State workers will have to pay more for their retirement benefits and work more years before claiming them, according to changes to the state’s retirement plan that the General Assembly approved Thursday.

Working longer means state workers would withdraw less money from the state’s $25 billion retirement fund – a taxpayer-supported fund that accountants estimate will run out of money sometime over the next 30 years if no changes are made. Having state workers pay more – an extra $567 a year from the average public employee’s paycheck – means taxpayers will pay less.

The changes plug the retirement systems’ projected $15 billion shortfall by making it nearly impossible for state workers to get a retirement check and a paycheck at the same time – a practice critics refer to as “double dipping.”

“This is a retirement system. And retirement system means that you retire. It’s not an annuity that all of a sudden I get to a point where I can collect it,” said state Sen. Greg Ryberg, R-Aiken, one of the authors of the bill. “We want these people to retire. ... It’s not a second income.”

Lawmakers killed the controversial TERI program, which allows state workers to retire and return to work for up to five years while they earn both a salary and a retirement check.

Lawmakers also made it much harder for public-sector employers to hire retired workers back to their old jobs. Under the new law, retired employees who return to work would have to forfeit their retirement checks once they earn $10,000 in salary in one year.

And if those public-sector employees – state and local government workers plus teachers – want to buy so-called “service time” to retire early, the price is about to go up significantly.

The S.C. State Employees Association supported the bill but said the TERI and return-to-work programs are not the bogeyman that lawmakers made them out to be.

“TERI is an incentive to get quality employees to come and work for the state,” said Carlton Washington, the association’s executive director.

TERI will be phased out over five years. The return-to-work changes and the “service time” requirements, which allow workers to buy credit for additional years of service, will not go into effect until Jan. 2, 2013. That gives current state workers who are close to retirement six months to make up their mind.

And it could lead to an onslaught of retirement requests. Columbia city manager Steve Gantt says he has 225 employees who are eligible to retire who are considering it to avoid the changes. “I’m going to lose some good employees,” he said.

State retirees, meanwhile, will continue to get guaranteed 1 percent annual cost-of-living raises, but those raises will not exceed $500 for any one person. House lawmakers opposed the guarantee. They wanted retirees to get raises only if the retirement fund’s investments made money.

“Having an increase not tied to revenue doesn’t make a heck of a lot of sense,” said state Rep. Jim Merrill, R-Berkeley, the House’s chief negotiator.

But Wayne Bell, president of the State Retirees Association of South Carolina, said having a guaranteed adjustment was important to retirees. “That is something we can depend on,” he said.

The bill also creates an 11-member Public Employee Benefits Authority that would govern the retirement systems. Four of the members either would be retirees or state workers. All of the members would be paid $12,000-a-year salaries.

It took House and Senate lawmakers weeks to agree on the authority, with Gov. Nikki Haley getting involved at the last minute, pushing lawmakers to create it, arguing it was the only way to get the Senate to vote on the bill.

House lawmakers opposed putting the authority in the retirement bill, saying it would make the bill vulnerable to a legal challenge that could end up with the state Supreme Court ruling the entire law unconstitutional. House Speaker Bobby Harrell, R-Charleston, called it “an eleventh-hour full court press ... to grow government,” accusing fellow Republican Haley and the GOP-majority Senate of “playing a game of constitutional Russian roulette.”

“It’s stupid. It’s a bad policy decision. It’s bad to do it. But we have our backs against the wall,” Merrill told his House colleagues. “If we end up having to say, ‘I told you so,’ we are going to do it mighty loudly.”

In a letter to House and Senate lawmakers, Haley said everyone has “had to concede on some points in furtherance of the greater good.”

And Haley spokesman Rob Godfrey said when Haley got involved, the House and Senate had already agreed on the authority – they just had not decided which bill it should be in.

“I imagine that’s why Rep. Merrill called the bill ‘outstanding’ when he voted for the conference report (Thursday) morning,” Godfrey said.

The House approved the bill 88-9. The Senate approved the bill 43-0. It now goes to Haley. She can sign it into law, veto it or allow it to become law without her signature. Haley has been a supporter of the bill.

Reach Beam at (803) 386-7038.

Retirement changes

State lawmakers approved changes to the S.C. Retirement Systems on Thursday. They include:

Changes for current workers

• Pay 1.5 percent more of your paycheck into the system, phased in over three years

• Pay more to buy time to retire early, effective Jan. 2, 2013

• Eliminates TERI program by June 30, 2018

• Requires retired employees still working to forfeit their retirement checks once they earn $10,000 in salary in any one year. Exempted? Anyone 62 or older on the S.C. Retirement Systems or 57 and older on the Police Officers Retirement System

Changes for retirees

• Guaranteed annual 1 percent cost-of-living raise but not more than $500

Changes for lawmakers

• Pay 1 percent more of paycheck into the system

• Closes the General Assembly Retirement System for newly elected lawmakers

Other changes

• Creates an 11-member Public Employee Benefit Authority to run the day-to-day operations of the Retirement Systems and the employee health insurance program. The governor appoints three members. The speaker of the House, chairman of the House Ways and Means Committee, president pro tempore of the Senate and chairman of the Senate Finance Committee appoint two members each. Four of those appointed either must be retirees or state workers.