By Paul Gable
The S.C. Budget and Control Board heard from S.C. Comptroller General Richard Eckstrom Wednesday that S.C. public pension plans are “dying on the vine” due to declining funding levels.
A combination of factors including investment returns, contribution levels and benefit-allocation amounts all contribute to what amounts to a train wreck waiting to happen. Eckstrom said unfunded liabilities of the various pension funds are increasing.
According to the latest numbers we have seen, the state’s pension fund assets are approximately $26 billion with unfunded future liabilities of approximately $17 billion. According to Eckstrom, the unfunded liability grew by approximately $1.5 billion in the past year.
Who is on the hook for making up the shortfall? That’s easy, the state’s taxpayers.
Eckstrom said the different types of pension funds (there are five) for different employee groups with different benefits also contribute to the problem.
For example, judges and solicitors with 28 years of service can retire at 90 percent of “current compensation”, according to state law. When current compensation goes up for active judges and solicitors, retired judges and solicitors also get the increase.
No wonder so many lawyers run for state office with a view to being appointed to a judgeship and there is such lobbying when it comes time for the General Assembly to vote for judge appointments.
By contrast, the average state employee retiring after 28 years receives less than 60 percent of the average of their top five years’ salary and wage increases do not apply to retirees.
As a consequence of the shortfall, employee contributions in some of the funds, no not the judges and solicitors, will be required to increase their amount of contribution and the state will increase contributions, out of state tax revenues, for virtually all of the funds.
In a state where many employees in the private sector have no retirement plan at all, you have to wonder why the voters put up with this.