A pension reform bill will be hammered out in conference committee next week after the South Carolina Senate rejected the latest House proposal Thursday.
The House and Senate are trying to fix a projected $15 billion shortfall in the retirement system over the next 30 years.
The crux of the debate the past two weeks was those retirees who go back to work. That includes those who enroll in the Teachers and Employee Retention Incentives program (TERI). TERI allows an employee to retire and collect deferred benefits while still employed for up to five years. The House wants to close it to new hires, while the Senate wants to phase it out completely by 2018.
However, lawmakers seem to be in agreement about ending a separate “return-to-work” provision currently in state law that allows an employee to retire and be hired again after 15 days. Both the House and Senate proposals would extend that to 60 days and put a $10,000 cap on wages for working retirees who are also accepting benefits.
“When you retire, you don’t retire to increase your salary by 50 percent,” said Rep. Kenny Bingham (R-Cayce), who helped draft the House plan.
The newer House plan also drops a proposed “anti-spiking” provision, which would have barred state employees from factoring unused sick days and vacation into their pension calculations. Rep. Jim Merrill (R-Charleston) said the House agreed with the Senate’s idea to target return-to-work instead.
“It was sort of a pick-your-poison scenario,” he said on the House floor Wednesday, “But we need to do one or the other.”
Under both proposals, new employees hired after June 30 would no longer be able to continue using the extra sick days and vacation time.
Much of the conference committee debate will likely center on the future of TERI. House leaders such as Merrill and Bingham want to keep the program in place for current state employees already vested in the system. But senators and even some rank-and-file representatives believe the program should end for good.
“The demise of TERI is an idea whose time has come,” said Rep. Walt McLeod (D-Little Mountain), “It’s time for TERI to take leave of us.”
Merrill said the House is also resisting the Senate’s guarantee of a one percent cost-of-living increase each year for retirees. The House wants the increase tied to the pension’s fund’s rate of return on its investments.
The South Carolina State Retirees Association favors the Senate version for that reason, with the group’s executive director Wayne Bell calling the House version ”unacceptable.”