Retired state employees will see their cost of living adjustments cut in half under a new plan approved by the South Carolina’s top financial board Thursday. The Budget and Control Board voted to set a projected 7.5 percent return on investment for the state’s retirement system, rather than the current 8 percent.
Because of a 2008 state law, the change will require a smaller cost of living adjustment (COLA) each year for retired employees. As long as the 8 percent projection was in place, retirees were promised a 2 percent COLA, but it drops to an automatic 1 percent once that projection goes down.
Lawmakers are making the change in response to solvency issues within the pension fund. The system has a $17 billion gap between what it has promised retirees and what it has on hand. If every employee in the system retired immediately, it would take South Carolina 60 years to cover the difference– double what federal standards recommend.
As Ways and Means Committee Chairman, State Rep. Brian White (R-Anderson) serves on the board. He said the cut was a difficult decision, but added he wants to prevent the system from going bankrupt. “I want those folks that have worked hard for those retirement checks to get those checks and the ones that are coming into the system to also have a system that will be there for them as well,” he said.
The board also voted to increase the amount employers (aka, government agencies) contribute into the system by 1 percent. However, this will not be the last change to the state’s pension system, as legislators are meeting this fall to determine what further changes will be needed.
Also at Thursday’s meeting:
— The Board approved several bond packages, including roughly $8 million for the University of South Carolina’s new softball stadium, as well as a video board at Williams-Brice Stadium.
— Members also approved the purchase of 190 acres for the state’s Mountain Bridge Wilderness Area in Greenville County. The Department of Parks, Recreation, and Tourism will pay the Nature Conservancy $250,000 for the property, called the “White tract.” Its appraised value is more than $1.4 million. The agency says the property (which includes a waterfall) will be used to provide another access point for trails in the 11,000 acre Wilderness Area.
— The state also transferred out all of the remaining assets of the Savannah River Development Division. Formerly the Savannah Valley Authority, it became a part of the Commerce Department during government restructuring in 1993. The Division has existed primarily to support a proposed residential development in Abbeville County at Lake Richard B. Russell. However, the housing market crash prevented the development from being built.
The board voted to transfer the agency’s remaining assets, including the Blue Hole Recreation Area, to the Army Corps of Engineers, which oversees activities on the lake.