board decides on cost-of-living adjustments.

Sheila Gallagher, S.C. Education Association president, said retired teachers are anxious.

“Retired teachers have been very nervous because they count on those cost-of-living adjustments so much,” she said.

Reach Stensland at (803) 771-8358 or jstensland@thestate.com.