South Carolina State Workers Challenge Pension Changes

The workers’ lawsuit alleges that state officials broke their contract with workers in the Teacher and Employee Retention Incentive (TERI) program that allows employees to return to work after retirement and earn both pension benefits and a salary without contributing to the retirement system, according to an Associated Press report. Under the new law, workers will be required to chip in 6.25% of their paycheck starting Friday ( SC Senate Approves Pension Overhaul ).

The suit, which asks a judge to certify it as a class action, demands that the court temporarily stop the state from deducting the money from their paychecks. The employees claim that requiring them to pay into the system but denying the credit for extra service, which would increase their pension, is like a sudden pay cut.

“It’s like the government is raising money by calling it something other than a tax,” said Cam Lewis, an attorney for the workers, according to the news report. “It’s taking their (TERI workers) money.”

But Bobby Stepp, the state’s attorney in the lawsuit, said the state must have some leeway to make its retirement system financially sound for its 89,000 current and 181,000 future retirees. “I certainly understand the point of view of the TERI employees, but the general issue is broader than that,” Stepp said, according to the report. “It involves the actuarial stability of the entire retirement system.”

The change will bring in an extra $45 million to support the retirement system.