Recommendations made by the Joint Committee on Pension Systems Review on how to fix South Carolina’s financially troubled retirement system will be taken up in the state Senate.
Committee c0-chairman State Sen. Vincent Sheheen, D- Kershaw, said employees will have to contribute slightly more — from 8.66 percent currently to 9 percent.
“The bill caps the employee contribution at 9 percent. If we took no action it would go up to 9.16 percent,” Sheheen said. “Our fund has been reliant on very high contributions from employees and not so by employers. And part of the action we took recognized that.”
However, the state’s employer contribution rate would go from the current 11.56 percent to 13.56, effective July 1. That would slowly increase each year until it reaches 18.56 percent by 2023.
Legislators on the Pension Review Committee say the recommendations are needed to help address the state’s belaguered pension system, which faces a $24 billion gap between what it has on hand and what is promised to future retirees. The recommendations will now be introduced in the House and Senate as separate bills.
Sheheen said under the new plan the assumption is that future investment revenue projections will fall below what the actual returns will be. “What we did is based on more conservative investment returns,” he said.