State and local government employees would pay more for benefits
under a new proposal to revamp the state’s ailing retirement
system.
The plan, written by a House subcommittee, contrasts sharply with
a Senate bill that would make several changes in how state
retirement funds are invested — but would not boost the cost for
employees.
The House plan also would guarantee retirees at least a 1 percent
annual cost-of-living increase. Over the past five years, inflation
has ranged roughly between 2 and 3 percent.
The increases are in jeopardy because the system is bumping up
against its debt limit. The Senate’s version would not guarantee
such increases.
To pay for that guarantee, state workers’ contributions to the
retirement system would be 6.5 percent, up from the 6 percent they
now pay.
Broadus Jamerson, executive director of the S.C. State Employees
Association, said most employees won’t mind sharing in the pain if
it helps strengthen the pension system.
“Everybody wishes we wouldn’t have to do it, but every group
involved has to do something to help fix the situation,” Jamerson
said. He said the group does not prefer one plan over the other.
State and local governments also would have to pony up an
additional 1 percent into the system. That would cost the state an
estimated $15 million a year.
House members who came up with the plan say it’s a more direct
approach than the Senate version.
“The Senate’s bill didn’t do anything about the (cost-of-living
adjustments), and we felt that was the most important thing,” said
Rep. Herb Kirsh, D-York, who chaired the House subcommittee.
The House plan, which likely will be considered by the full Ways
and Means Committee in the next few weeks, would leave some of the
pension’s assets under the control of the state treasurer’s office
and some controlled by a separate investment panel.
The Senate bill would create a new investment board to manage the
system’s $25 billion in assets and encourage a more aggressive
investment strategy.
It also would allow employees to choose between retiring after 28
years or 30 years, depending on what benefits they want to receive
once they retire.
Both bills would make TERI — a popular post-retirement work
program — much less attractive by lifting an existing earnings cap
on retired employees who come back to work under a separate
program.
The House bill would come closer to effectively killing the
controversial TERI program by allowing employers to dismiss
participants for any reason.
The TERI program was designed to keep valued workers on the job
after they officially retire, but critics say it gives employers no
choice in the matter.
“TERI is too popular to just get rid of,” said committee member
Rep. Gilda Cobb-Hunter. “Politically, it just didn’t make sense to
eliminate it completely.”
Since the House proposal and Senate bill are so different,
lawmakers likely will need to work out a compromise in a conference
committee.
Reach Stensland at (803) 771-8358 or jstensland@thestate.com
