COLUMBIA, SC (WACH) - For years, South Carolina's retirement program has been described as a ticking time bomb and a high-ranking state financial official says it's time to defuse it.
Comptroller General Richard Eckstrom says the General Assembly and the state Budget and Control Board need to take steps to put the system on sound financial footing. Projections show the main pension plan for the state's public employees and teachers has a more than $17 billion gap between money on hand and what it is required to pay current and future retirees.
Filling the more than $17 billion gap would likely require a combination of lower cost-of-living pension increases, and higher contributions from workers and taxpayers, as well as changes to rules for earning benefits.
Eckstrom says state leaders can't ignore that despite the fact that possible fixes won't make everyone happy.
"It's a cowardly thing for state officials to not take the risk, to not endure the wrath of all constituencies that are going to be unhappy with the solution," said Eckstrom.
The comptroller general says a number of factors got the state to this point. More workers are retiring early, he says, right when they meet the state minimum. In the year 2000, the General Assembly cut the number of years required as a state employee from 30 to 28. Many are retiring when they reach that magic number. Retirees are also living longer.
Last week, lawmakers were briefed by a panel of consultants about the state of the retirement system. The consultants explained the pension plan should assume people will continue living longer and lawmakers should include that into any projections.
The experts said it would take up to 60 years to cover the $17 billion gap and that's more than twice the accepted standard.
"Not doing something assures that we kick the can down the road and produce a much greater problem for the taxpayer, the next generation, and the generation after that," said Eckstrom.
It's estimated that if everyone entitled to a state pension retired right now, it would take more than 37 years to cover the bill.
Lawmakers are expected to have proposals drafted before the the next legislative session starts in January.
A state Senate panel will work on changes to the pension system.
The experts are recommending limiting cost of living pension increases to 1 percent.
The system previously had an estimated $13 billion gap. That was increased mostly because expectations are lower for investment returns and higher for how long retirees will live.