Gov. McMaster has signed into law the pension bill (H. 3726), which aims to address the state’s $22 billion pension liability.
McMaster said the pension crisis was the “result of a combination of factors created, occurring and neglected for over 15 years,” such as the 28-year retirement eligibility, the Teacher and Employee Retirement Retention Incentive (TERI) program, continued cost of living adjustments (COLAs) and lower than expected rates of return on investments.
"Unfortunately, the only means available today to immediately begin reducing the state's unfunded liability is to increase employee and employer contributions for the South Carolina Retirement System (SCRS) and Police Officers Retirement System (PORS)," McMaster said in the statement.
The governor noted that the law “does not address the single most important measure which would ensure the long term financial stability and viability of the state's retirement systems: a date certain transition from the state's defined benefit pension plans to a defined contribution retirement plan for new state employees."
McMaster suggested the following changes:
- A new defined contribution plan that maintains state government’s competitiveness in the job marketplace against higher paying private sector jobs.
- Possible “enhanced” contributions by state employers for employee years of service, promotions, or other merit based criteria.
- Restricting the new defined contribution system to new state agency employees.
- A 2021 oversight review by the General Assembly of governance changes to the Retirement System Investment Commission (RSIC) and the Public Employee Benefit Authority (PEBA).
The bipartisan legislation reduces the unfunded amortization schedule 20 years from 30 years, and changes the assumed rate of return on investments to 7.25% from 7.5%.