Dozens Voice Concerns Over SC State Retirement
Mandy Gaither, WYFF News 4 Reporter
CLEMSON, S.C. -- Dozens showed up to the first of four public hearings with South Carolina state lawmakers to discuss the problems facing state retirement systems.
A state official said there is a $17 billion gap between the money the state has right now for retirement and what it needs to pay future and current retirees.
A special subcommittee of lawmakers was created to review each retirement system, study both the short- and long-term issues of each system and, eventually, create a system that "insures balance for all interested parties."
Clemson University employee Robbie Nicholson is currently in the Teacher and Employee Retention Incentive program and will retire in about 15 months.
"Even though the salaries may not have increased, we may not have had cost of living raises, the merit raises went away, the longevity raises are no longer, we still had that promise of a state retirement system," said Nicholson. "It is a concern because we don't know what changes are coming."
Nicholson said another concern is attracting future state employees, who may lose interest if the state retirement systems drastically change.
"It's certainly not the salary (that makes people stick around), and I think most state employees can attest to that," said Nicholson.
State Senator Thomas Alexander-R Oconee and Pickens counties, is one of the lawmakers on the special retirement subcommittee.
"This is an issue that our credit rating agencies look at as to how we are managing the retirement system as part of our AAA credit rating, so there are consequences. Plus, I think we need to take care of the responsibilities that we've provided to the citizens, and at the same time protect the interests of the taxpayers," said Alexander. "Ultimately, by the end of the day, I think you'll see us finish the work (on the retirement systems) by the end of the legislative session this next year."
Future public hearings will be held in West Columbia, Aiken and Florence.
Copyright 2011 by WYFF4.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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Inside Clemson:
Changes in the Retirement System Could Affect You
By Julia Lusk,
SCSEA Clemson Chapter President
Date Published: September 27, 2011
In early October you will get your first chance for input on proposed changes to the SC State Retirement System (SCRS). Whether you are a new Clemson employee, a longtime employee or even a retiree, these changes could affect you dramatically. The changes would apply to both staff and faculty accounts in the retirement system.
The proposed changes include:
• a possible extension of the full retirement threshold to 30 years’ service (up from the current 28 years);
• an increase in the retirement withholding amount from active employees’ paychecks;
• a decrease in the annual automatic cost-of-living adjustment to retirees’ monthly annuity checks; and/or
• a possible conversion of the fundamental concept that undergirds the entire retirement system, potentially ending the guaranteed current lifetime benefit the SCRS would offer new entrants.
Proponents of these changes would point to an anticipated multi-billion dollar shortfall in SCRS reserves 30 years from now, growing out of a variety of factors including longer lifespans of retirees, unfunded new benefits and system investment losses during the Great Recession (mostly in 2009). Opponents would say that the retirement system was declared ‘fiscally sound’ by auditors as recently as last spring and that the losses seen in 2009 have largely been offset since then, despite lingering negative economic conditions, and with every reason to believe the positive trend will continue (resolving other funding concerns). The difference largely comes down to how two different groups with different agendas interpret the same sets of data trends and how they project those trends will play out over the decades to come.
There are, quite candidly, other non-monetary issues at play in this debate. Most of them come down to the fundamental value of state employees as a group and whether they deserve a continuation of the level of retirement and health benefits they have come to expect at a time when unemployment remains high and tax revenues are dwindling at the local, state and national level. There are also issues surrounding whether SCRS should continue as an independent entity in state government or be absorbed into a new agency that would be under the direct control of the governor.
The South Carolina State Employees Association, the State Retirees Association, the South Carolina Education Association and other groups have formally taken positions largely opposing the changes in SCRS. Their contention is that the proposed changes are unwarranted, unfair and that making them would cripple the state’s ability to attract and retain the best workers in state employment. The governor and other state officials contend that the changes must be made to ensure that taxpayers don’t get handed a bill to cover an SCRS shortfall sometime in the future.
I would recommend that you explore the issues, educate yourself and make your feelings known at a public hearing by the legislative committees examining the issues.
$17 billion short, public voices concern on retirement funds
Posted: Oct 06, 2011 7:30 AM EDT Updated: Oct 06, 2011 7:44 AM EDT
By Casey Vaughn, Web Producer
CLEMSON, SC (FOX Carolina) -
Members of the state Senate's Finance Committee met at Clemson University's Madren Center Wednesday night to discuss the future of the state's retirement program.
