State lawmakers are forming a new committee to find solutions for South Carolina’s pension fund — which currently faces a more than $20 billion shortfall in the retirement benefits eventually promised to state and local employees.
Statehouse leaders on Wednesday created a 12-member committee consisting of 6 House and 6 Senate members to study the pension system for more than 500,000 public employees, retirees and their beneficiaries.
“This committee will take into account all the relevant factors involved in making this system as strong as possible,” Senate President Pro Tempore Hugh Leatherman, R-Florence, said. “I’m confident we’ll roll up our sleeves, work together and make sure South Carolina honors its obligations in a fiscally responsible way.”
An audit of the state Retirement System Investment Commission last year found the fund continually fell short of the annual 7.5 percent return rate legislators have set as the benchmark needed to keep pace with benefits. Instead, the total return from 2006-2015 was 5.2 percent. Investment Commission executive director Michael Hitchcock told legislators two weeks ago that the system’s unfunded liability is more than $20 billion.
“There’s definitely trouble,” State Rep. Bill Herbkersman, a Bluffton Republican who will serve on the committee, told South Carolina Radio Network. “There’s been trouble for years all over the country. But we’re primarily concerned with South Carolina and how it’s going to affect our retirees and the people that use the system.”
The committee is slated to begin meeting in August, with hopes to finish work during next year’s legislative session with recommendations on how to reform the retirement system.
“Thousands of South Carolinians have voluntarily contributed into the state retirement system with the hope of receiving a positive return in the future,” House Speaker Jay Lucas stated. “These hardworking citizens have entrusted our state to invest their income wisely and we owe it to them to honor our commitments.”
Nationwide, states are struggling to keep pace with their growing pension deficits, particularly as retirees live longer and low interest rates limit historically “safe” investments.