COLUMBIA, S.C. - Governor Henry McMaster today signed into law H.3726, which addresses South Carolina’s $22 billion unfunded pension liability calling it “the first step of many which are needed” to secure the future fiscal health and sustainability of the pension systems.
“I appreciate the great leadership Governor McMaster has shown in signing this legislation and his commitment to working on future retirement reforms,” said John Sowards, Chairman of the Public Employee Benefit Authority (PEBA) board.
In a bill signing statement to the General Assembly, McMaster explained that the pension crisis was the “result of a combination of factors created, occurring and neglected for over fifteen years,” such as the twenty-eight year retirement eligibility, the Teacher and Employee Retirement Retention Incentive (TERI) program, continued cost of living adjustments (COLAs) and lower than expected rates of return on investments.
A copy of the signing statement can be found on the governor's website.
"Unfortunately, the only means available today to immediately begin reducing the State's unfunded liability is to increase employee and employer contributions for the South Carolina Retirement System (SCRS) and Police Officers Retirement System (PORS)," the governor wrote.
The governor proposed additional changes to the retirement system, stating,
“Disappointingly, H. 3726 does not address the single most important measure which would ensure the long term financial stability and viability of the State's retirement systems: a date certain transition from the State's defined benefit pension plans to a defined contribution retirement plan for new state employees."
Suggestions in the governor's signing statement include the following:
• A new defined contribution plan that maintains state government’s competitiveness in the job marketplace against higher paying private sector jobs
• Possible “enhanced” contributions by state employers for employee years of service, promotions, or other merit based criteria
• Restricting the new defined contribution system to new state agency employees
• A 2021 oversight review by the General Assembly of governance changes to the Retirement System Investment Commission (RSIC) and the Public Employee Benefit Authority (PEBA)