A plan to secure the state’s financially troubled pension fund advanced to the South Carolina House floor on Thursday.
The plan that passed the Ways and Means Committee contains recommendations made by the Joint Committee on Pension Systems Review to help narrow an estimated $24 billion gap in what the fund has promised retirees vs. what it has on hand.
Committee Co-Chair Bill Herbkersman, R-Beaufort, told the Ways and Means Committee Thursday that the employers’ contribution rate will increase by two percentage points in fiscal year 2017-2018. “And it continues to increase the employer rate by one percentage( point each year) until fiscal year 2023,” he added.
Employees’ contribution rates will also go up, but will have a limit. “It increases the employee rates from 8.66 percent to 9.00 percent and caps it there,” Herbkersman said.
Herbkersman said not only will contribution rates go up on both sides, but other steps are in the plan. “It reduces the assumed rate of return from 7.5 percent to 7.25 percent as was recommended.”
“It also reduces the amortization period of unfunded liabilities from 30 years to 20 years,” Herbkersman told the committee.
The measure next heads to the House floor.