Well, now, here’s an interesting bill I haven’t heard about (although Kathryn may point out that everyone else knew about it but me):
S 0531 General Bill, By Campsen, Ryberg, Grooms, Bryant, Rose, Campbell, Shoopman, Davis and Bright Similar(H 3568) A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTIONS 9-1-5, 9-8-5, 9-9-5, 9-11-5, AND 9-20-5 SO AS TO CLOSE THE SOUTH CAROLINA RETIREMENT SYSTEM, THE RETIREMENT SYSTEM FOR JUDGES AND SOLICITORS, THE RETIREMENT SYSTEM FOR MEMBERS OF THE GENERAL ASSEMBLY OF THE STATE OF SOUTH CAROLINA, THE SOUTH CAROLINA POLICE OFFICERS RETIREMENT SYSTEM, AND THE STATE OPTIONAL RETIREMENT PROGRAM TO EMPLOYEES HIRED OR OFFICERS TAKING OFFICE AFTER JUNE 30, 2012, AND TO PROVIDE THAT OFFICERS OR EMPLOYEES HIRED OR TAKING OFFICE AFTER JUNE 30, 2012 MUST BE ENROLLED IN THE SOUTH CAROLINA RETIREMENT INVESTMENT PLAN; BY ADDING CHAPTER 22 TO TITLE 9 SO AS TO ESTABLISH THE SOUTH CAROLINA RETIREMENT INVESTMENT PLAN AS A DEFINED CONTRIBUTION PLAN AND PROVIDE FOR ITS ADMINISTRATION AND OPERATIONS; AND TO REPEAL, EFFECTIVE JULY 1, 2017, CHAPTER 22, TITLE 9 RELATING TO THE STATE OPTIONAL RETIREMENT PROGRAM.
02/09/11 Senate Introduced and read first time (Senate Journal-page 7)
02/09/11 Senate Referred to Committee on Finance (Senate Journal-page 7)
The boldfaced parts are my own enhancement. Oh, and here’s the House version:
H 3568 General Bill, By G.M. Smith and Ballentine Similar(S 531) A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTIONS 9-1-5, 9-8-5, 9-9-5, AND 9-20-5 SO AS TO CLOSE THE SOUTH CAROLINA RETIREMENT SYSTEM, THE RETIREMENT SYSTEM FOR JUDGES AND SOLICITORS, THE RETIREMENT SYSTEM FOR MEMBERS OF THE GENERAL ASSEMBLY OF THE STATE OF SOUTH CAROLINA, AND THE STATE OPTIONAL RETIREMENT PROGRAM TO EMPLOYEES HIRED OR OFFICERS TAKING OFFICE AFTER JUNE 30, 2012, AND TO PROVIDE THAT OFFICERS OR EMPLOYEES HIRED OR TAKING OFFICE AFTER JUNE 30, 2012 MUST BE ENROLLED IN THE SOUTH CAROLINA RETIREMENT INVESTMENT PLAN; BY ADDING CHAPTER 22 TO TITLE 9 SO AS TO ESTABLISH THE SOUTH CAROLINA RETIREMENT INVESTMENT PLAN AS A DEFINED CONTRIBUTION PLAN AND PROVIDE FOR ITS ADMINISTRATION AND OPERATIONS; AND TO REPEAL, EFFECTIVE JULY 1, 2017, CHAPTER 22, TITLE 9 RELATING TO THE STATE OPTIONAL RETIREMENT PROGRAM.
02/02/11 House Introduced and read first time (House Journal-page 57)
02/02/11 House Referred to Committee on Ways and Means (House Journal-page 57)
02/08/11 House Member(s) request name added as sponsor: Ballentine
OK, so they were just alike. I just gave you both so you could get the names of the legislators responsible. You’ll note I provided links to each. I live to serve.
And to cause trouble, of course. Hard to imagine anything more likely to stir up one of the largest and most politically alert demographics you’re likely to find, state employees — even though it would not apply to them, but only to new hires.
Of course, there’s one thing that IS politically appealing here: Getting rid of the grossly overgenerous retirement system for legislators. That said, it seems that should be addressed in a separate bill, because the two things should not be mentioned in the same breath: the legislative system is SO much more generous, and offered in return for SO much less service, that the two things are like night and day. The state retirement system is a fiscal challenge. The legislators’ benefit is an outrage (read one of Cindi’s ever-popular columns on the subject, to remind you how outrageous). Changing what retirement looks like for future state employees may or may not be a great idea, or at least something that needs to be done whether its a great idea or not. Eliminating the legislators’ benefit is something that most would think is a great idea on its face.
