South Carolina financial leaders Wednesday approved requiring state employees to pay more toward their retirement.
State employees will pay 0.5 percent more of their salaries into the state pension system, starting July 1, after that hike was formalized Wednesday by the State Fiscal Accountability Authority. Their employers – the state, cities, counties or other public institutions – also will be required to contribute 0.5 percent more.
S.C. leaders still are weighing how to cover $16.75 billion in unfunded liabilities in the state’s pension system. The 0.5 percent increases this year are not a long-term solution, experts said Wednesday.
S.C. Gov. Nikki Haley, who chairs the five-member board, called the situation “urgent” and said solving the problem won’t be easy.
“This is going to upset people,” the Republican governor said. “It’s going to make it hard.”
The higher pension costs will affect more than 200,000 S.C. employees, who work for state agencies, public schools and local governments, and are paying now into the retirement system. Judges, police officers and legislators have separate, smaller retirement programs.
Representatives of S.C. teachers and state employees have opposed raising state workers’ retirement contributions.
S.C. State Employees Association executive director Carlton Washington said state workers already pay too much for benefits, adding state agencies suffer as a result.
“We already have an issue with recruiting and holding good employees,” Washington said. “The benefits package has eroded.”
State employees already pay nearly 8.2 percent of their salaries into the state’s pension system. Employers contribute nearly 11.1 percent.
S.C. lawmakers this year approved mandating state employees pay an additional 0.5 percent of their salaries toward their retirement.
Legislators this year also approved a 3.25 percent pay increase for state employees, the largest such raise in 10 years. In addition, lawmakers approved picking up increases to state workers’ health care costs.