SC House panel reviewing state’s retirement system

A S.C. House oversight panel reviewing the S.C. Retirement System Investment Commission is likely to recommend changing the way that body is set up, a state legislator said Tuesday.

The system is drawing scrutiny because it has billions in unfunded obligations. Across the system’s five retirement funds, that unfunded liability is more than $20 billion, Investment Commission executive director Michael Hitchcock told legislators Tuesday.

The retirement system benefits S.C. state workers.

The largest pension fund, the S.C. Retirement System, serves state and local government employees, including teachers, and has about $24 billion in assets, Hitchcock said. The other four pension systems benefit judges and solicitors, National Guard members, S.C. police officers and General Assembly members, a system that is being phased out.

The retirement systems have more than 500,000 active participants and beneficiaries, accounting for about one in every nine S.C. residents, Hitchcock said.

S.C. House Oversight Committee chairman Weston Newton, R-Beaufort, said the legislative panel likely will recommend changes to the Investment Commission.

Those changes could include term limits for commission members, changing qualifications for commissioners or modifying the makeup of the commission, he said.

Starting July 1, state employees are paying 0.5 percent more of their salaries into the state pension system. Their employers – the state, cities, counties or other public institutions that they work for – also are contributing 0.5 percent more.

For the 10-year period that ended with the 2014-15 fiscal year, South Carolina’s pension investments earned a 5.2 percent rate of return, according a Legislative Audit Council report released last year.

That is below the average national return of 6.9 percent and the state’s expectations — its “assumed rate of investment return” — of 7.5 percent, set by the General Assembly.

This story was originally published July 12, 2016 at 5:55 PM with the headline "SC House panel reviewing state’s retirement system."