Police Officers Join SC Retirement System Lawsuit

February 22, 2006 (PLANSPONSOR.com) - South Carolina police officers and firefighters have joined in a lawsuit challenging a new state law requiring payroll retirement contributions from state retirees who return to work under a special incentive program.

The Myrtle Beach Sun News reports that Circuit Judge John Breeden signed an order this month in Georgetown County giving class-action status to about 1,600 police and firefighters covered by the Police Officers Retirement System, a subset of the SC Retirement System that originally filed the suit. They will join about 22,000 other state employees who are part of the class-action suit filed in June of last year.

The General Assembly passed the law last year requiring Teacher and Employee Retirement Incentive (TERI) participants to contribute 6.25% in payroll deductions toward the state’s retirement program. The TERI program, started in 2000, let state employees retire after 25 years and then return to work for up to five years, during which time the workers would not have to contribute to the retirement system, the news report said. Pension benefits for TERI participants are set aside until the workers finally retire.

The new deductions began in July and are being held in an escrow account which pays 4% annual interest, pending a SC Supreme Court ruling on the case. The high court heard arguments in the case in December (See South Carolina High Court Hears TERI Appeal).

In his order, Breeden said police and firefighters deserve the same status as other state employees and should be allowed to piggyback on their lawsuit.

The state law was intended to generate more money for annual cost-of-living increases for retirees and address financial concerns about the pension system.State officials have said overturning the legislation requiring deductions would threaten the retirement system’s solvency.