The future of the State Retirement System was up for discussion at Governor Sanford’s latest roundtable gathering Wednesday in the State House complex.
Concerned citizens, politicians and financial experts all delved into the discussion of a system that Sanford says has state taxpayers on the hook for over $21 billion in long-term liabilities.
Bob Borden, CEO of the State Retirement System Investment Commission says diversifying the system’s investment portfolio has helped in minimizing risk involved by investing with a goal of eight percent on return.
Dr. Joshua Rauh, Associate Professor of Finance at Northwestern University, painted a bleak picture of the system in his report “South Carolina’s Public Employee Pension Crisis.”
Rauh says South Carolina labels its state pension plan as “risk-free” but, in actuality, any system based on funding off stock market investments comes with an element of risk. He said a consistent rate of return of eight percent is unrealistic.
Rauh says if a number of investments have a downturn, the unfunded liability becomes the burden of every state taxpayer. Rauh says his calculations show that the unfunded liability of the state retirement system is nearly $53 billion.
Sanford says ideally he wants a more realistic set of numbers on the expected rate of return on the system’s investments, so that steps can be taken now so the system will not be a long term burden on the taxpayers of South Carolina.