COLUMBIA - An ultra-conservative investment strategy threatens to drag down the state's pension plan, many lawmakers and financial experts say.

A proposed solution now before the Senate would place $25 billion in public assets, more than four times the state's annual budget, in the hands of five political appointees.

That would make them some of the most influential people in the state, given the effect their decisions could have on so many South Carolinians' future livelihoods. That group, the proposed S.C. Retirement Investment Commission, would control how and where money is invested in the 30th-largest public pension system in the nation.

The plan to ensure the health of the retirement system by boosting profits is full of promise and potential dangers.

The proposal, approved Tuesday by a Senate subcommittee, is part of a larger state retirement reform package, which also includes securing contributions from working retirees.

"This is one of the most important - if not the most important - things we can do for the people of South Carolina," said Sen. Nikki Setzler, D-Lexington.

The way the state invests its pension assets makes it an odd duck among other public retirement systems. S.C. investments are managed in two ways:

Sixty percent, roughly $15 billion, of the pension funds are in bonds controlled by the state treasurer's office.

Forty percent, roughly $10 billion, is in stocks managed by a five-member investment panel that advises the State Budget and Control Board, which makes the final decisions on investments.

State law prevents money managers from the stock side and the bond side from coordinating their activities.

The proposed commission would consist of five appointees and one non-voting state retiree. That group would oversee money managers and dictate the retirement system's overall investment strategy.

The goal of the commission would be to boost earnings to an average of 8 percent a year - a $2 billion profit.

Coupled with a proposal to lift a constitutional ban on foreign investments, supporters say the changes would "unshackle" state assets and allow for a more unified, flexible investment strategy.

"It's hardly a radical idea," said Kevin Hall, a Columbia lawyer who leads the state's current investment panel. "This would put South Carolina in the mainstream of what other public funds are already doing."

With added rewards come added risks.

South Carolina's current cap on stock investments meant that, although it didn't share in Wall Street's windfalls of the 1990s, it also didn't lose as much when the market bubble burst a few years later.

The Enron scandal, for example, triggered several lawsuits from pension funds invested heavily in the former energy trading company. Florida's state employee pension fund lost an estimated $330 million.

Others worry that the proposed commission of five voting members would hold too much concentrated power.

"I support the concept, but there ought to be at least nine members, and state retirees ought to have a vote," said Kent Phillips, president of the Association of S.C. State Retirees.

The full Senate likely will take up the bill this week. If approved, it then would go the House. Gov. Mark Sanford would have to sign the bill.