The South Carolina House Wednesday approved a bill that would requires all state and local government employees to contribute more towards their retirement and new hires to work longer as a way to shore up the state’s pension system.
“This isn’t something that we arrived at quickly,” said Rep. Jim Merrill (R-Charleston), who chaired the House ad hoc committee which drafted the bill after nearly nine months of meetings and debate.
The reform bill makes several changes. Current employees would contribute 7.5 percent of their salary instead of the current 6.5 percent. They also could no longer use vacation days, sick leave, or unapproved overtime in the formula which calculates their retirement benefits. Their benefits would also be based on their average pay over the final five years of employment, instead of the current three.
New employees would have to work 30 years to receive full benefits, rather than the current 28 years (with exceptions for police and certain other jobs). They also would not be eligible to participate in the TERI program that allows retirees to return to work.
Current retirees are still eligible for TERI, but all retirees will lose their automatic Cost-of-Living Adjustment (COLA) under the proposal. Instead COLAs will be based on how much money the state’s investments return.
Merrill said lawmakers need to make the changes to ensure state employees are still able to receive benefits 30 years from now. “If we do nothing, the biggest problem is that the system will not be here at the end.”
27 Democrats voted against the bill, saying it was unfair to workers already enrolled in the system. Rep. Joe Neal (D-Columbia) said there should be an exemption for employees who are less than five years away from retirement.
“It is not fair to continue to ask them to give and give and give with no flexibility and no ability to consider the concerns of those who are closest to retirement,” Neal said.
18 Democrats did vote in support of the bill, saying that– while not perfect– it helps fix problems in the retirement system.
Rep. Kenny Bingham (R-Cayce) said he sympathized with state employees, but added the changes had to be made. “It is very difficult… but unless we get the system in balance, we are headed for disaster.”
Legislators unanimously voted on a late amendment by Rep. Harry Ott (D-St. Matthews) that required all General Assembly members to increase their own retirement contributions by one percentage point to 11 percent. Members of the state legislature have their own separate retirement system that is not facing financial problems.
“I believe if we treat ourselves differently than we treat state employees, we are asking to be demonized and rightly so,” Ott said. He was one of the 18 Democrats who voted in favor of the overall bill.