A proposal to fix the state’s ailing pension system is expected in January, a co-chairman of a legislative panel said Wednesday.
"We need to offer a solution that fixes the problem," said state Sen. Kevin Bryant, R-Anderson, a co-chairman of the committee. Bryant said he hopes a panel of House and Senate members will have a solution to offer by the end of the first week of the legislative session.
Lawmakers were told Tuesday the state’s unfunded pension debt could be nearly $40 billion, twice previous estimates. That debt is the difference between the amount the pension fund has on hand to pay for the retirement benefits of state and local government workers, including teachers, and the amount it has promised to pay current employees and retirees.
In an effort to close that gap, lawmakers are looking at whether to put more taxpayer money into the pension system or take more money out of the paychecks of government workers.
The state’s pension system serves more than 180,000 state and local government employees, including teachers. Another 134,634 retirees also are part of the system.
Lawmakers also could close the pension plan to new state employees and require they take part in a defined contribution plan — like a 401(k) investment plan. In the short term, that would increase the pension system’s unfunded debt because new workers would not be paying into the retirement system. But, in the long term, it would reduce the state’s pension costs.
“We need to forge a way forward that works for all of the stakeholders – the existing retirees, the existing members and the taxpayer,” said state Rep. Jeff Bradley, R-Beaufort.
Retirees have urged lawmakers to not cut retirement benefits, including an annual 1 percent cost-of-living increase – capped at $500 — that retirees get.
Advocates for state employees also have urged lawmakers to not increase how much workers pay for their retirement benefits out of their paychecks. Increasing that deduction would result in a cut to a worker’s take-home pay, and could hurt the state’s ability to recruit and retain employees, they argue.
“We’ve got to pull a lot of levers in this process moving forward,” said state Sen. Sean Bennett, R-Dorchester.
Who is a beneficiary of the S.C. retirement system?
The S.C. retirement system system serves 134,634 retirees. Another 187,386 active state and local government employees contribute to the system.
69 years old: Average current age
59 years old: Average age at retirement
23 years: Average years of service at retirement
$42,677: Average final compensation at retirement
$19,774: Average current pension benefit annually
SOURCE: Public Employee Benefit Authority