By Paul Gable
Six years after SC Treasurer Curtis Loftis began complaining about the poor performance of public pension investments under the SC Retirement Systems Investment Commission, legislators in Columbia have finally heard the message.
Fixing a seriously underfunded pension system has become a priority for this legislative year, The problem is you don’t fix an approximately $25 billion shortfall overnight.
When Loftis assumed the office of SC Treasurer, he became a statutory member of the investment commission. As a statutory member of the South Carolina Retirement System Investment Commission, Loftis criticized the high fees, low performance and lack of transparency associated with South Carolina’s public pension funds.
Almost immediately, the ‘good ole boy’ system in Columbia struck back. Loftis was subjected to allegations in 2011 that he and Mallory Factor were partners in what was called a “pay to play” scheme involving state retirement funds.
Despite the best efforts of members of the SC Retirement System Investment Commission, Gov. Nikki Haley, then state senator Greg Ryberg and others, Loftis was cleared of all allegations by SLED and the SC Attorney General’s office.
A couple of years later, Loftis was censured by the same SCRSIC he serves on for “false, deceitful and misleading rhetoric.”
At the time, Loftis said the commission members didn’t like him looking under rocks and asking questions about investments made by commission staff.
Things changed last spring when the CEO of the investment commission, Michael Hitchcock, told members of a Senate committee that the returns of the state pension fund have “underperformed” in recent years. He said the approximately $16 billion shortfall in the pension fund accounts has been aggravated in recent years by the gap between the assumed rate of return set by lawmakers (7.5%) and the actual rate of return (1.6%).
According to Hitchcock, the contributions from public employees to the fund amount to approximately $2 billion per year. The payout to retired employees is approximately $3 billion per year. The state pension fund must earn $1 billion per year, an approximate 4% annual return, to just break even.
Now legislators in Columbia are wringing their hands about what to do. Employee and employer contributions to the pension system have been increased this fiscal year, but that isn’t even a band aid.
We’ll give Loftis the final word on this from a Facebook post he made last spring:
“For 5 years I sounded the alarm on this issue and have gotten the hell beaten out of me by the very people responsible for the multi-billion dollar losses. Now that EVERYONE agrees the system is in crisis it seems that those Investment Commissioners responsible will not pay a price for their awful performance, nor will their protectors like State Senators Kevin Bryant, Shane Martin, Shane Massey and Hugh Leatherman. They fought me every step of the way, allowed billions in losses to pile up on the backs of the people of SC, and are continuing to do so to this very day. They were wrong at virtually every turn & now those same people get to decide how to “fix the problem!” Curtis Loftis
Of course, being right doesn’t solve the problem for Loftis or the people of South Carolina. But, there is a lesson to be learned here.
Loftis was elected to the office of Treasurer by the people of South Carolina. When he took the duties of this office seriously and attempted to bring to light a problem that needed fixing, the established government structure in Columbia fought him and tried to smear him rather than listening and attempting to find a solution to the problem six years ago.