State and local government employees would pay more for their benefits under a state House proposal to revamp the ailing public retirement system, according to the paper. This plan – written by a House subcommittee – stands in sharp contrast to a state Senate bill that would make several changes in how state retirementfunds are invested, but would not boost the cost for employees. The Senate passed its bill in early April (See SC Senate Approves Pension Overhaul ).
Under the House plan, workers would be guaranteed at least a 1% annual cost-of-living increase. However, if inflation does not decrease considerably from its 2%-3% annual increase as of late, this will do little to stop the damage for workers. The Senate’s version would not guarantee such increases.
The House increase doesn’t come for free, however. To pay for that guarantee, state employees’ will have to contribute 6.5% to the state plan, up from the 6% they now pay.
State and local governments also would have to pony up an additional 1 %, however. House members who came up with the plan claim that it is a more direct approach than the Senate version, according to the paper.
“The Senate’s bill didn’t do anything about the (cost-of-living adjustments), and we felt that was the most important thing,” said Representative. Herb Kirsh, according to the newspaper.
The House plan will likely leave some of the pension plan’s assets under the control of the state treasurer’s office and some controlled by a separate investment panel. In contrast, t he Senate bill will create a new investment board to manage thesystem’s $25 billion in assets, and also encourage a more aggressiveinvestment strategy.
Both bills would make TERI – a post-retirement work program – much less attractive to workers by lifting an existing earnings cap on retired employees who come back to work under a separate program. The House bill, however, would come closer to ending the program entirely.