Tuesday the State Fiscal Accountability Authority (SFAA) approved the retirement contribution rate increases adopted by the South Carolina Public Employee Benefit Authority (PEBA) Board of Directors further driving up costs for state workers and tax payers.
Effective July 1, 2017, contribution rates will increase by 0.5 percent for the South Carolina Retirement System (SCRS), Police Officers Retirement System (PORS), and the State Optional Retirement Program (State ORP). Teachers, firefighters, and police pay into the pension plans.
Senator Hugh K. Leatherman spoke at the vote saying, “Do what we gotta do.”
State and municipal employees already pay 45% more into the state’s pension program than the national average. For perspective, the average teacher takes home $107 fewer than out of state counterparts, according to a report released this Fall.
Plans have experienced significant funding shortfalls since 1999 due in part to lower than expected investment earnings and expected future decreases in investment earnings.
Senator Sean Bennett is on the Joint Committee on Pension Systems Review. The committee, formed this year, is tasked with tackling the problem. He says the state is somewhere between $20 and $40 billion short on pensions. Early reports had the debt at $21 billion. Richard Eckstrom, South Carolina’s Comptroller General, says it’s likely a debt between $30 and $35 billion.
SC Treasurer Curtis Loftis told the Authority they have one chance to block a rate increase, and there is no promise legislators will be able to fix the problem this coming session. He told the Authority they would be back at the table next year looking at another rate increase and even worse debt.By the numbers:
- The rates for SCRS will increase to 9.16 percent for employees and 12.06 percent for employers.
- The rates for PORS would increase to 9.74 percent for employees and 14.74 percent for employers.
- The State ORP employee rate will increase to 9.16 percent and the employer rate will increase to 7.06 percent.
- State ORP employers also remit an additional 5 percent directly to a member’s account for a total contribution of 12.06 percent.