According to the Columbia State newspaper, the independent firm has said that more needs to be done to deal with the state’s $4.2 billion unfunded liability.
Governor Mark Sanford has proposed a plan to tweak the state’s pension system by scrapping the TERI system, a program that allows state employees to retire, defer their benefits, and continue working for up to five years. Sanfordalso said that he would back any proposal that would alter the state’s benefits plan from a defined benefit to a defined contribution system, a move similar to that proposed by California Governor Arnold Schwarzenegger last week (See Schwarzenegger Supports CalPERS Overhaul Efforts ).
State employees already have the option of switching to a defined contribution plan, according to the paper, but few choose to adopt such a change.
State legislators expressed differing opinions on Sanford’s proposal. State Senator Greg Ryberg, a Republican, said that the benefits packages offered to state employees might be too sweet to sustain. “It’s the best deal in or out of state government,” he told the State. “The problem is, these programs have a huge economic impact that’s put on the back of the system. We can’t afford it.”
Ryberg plans to introduce a bill this week that is similar to Sanford’s proposal and would eliminate TERI and return to a 30-year retirement instead of the current 28 years. He also wants to apply the changes to all employees, not just future ones, the paper said. Sanford and others admit that this would lower the debt, but would open the state up to lawsuits from disgruntled employees.
Senator Hugh Leatherman, also a Republican, disagreed somewhat, telling the paper that the pension system overall was good, but that the state needed to revisit how the money is invested. He claimed that TERI was not the biggest problem, asserting that he would not “be a party to sticking a Band-Aid on it and saying, ‘There, we fixed it,'” according to the paper. “We need to look at the entire retirement system and see what we need to do,” he added.
South Carolina has a somewhat conservative investment strategy, according to the paper, with a 40-60 stock-to-bond ratio mandate.