Legislators haven't dealt with the unfunded liability of the state employee retirement system, but they have done fairly well for themselves, pension-wise. If legislators can provide a solvent system for their retirement, they should be able to tackle the problems facing the system that serves the general state employee.
Comptroller General Richard Eckstrom, who has opposed cost-of-living allowances on the Budget and Control Board (with Gov. Mark Sanford), estimates the unfunded liability of the South Carolina Retirement System at $9 billion. Financier Darla Moore recently described its financial management as "horrendous."
According to the state's Comprehensive Annual Financial Report for the last fiscal year, state employees served by the state retirement system contribute 6 percent of their pay to the system, which is matched by the state at a rate of 7.7 percent.
Unfortunately, that's not enough to support the demands of the system in the long-term, particularly in view of the COLAs routinely granted retirees by a majority of the state Budget and Control Board.
The General Assembly Retirement System avoids problems with the aid of a much higher rate of state contribution. At 79 percent, it's about 10 times the rate for general state employees. Not bad for a part-time job.
Meanwhile, legislators can tap into their retirement with a mere eight years of service, compared to a 28-year requirement for state employees. Legislative retirement is based not only on the annual legislative compensation of $10,400, but also the $12,000 they receive annually for so-called local expenses (which actually served as a backdoor pay hike). Legislators are eligible for retirement beginning at age 60.
(The judicial retirement system, also separate, is funded at a higher rate, as well, with a taxpayer contribution of nearly 42 percent, or more than five times the rate for the S.C. Retirement System. Most state judges, incidentally, are ex-legislators, and may be eligible for retirement checks from both systems.)
The major problems in the S.C. Retirement System have been created by the approval of COLAs without the means to support them, the reduction of retirement eligibility from 30 to 28 years, and the Teacher and Employee Retirement Incentive, which allows retirees to remain employees of the state, creating an unfunded liability of at least $100 million.
Legislators have made ample arrangements for their own golden years. Now they should deal with the threat to the retirement system covering the majority of state employees.
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