Tag: SC Retirement System Investment Commission

SC Joint Pension Committee Fails Review Test

The South Carolina Joint Committee on Pension Review failed miserably in its task to recommend solutions to the state’s failing public employee retirement system.

Made up of a mixture of Democrats and Republicans from the SC House and Senate, the committee’s basic recommendations were to throw more money at a failing model and to silence the one statewide elected official who has been calling for changes in the system over the past six years.

The state’s public employee retirement fund has been one of the worst, if not the worst, performing public pension funds in the country. It is known for two things – extremely low rates of return on investment combined with extremely high fees paid to the institutions doing the investing.

The public retirement system is currently plagued with an estimated $25 billion shortfall on future liabilities.

The committee’s solution to closing the shortfall is to throw more money into the pot. Employee contributions will rise slightly from the current 8.66% of earnings to a cap of 9% of salary.

However, the employer contributions, those contributions paid by tax dollars from public agencies participating in the system, will rise from the current 11.56% of earnings to 13.56% beginning next fiscal year and rising each year until it reaches 18.56% in 2023. That is a 60.5% increase in tax dollars over the next six years.

As egregious as that rise of public spending is, even worse is the recommendation to remove SC Treasurer Curtis Loftis as Custodian of the pension funds and as a member of the SC Retirement System Investment Commission.

Loftis is the only public official who has routinely criticized the mismanagement of the retirement system by the Public Employee Benefit Authority and the SCRSIC as well as the high salaries and bonuses paid to SCRSIC staffers and their often cozy relationship with risky hedge fund investment managers.

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Attorney General’s Opinion Agrees With Treasurer Curtis Loftis

Says State Pension Fund Accounting Methods Illegal and Unconstitutional

The following is a press release from Treasurer Curtis Loftis:

Columbia, SC – State Treasurer Curtis Loftis has been saying for years the accounting system used to calculate the state pension system’s unfunded liability is reckless, unsound and deceives the public.

For years, his concerns have been ignored. Now the Attorney General’s Office has weighed in with an official opinion, requested by Loftis, concluding that the accounting system is both illegal and unconstitutional. The 13 page opinion is attached.

Signed by Solicitor General Bob Cook of the S.C. Attorney General’s Office, the opinion says the “open amortization” method used by the S.C. Public Benefits Authority violates constitutional requirements for the retirement system to operate on a “sound actuarial basis.”

Loftis says the unfunded liabilities built up by the State pension fund are now in the range of $24-40 billion dollars.

“It’s impossible to give a more precise estimate,” Loftis said, “because the funds have been so grossly mismanaged.”

Loftis urged the S.C. General Assembly to compel the Public Employee Benefit Authority to comply with state law immediately.

“I hope this independent legal opinion provided by our Attorney General’s Office will show once for all that our pension fund management system is a sham and a major scandal that threatens to bury our State in debt,” Loftis said.

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South Carolina’s Public Pension Problems

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%).

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Curtis M. Loftis Jr., South Carolina’s treasurer

Fixing the SC Public Retirement System

It appears the SC General Assembly is finally realizing major work must be done to save the SC public retirement system.

This realization comes in the aftermath of a SC Legislative Audit Council report on the SC Retirement System Investment Commission (SCRSIC). “The LAC’s report reveals that our retirement and pension system’s longevity is in jeopardy and in need of immediate effective adjustments,” said SC House Speaker Jay Lucas.

What is bothersome is Lucas’ next quote attempting to take credit for discovering the deficiencies within the system: “Without the initiation of this report, we might not know the truly delicate state of South Carolina’s pension system. Although its findings reveal significant flaws and deficiencies, it gives the General Assembly a starting point to offer assistance to the RSIC by helping them institute corrective measures that will put South Carolina’s pension plan on a path to solvency,” Lucas said.

The LAC report called the retirement system “significantly underfunded” and that “it underreported risk” of its investments. It called for improvement in controlling conflicts of interest and pointed out the high fees paid and the low rate of return earned on its investments.

These are exactly the same criticisms SC Treasurer Curtis Loftis has leveled at the SCRSIC since taking office in 2011.

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Curtis M. Loftis Jr., South Carolina’s treasurer

The Tough Fight of Curtis Loftis

Despite continuing efforts to embarrass and silence him, SC Treasurer Curtis Loftis continues to criticize the SCRSIC for poor performance.

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.

Currently, he is facing an Ethics Commission hearing alleging Loftis used his influence as a state constitutional officer to include a business associate and friend as a lawyer in a lawsuit against the Bank of New York Mellon.

I predict these allegations will be found just as baseless.

The good ole boys and their confederates just can’t stand a politician who looks out for the public good first.

And Loftis is not criticizing without reason. The SC retirement system is consistently among the bottom few performers of public pension funds in the nation despite paying hundreds of millions of taxpayer dollars in fees and giving the underperforming staffers at the SCRSIC generous annual bonuses with more taxpayer dollars.

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Curtis Loftis Visits “Big Talk”

S.C. Treasurer Curtis Loftis made an appearance at yesterday’s taping of the “Big Talk” television show.

In the area to address several Republican groups, Loftis agreed to be a special guest on “Big Talk” where he spoke of his conservative approach to government and duties as state treasurer.

Loftis said government should be simple, open and accountable to the citizens, but it is often the bureaucracies surrounding government that make it anything but.

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Budgets - Cuts, Spending and You

More on SC Public Pension Fund

It seems the SC Public Pension Fund can’t help but make news. Unfortunately, most of it is not good.

In a recent article by asset international’s Chief Investment Officer magazine, the New York City and SC public pension funds were highlighted.

Both New York City and South Carolina spent approximately $500 million in fees last year and both are drawing considerable criticism for expending such amounts for public pension fund management.

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Senate Panel Investigates Curtis Loftis Pension Complaints

A panel of four senators began hearings last week on the complaints of SC Treasurer Curtis Loftis about the SC Retirement System Investment Commission.

Panel co-chairman Sen. Joel Lourie said he hopes the panel can settle the complaints of the treasurer about what Loftis calls corruption and wasteful spending at the SCRSIC.

Since taking office and becoming a statutory member of the SCRSIC, Loftis has complained about the high fees paid by the commission, the low investment results despite these fees and the perks enjoyed by employees as well as the cloak of secrecy surrounding the decisions the employees make.

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More Attacks on Curtis Loftis

S.C. Treasurer Curtis Loftis was subjected to another attack by the good ole boys at the S.C. Retirement System Investment Commission last week when staffer and former state senator Greg Ryberg went on a 20 minute rant against him during a commission meeting last week.

SCRSIC chairman Reynolds Williams would not allow Loftis to respond to Ryberg’s mouthing off, which seems to be a new tactic to attempt to wear Loftis down.

Loftis is the only member of the commission who questions the expenses and results of the SCRSIC, so he is the only member who is truly representing the citizens of South Carolina.

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Curtis Loftis Wins Battle for Public Fund Accountability

An agreement between S.C. Treasurer Curtis Loftis and the S.C. Retirement System Investment Commission (SCRSIC) is expected to be finalized tomorrow allowing four members of Loftis’ staff greater access to supporting investment documents of the state’s public pension fund.

Loftis has already signed the agreement and the SCRSIC board, on which Loftis serves, is expected to vote its approval tomorrow.

Since taking office nearly three years ago, Loftis sought to have members of his staff in the Treasurer’s Office get greater access to SCRSIC documents in order to help him (Loftis) conduct proper due diligence on investment decisions by the commission.

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