As South Carolina lawmakers grapple with how to fix the state’s ailing pension system, the cost of having roughly $20 billion in unfunded liabilities is ticking up.
That cost is rising by about $150,000 an hour, said state Rep. Jeff Bradley, R-Beaufort, a member of the joint House-Senate panel tasked with addressing the underfunded pension system.
That sum is interest on the money owed to pay for the benefits promised to state retirees. That debt is increasing as pension investments fail to earn as much — 7.5 percent — as assumed by state law.
To address that gap, lawmakers could increase the amount of taxpayer money that government employers — state and local governments plus school districts — pay into the pension system. State workers also could pay more from their paychecks for their pensions.
Retirees now get an annual 1 percent cost-of-living increase, capped at $500, to their pensions. That benefit accounts for $3.3 billion of the pension debt, said Public Employee Benefit Authority director Peggy Boykin.
However, cutting that benefit is not an option, said state Rep. Gilda Cobb-Hunter, D-Orangeburg. “We’ve already booked that expense.”
Cobb-Hunter also said it would be unfair to require public-sector employers to pay more of their workers’ retirement costs unless cities and counties get more state money.
“I’m not interested in passing on those costs” through an unfunded mandate, she said.
However, Rep. Bradley said paying off the pension debt should include charging employers and workers more for their pensions as well as contributing some money from the state.
“That fine balance is where the political act is all going to come from,” Bradley said. “That’s the hard part.”
The state pension system covers more than 180,000 state and local government employees, including teachers. Another 134,634 retirees also are part of the system.