SC Seeks High Court Review of Public Pension Lawsuits

August 23, 2005 ( - The state of South Carolina wants the state's Supreme Court to review two cases for which it says prior rulings imply state pension plans cannot be changed by the General Assembly.

 In the first case, four employees sued the state because of changes to the Teacher and Employee Retention Incentive (TERI) program, the Associated Press reports.   The program allowed state employees who retire after 28 years to return to work and earn benefits and salary for up to five years without making contributions to the retirement system.

The state made a law change that required the employees to make contributions to the system when they returned to work, saying cost of living adjustments for all state retirees would suffer without contributions from TERI participants.   According to the AP, a circuit court ordered the state not to deduct pension contributions from the four employees’ checks and the state appealed the decision.

The second case concerns a 1989 law repealing the exemption of state retirement benefits and the first $3,000 of federal retirement benefits from state income tax.   The General Assembly increased state benefits by seven percent to make up for the tax, the AP reports.

State retirees sued saying the state breached its contract with them and violated their constitutional rights.

The state’s pension board says, if the state loses the second case, it could cost at least $450 million in refunds of previously paid taxes and about $50 million annually in lost revenue.   An attorney representing the retirees said these estimates are just scare tactics.

Julie Horton, a state spokeswoman for the South Carolina Chamber of Commerce, told the AP that the group will file an amicus brief on behalf of the state.   She said the General Assembly needs to have the power to make necessary changes to plans for the state’s fiscal health.