A Hilton Head Island voter recently asked me what issues I have a particular interest in moving forward in the upcoming legislative session. My list included: Pension reform and improvement; changing the office of the state superintendent of education from an elected to an appointed position, and pursuing more intense streamlining of regulations in the business sector.
Pension reform has been near the top of my list from the first year I began as your state legislator in 2014. Back then, I discovered that few in the state house were even thinking about the perilous condition of the South Carolina retirement system.
However, because of my own professional background as an investment consultant, I quickly realized significant remedial initiatives needed to be taken sooner than later.
Quite frankly, the South Carolina retirement system is a mess. There are five subsets that make up the South Carolina retirement system covering 15% of all workers in our state. At present, an aggregate of those subsets shows an underfunding of $38 billion.
Retirement plans are made up of basically three things: contributions, earnings on money already in the plan, and payout to beneficiaries. Over the years, our state plan has gotten woefully out of balance as a result of overly generous promises by the general assembly, poor investment choices, and improperly calculated contribution rates that allowed the general assembly to spend money on priorities in South Carolina other than the state retirement system.
Four years ago, I was part of a special committee of House members and senators called upon to review the retirement plan. We quickly realized there were two components that had to be promptly addressed. The first was contributions and the second was the nature of the benefits.
In two different general assembly sessions since 2017, we introduced legislation designed to revamp and improve future retirement plans so all could benefit. So far, no action has been taken on either of the reform bills, largely because of strong lobbying pushback from organized associations, including school teachers and others who are satisfied with the status quo.
But, the status quo is not sustainable. Therefore, I am continuing to diligently work with the retirement system investment commission to craft alternatives that might be politically acceptable as well as effective in getting our state back on solid financial footing.
It should be pointed out South Carolina is not alone in this dilemma. According to a 2020 report in USA Today, most states have sufficient money to pay just over 70% of the pensions they owe. South Carolina is among the worst, with only 55%.
The price of failing to address our situation will be costly for every taxpayer. They could include tax hikes for all of us, layoffs of essential workers or cutbacks in services.
The facts are real. America’s older population is growing faster than any other age segment. An estimated 10,000 Americans hits age 65 each day. People are living longer, and unless we get legislative attention for this matter a harsh day of reckoning will occur.
Jeff Bradley is the representative for District 123 in the State House of Representatives.