SC’s retirement plan for new state hires could include both a pension and a 401(k)

S.C. lawmakers said Wednesday that more conversations need to take place before they decide what future retirement plans for new state hires should look like.

But that plan could include a hybrid retirement plan that includes both a pension and 401(k)-style plan.

Any change to the state retirement plan also needs to include higher pay for state workers, several lawmakers said.

State Sen. Vincent Sheheen, the Camden Democrat who co-chairs a committee tasked with reforming the state pension system, asked the Public Employment Benefit Authority and the S.C. Retirement System Investment Commission Wednesday to report back what the results would be if the state offered a “hybrid-like” retirement system – a mix of both a state pension and a 401(k)-style retirement plan.

Last year, the Legislature voted to shore up the state’s underfunded pension system by requiring state workers, teachers, police officers and local government workers – and their employers – to pay more into the retirement system.

That change increased and capped most public employees’ contributions to the retirement system at 9 percent of their pay. Police officers pay 9.75 percent.

For every $100 an employee makes, a public employer will eventually pay $18.75 percent to the retirement system. Police agencies will pay $21.24 for every $100 an officer earns.

Those increases are a step to filling a roughly $20 billion hole in unfunded benefits the state has promised to state workers and retirees.

While the Legislature has been focused on the state’s energy future in the wake of the V.C. Summer nuclear debacle, Lt. Gov. Kevin Bryant, R-Anderson, commended the joint House-Senate committee for “maintaining their focus” on Phase 2 of pension reform.

“Our commitment is to the taxpayers, and our commitment is to the participants.”

This story was originally published February 14, 2018 at 7:19 PM with the headline "SC’s retirement plan for new state hires could include both a pension and a 401(k)."