Here’s how my thoughts went as I read the bill:
- “Close the South Carolina Retirement System…” Whoa! There’s a bombshell.
- … to employees hired or officers taking office after June 30, 2012…” Oh, OK. Still, that’s a huge issue that needs infinitely more discussion than it’s gotten.
- Require new hires to “be enrolled in the South Carolina Retirement Investment Plan.” Huh. Well, I’ve never heard of that. Is it a viable option? How’s it doing? How has it performed? Can we have confidence in it as a viable option to a defined benefit?
- “…establish the south carolina retirement investment plan…” So it doesn’t exist yet? OK, tell me more. Lots more.
And indeed, there are details below, although not quite enough — that is, not enough for a nonfinancial guy like me to tell whether the idea is viable.
What this looks like on its face is just what private employers have been doing for about a quarter-century and more: Moving employees out of pension plans, and into investment plans such as 401ks.
It’s worth talking about. A lot. Let’s start.
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Just another way to widen the gap between the super rich and the rest of us. By moving workers into a 401k type plan we add a middleman – investment brokers. This basically gives a few folks with a vested interest in stock earnings a new source of income to tap into. It’s sort of like what Bush was trying to do to social security with those private savings accounts. Let’s leave the system as is. It works fine and provides a nice retirement income for the hardworking state employees of South Carolina. No need to get into a risky scheme that unlikely to benefit anyone but the rich. And this certainly won’t help the taxpayers.
Not sure I understand all of it– correction: I do not understand all of it, but I do know that professors never use the State Retirement System because it is highly unlikely that they will ever complete 30 years of service: first, they get a late start, (because of graduate school they are pushing 30 or more when they get started), and then they risk not getting tenure or otherwise leaving the state and losing everything. We invest in a 403(b) account– the academic/nonprofit version of a 401(k). I wonder if the new plan is some version of a 401(k)/403(b).
It will get amended to retain the General Assembly Retirement System for our part-time legislators.
I agree with bud.
I think it’s a rotten idea because poor investing by the state and big drops in the stock market can wipe out your retirement fund in a snap. My husband’s 401K has taken some big hits over the years. I sure wouldn’t trust the state of South Carolina to wisely invest on my behalf.
I see your point, Kathryn, but the majority of state employees aren’t professors and don’t make the big salaries. They need something more stable.
I also question what will happen to the accounts of those already in the retirement system (myself included) if this is enacted. The bills state the current system will close. Okay, so how will the existing accounts be managed? Will we still make contributions as we have been, or will we end up with two accounts, the old and the new?
I just don’t have any faith that our state government can do this the right way.
Uh, very few professors make large salaries. Most of my friends who are not business, law or engineering professors do not show up on the “over $50K” list, and these are people 40+ years old.
Also, how many people work at the same employer for 30 years any more, and if so, do we want state employees whose only reason for working w/ the state is that they will get a pension if they stick around long enough?
Banking on not losing your job in state government is no longer such a great bet, either.
When you look at what the people over the years who have been in charge of pension plans have gotten away with (that’s why there’s the Pension Benefit Guaranty Corporation, fwiw), and the costs and statistically poor performance of “managed” funds vs. index funds, I think maybe pensions aren’t nearly the great deal y’all think they are–and 43% of your salary is not a whole lot–your costs don’t go down all that much when you stop working, if you are not paying for child care or high cost commutes.
People get lulled into a false sense of security with pensions!
Not sure where the 43% figure is coming from. Takehome pay is much more than that for a 30 year employee, probably on the order of 60%.
WOW. If I could have taken full retirement from the paper after my 35 years, and my pension had been 60 percent of my salary, I doubt you’d see me working now. (Except for tinkering with the blog, of course. When I felt like it.)
That would have been sweet, indeed.
Of course, letting people take full pension benefits after 30 years, long before they turn 65 (or 70, as it should probably be now), is pretty crazy.
Of course, that’s a home truth that’s likely to stir up state retirees as much as those bills above do. Maybe more.
It’s such a hugely positive step in the right direction that it will have every public sector worker crying foul.
