South Carolina’s state and local government workers will have to bump up their contributions to the South Carolina pension fund to 9% of their paycheck if a bill (H.3726) passed Feb. 28 by the state House of Representatives becomes law.
The workers’ contribution would go up from 8.7% on July 1, according to the bill. The South Carolina Senate is working on a similar measure (S. 394).
Speaker Jay Lucas, R-Darlington, said the House bill, which passed 99-14, seeks to restore the solvency of the South Carolina Retirement System.
According to a report, if the state does not infuse the fund with state dollars, the unfunded liability could reach as high as $23.6 billion by 2022. As it stands, the unfunded liability with the fund will be $19.45 billion in 2017.
Provisions included in the Retirement System Funding and Administration Act:
- Increases the employer contribution rate.
- Places a cap on the employee contribution rate.
- Reduces the assumed rate of return on investments and puts protections in place to oversee changes in future rate adjustments.
- Modifies the amortization rate period to reduce unfunded liabilities.
- Implements governance recommendations from the Funston Advisory Services and Legislative Audit Council.
- Requires a four-year rotation schedule for fiduciary audits of PEBA and the RSIC (Retirement System Investment Commission).