By Paul Gable
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.
As Loftis has often said in the past, “The penalty for the State’s mismanagement of money is that you (the taxpayer) must pay higher taxes and employee contributions.”
Rather than listen to Loftis’ criticism of the system and find solutions to the systemic problems that plague the system, legislators would rather remove the SC Treasurer from direct oversight of the system and, instead, throw more tax dollars into a poorly performing model.
This is not yet a done deal. The recommendations must be formed into legislation that must be passed by both the House and Senate and signed by the governor before they become official.
However, you can bet those politicians in Columbia whose main goal is to silence Loftis and pass what looks like a fix, but really isn’t, are greasing the legislative skids.