They won’t catch on that it means they don’t have to “do the time” just to protect their pension benefits. And so people might do things like seek a better position; which might cause them to think a little harder about doing a good job at their current position…
Ditching a pension for a 403(b) kind of thing doesn’t have to mean that they’ll see less in retirement. In fact, as has been seen over the past 30 years in big, dinoseaur industries, it just might mean that they will continue to have something. If the status quo remains the same, which State is going to be the first to be crushed by its pension plan?
Sorry, folks. It’s just time to get real. And like I said, the goal shouldn’t be to penalize people, but to create a sustainable program that empowers the employees to manage their own careers.
30 years? A state employee can retire at 28 years. If you are hired on right out of high school you can retire at age 45 or 46. How cool is that. And if your spouse dies before he retires you can draw a lifetime pension based on years of service after they have been in the system for at least 10 years.
You need 30 years to collect a pension. The 43% was in the paper as how much you’d collect. You pay taxes on a pension payout, no?
State workers can retire with a pension with just 28 years of service. Depending a number of factors, such as how much annual leave you’ve accrued, when the last time you received a big raise, etc. the gross payout is in the vicinity of 51% of your gross salary after the 28 years.
You will pay state and federal income tax but you no longer have to pay SS on retirement or the 6% payment into the retirement system. Someone making 50k at the end of 28 years with 45 days of annual leave, 90 days of sick and no significant raises within the past 3 years and who elects plan A (no survivor benefit) can easily TAKE HOME 60% of what they did while working.
Folks who work until they are 62 may actually be in a position to take home less money if they continue to work if they have at least 35 years of service time.
Then there’s TERI. An employee can work 28 years then TERI for 5. He will earn his regular salary plus have the retirement money (that may be where the 43% comes in since he won’t have leave included) paid into a special account. No interest but a pretty good way to save some big bucks. And that retirement money can increase due to COLAs.
After working 33 years an employee making 50k may acrue 125K + in retirement, then continue drawing retirement at a somewhat higher rate since he will now have an adjustment for his sick and annual leave.
This is a pretty good benefit for state workers. I can’t imagine why they would risk this on some pie in the sky scheme that conforms to the GOP mantra of capitalism at any cost.
I don’t know where they would find people to do low paying front line jobs in law enforcement, corrections, DSS, DHHS, DDSN and similar jobs.
The likes of Ryberg and Grooms don’t have a concept of how little these people make.
Legislators, and other part timers, like shrinks at local Mental Health Clinics, shouldn’t get benefits at all; DMH used to do that, don’t know if they still do. The judges don’t deserve what they get, either.
People need to be aware that Newt Gingrich and Jeb Bush are writing op-eds encouraging the new Republican House to make laws to allow states and local governments to go bankrupt and get out from under their pension obligations, hurting their bond holders, too. I guess they think union members are the main ones who will get hit. That makes it all worth while.
It boggles my mind to think anyone still thinks the stock market is where they should have retirement funds. Haven’t we learned anything?
You can retire from state service with 28 years service, at any age, and get full benefits. At 28 years you would get 51% of the annual average of your three highest-paid years. For 3o years service you would get 55% of that same annual average.
Here’s a link to a table summarizing retirement pay on the state retirement systems web site:
http://www.retirement.sc.gov/scrs/active/serviceretirement/general.htm#afcpercentage
If “the paper” (I’m assuming The State) claimed 30 years service with a 43% payout, then they were flat-out wrong.
Just some points of clarification, retirement in the State system after 30 years of service is 54.6 percent of pay (1.82 x 30). One can retirement after 28 years which gives you 50.96 percent of your pay. This is for State employees, much more lucrative for judges and legislators as mentioned above. See: http://www.retirement.sc.gov
Also, you can retire at 25 years if you are 55 years of age with reduced benefits and if you vest then you can leave you money in retirement and receive benefits at 65. The money left in retirement continues to pay 4 percent interest over that time or it can be withdrawn and rolled to IRA or 401(k) so no money is lost Katherine.
I agree with Brad, this could be solved simply by getting rid of these better plans and roll them into one standard pension plan. Hopefully, they don’t throw out the baby with the bathwater! Pensions plans are much better for employees than defined plans. A lot of our plan’s problem has been caused by the Legislature creating underfunded plans for select groups like judges, legislators and they created a National Guard plan that forced Retirement to pick up these members retroactively without adding any monies to cover these new members.
ARRRGGGHHHHH!
I had almost finished typing a LONG response filled with pithy observations, elucidating elaborations and delightful diversions — probably at least 1,000 words — when my laptop decided to shut down to install “Windows Updates,” and then, just for fun, ran “CHKDSK.”
