South Carolina taxpayers will be paying more into the State Retirement System, and so will law enforcement officers and firefighters, to shore up what Comptroller General Richard Eckstrom says is an ailing system.
“When you look at the direction we're heading, I don't know that you can reach any other conclusion other than that the plans are in a death spiral,” Eckstrom says of the state's retirement plans.
The state Budget and Control Board on Wednesday voted to increase the amount that law enforcement officers and firefighters have taken out of their pay to go toward retirement.
They were already going to be paying 8 percent next year, but instead that will go up to 8.41 percent starting July 1, 2014.
Since employers also pay part of an employee's contribution toward retirement and the state is the employer in this equation, the state, and therefore taxpayers, will also pay more.
Taxpayers' contribution to the fund will go from 13 percent up to 13.41.
Eckstrom told the other members of the Budget and Control Board that the State Retirement System is a looming catastrophe because funding levels had dropped over the years and investments lost money.
The system doesn't have enough money to cover its future liabilities.
“We have just over half a dollar for every dollar that we hope to pay out,” he told 7 On Your Side. “Where's the half dollar going to come from?”
He says the only solutions are to cut benefits, increase the contributions from taxpayers and those in the system, or some combination. The state pension plan lost $1.5 billion last year and about the same amount the year before.
“Taxpayers are going to end up paying more. Future taxpayers are likely to really have to bear this burden,” he says.