State retirees want current taxpayers and state employees to help fix the retirement system, but some said there is not enough money to keep the program afloat.
It will take $42 billion to pay 450,000 current and retired employees but there is only $25 billion available.
"There's a lot of small changes in the system that would make it work better and last indefinitely and support the people that depend on this as their main source of retirement income," said Dr. Holley Ulbrich with the Strom Thurmond Institute.
Dozens attended Wednesday's meeting voice their concerns on the issue.
"I don't think it is in the crisis that the legislators believe," said Julia Luck, a state employee. "I think they are using some scare tactics that are unwarranted. I believe the system is financially solid."
House and Senate lawmakers have met for several weeks to discuss the short-fall and will continue to have town hall meetings throughout October.
Session begins again in January and lawmakers hope to have a plan in place by then.
Copyright 2011 FOX Carolina. All rights reserved.
Workers tout merits of state retirement system
Many say plans lure top prospects
9:34 AM, Oct. 6, 2011
Anna Simon | Clemson bureau
CLEMSON — University workers, school teachers, law enforcement officers, retirees from various state agencies and private citizens came to Clemson on Wednesday to air views on changes to the state retirement system.
About 150 people attended a public hearing of the state Senate Finance Committee’s Special Subcommittee on Retirement. Many who spoke said working for the state doesn’t pay much, but the retirement program is an important benefit that keeps qualified people in public jobs.
Without that benefit, “We will lose great state workers to the private industry,” said Julia Lusk, president of Clemson University’s chapter of the state Employees Association and an undergraduate academic adviser.
A review of the system is needed, Lusk said.
However, the unfunded liability problem is “based on what would happen” if all 232,000 current state employees retired at once, which “is not going to happen,” Lusk said.
Lusk and Holley Ulbrich, a senior scholar at Clemson’s Strom Thurmond Institute, urged lawmakers to keep the defined benefits system that is like a traditional pension plan rather than shifting to a defined contribution plan.
That shift would be one more “denigration” for state workers, said Dave Crockett, who recently retired after 29 years with the state. He said it would send the message that state workers “should be happy to have jobs” and not expect the benefits they have had. “I haven’t quit working yet, I just quit working for the state,” said Crockett, who is 58.
As state employees, Brett Dalton, chief financial officer of Clemson University, said he and his wife, a school teacher, worry about the future of the state retirement system, and Dalton said he also worries about it as a taxpayer and as an employer at a time when universities compete globally for top faculty and staff.
State retirement was a selling point for hiring people earning more than they would make in the schools, said Ken Westbury, a retired public school superintendent.
A good retirement system should attract and retain good employees, protect taxpayers from loss of general revenue and treat all employees equally, Ulbrich said.
Ulbrich offered some options for change, such as changing vesting from five years to 10, basing eligibility on age as well as years of service and increasing eligibility for full benefits back to 30 years.
“We may need changes to the current system so we can retain those things of the greatest value to us,” said Wayne Bell, who retired from the state Department of Social Services.
Workers and retirees “want a good stable retirement system” that provides “a stable source of income and security.”
Cost-of-living adjustments are important to retirees, Bell said, but could be limited to retirees after age 55 or 57, an option that is being considered.
“If you made commitments to those people, be honest and keep those commitments,” said Harry Kebler, a private citizen who has never worked for the state. “It’s fine to make changes but don’t promise someone something and then say oops, we can’t keep our commitment.”
The hearing, at Clemson University’s Madren Center, was the first of four to be held around the state.
The state’s retirement system faces challenges to its integrity, solvency and soundness, said State Sen. Thomas Alexander, R-Walhalla, co-chair of the panel.
Those challenges need to be resolved “in a way that is fair to all involved,” Alexander said.
The Senate panel and a House committee are studying the state’s retirement system to determine what changes should be made to address an unfunded liability.
That unfunded liability — the difference between what the system has on hand and what would be needed if everyone in the system retired today — was more than $19 billion as of 2010, according to information presented at the hearing.
Earlier this week, the House committee heard suggestions from state retirees ranging from increased contributions by workers and agencies to requiring that retirees reach a certain age for cost-of-living increases.
Other changes under consideration include increasing the required length of service from 28 to 30 years for future workers, raising contribution rates, lowering the assumed investment rate of return and cutting automatic annual cost-of-living payments.
Also under examination is a recently criticized pension fund for lawmakers that allows them to receive two to three times their legislative salary in retirement.