So… here’s the short version of what I said…
Yes, I believe you’re right — it’s 28 years now (although for reasons I went into in the LONG version, I had been thinking as I typed it that that was just teachers). I thought it was ridiculous when it was 30 years, I’ve thought it was even more ridiculous since it changed to 28 years.
No way anyone in any usual job should get full pension that soon. Nothing against state workers; I want them to get full benefits — but at 65 (or later, nowadays), just like everybody else.
Yep, agreed. Just another example of the nuts (‘er legislators) not doing their homework, I believe the move to 28 years kept the 50 percent payout which has caused some of the underfunded liability problems but legislators now want to blame State employees for taking something that was given to them.
It seems this could be fixed fairly easily by moving to best 5 years of pay instead of 3, move back to 30 years and increase contributions slightly, eliminate service purchases, get rid of the lucrative plans, and maybe a few others. This would still let people retire pre-65 and everything be funded. Certainly moving it out to 65 would fund it sufficiently to maintain a defined pension instead of going to defined contribution. After all the average payout in the State plan is $18,000 per year so it’s not a bunch of retired employees getting rich on retirement but legislators certainly are getting rich compared to what they are paying in.
I do think this is “a bombshell”, as Brad phrased it. So far I am not finding anything about this in The State. Why not? This has the potential to adversely affect thousands of current and future retirees. If the system is closed how will they continue to pay promised benefits to people already in the system?
Although the state retirement plan is a good benefit for employees, it is offset by low salaries paid to most state employees. I know people who work for the state and have 28 years (or more) but can’t afford to retire. Many work at jobs making less than they could elsewhere because of the benefits. To yank the rug out from under them would hardly seem fair.
On another point, why shouldn’t someone be able to retire after 30 years? That’s a long time to put in at any employer. And why should people be forced to work until 65 or even 70? Many would find it difficult to work that long. Should police and firefighters work that long? Plumbers and other construction workers? How about the military – should someone remain in the service until they’re 65 or older before they can draw full retirement?
I believe this is just part of the continued attack on the middle class, as is so-called social security “reform”. The Republicans and corporate Democrats won’t be happy until almost all the money is in the hands of the super-rich and the rest of us are relegated to being serfs.
Just my two cents.
All of this just ignores that people are rational beings. They take state and municipal jobs for all sorts of reasons that make sense to them and their families. Some of those are job security, early retirement and benefits. But why do we have to go so far out of our way to make life comfortable and stable and knowable for all of these people? Before anyone takes offense, that is not meant disparagingly of any individual. It’s really not in anyone’s best interests, in a holistic sense.
I’m not suggesting radically reducing municipal workers benefits. However, when you look at the sum total package that municipal workers receive, versus those in the open market, position for position one would find the municipal workers doing relatively better overall until one reaches the higher echelons – when it becomes a situation either of one’s choice to serve, or of one’s competence versus one’s private sector peers. It’s very misleading of the facts for people to say that municipal – especially State – workers are underpaid.
I think the first place to start is to simply to eliminate every position occupied by a TERI program (retired) employee. If it’s only necessary to have a placeholder in that position, then it’s not really something we need to fund for the long-term. Again no offense to the individual skills, talents, and experience of the individuals in these positions, but this is really just a boondoggle to have this program in place. So whack it all. Eliminate all these surplus positions across the board.
I think this is a lot like the bruhaha over social security, much ado about very little. State employees contribute a significant portion of their wages to the system. Plus most state employees don’t make huge salaries. Nor do they have nice cushy jobs like some couch potato journalists who only risk carpal-tunnel. Take your average maintenance worker. These guys work long hours in the hot sun during the summer, freezing cold at night during the winter and rain all year for around $15-20k a year. If they’re lucky they can stay healthy enough to draw a pension after 28 years. Many of these guys will be lucky to celebrate their 65 birthday let alone retire for 20+ years afterwards.
Before we go crazy trying to take away a modest benefit for a few very hard working folks let’s look at the income side of things. After all some rich guy who sat on his behind and is rich only because of an inheritance can certainly give up a yacht or two to help with the retirement system and social security.
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Whiskey Tango Foxtrot?
I think the above comment is a spiced pork product?
After struggling to make ends meet on a $18,000.00 (current) annual salary for 18 years. Working hard to ensure that students are feed in accordance with all governing guidelines. Having sacrificed a mandatory percentage of that annual salary; how is it fair that the rules can change on a food service worker now that they are age 43.