Historical South Carolina pension information

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The historical South Carolina pension information below applies to prior calendar years. The tabs below may contain information from several different fiscal years; for example, the tab labeled "As published 2015" contains information from fiscal years 2013 and 2012 (the most recent data available at the time of initial publication). For more current information regarding South Carolina's pension system, click here.

As published 2016

South Carolina information (2015)

Total contributions: $2,035,353,000

Employee contributions: $826,926,000

Government contributions: $1,208,427,000

Total payments: $3,108,828,000

Total cash and investment holdings: $29,999,200,000

Number of state and local pension systems: 9

Active membership: 214,713

Inactive membership: 173,145

Key terms

Actuarial value of assets (AVA) • Unfunded actuarial accrued liability (UAAL) • Annual required contribution (ARC) • Discount rate • Funded ratio • Rate of return • Active member • Inactive member • OPEB

Hover over the above terms for definitions.

Note: This page utilizes information from a variety of sources. The information presented on this page reflects the most recent data available as of August 2016.

South Carolina public pensions are the state mechanism by which state and many local government employees in South Carolina receive retirement benefits.

According to the United States Census Bureau, there were nine public pension systems in South Carolina as of 2015. Of these, four were state-level programs, while the remaining five were administered at the local level. As of fiscal year 2015, membership in South Carolina's various pension systems totaled 387,858. Of these, 214,713 were active members.

HIGHLIGHTS

In fiscal year 2015, the most recent year for which information is available, total contributions of $2.0 billion were made to South Carolina's state and local pension systems. Of this amount, $826.9 million came from employees.

In fiscal year 2015, South Carolina's state and local pension systems made payments totaling $3.1 billion.

As of fiscal year 2015, South Carolina's state and local pension systems held $30.0 billion in total cash and investment holdings.

According to a 2013 report by Morningstar, an independent financial research group, most states' pension plans continued to be funded below the 80 percent level considered necessary for a healthy fund. Decreased funding and increasing liabilities since the 2008 recession continued to put pressure on local and state budgets, in some cases leading to bankruptcy. Higher pension costs can have the following consequences:

• higher taxes
• less intergovernmental aid for services
• lower credit ratings
• higher interest rates on state borrowing

State pension systems can vary in their organization, management, and accounting principles, making them difficult to compare. The basic information on this page comes from the U.S. Census Bureau, as reported by the states and pension funds themselves for fiscal year 2015.

In September 2016, State Treasurer Curtis Loftis told taxpayers their taxes would likely rise to pay for the state pension system debt. According to Loftis, the system's debt totaled $21 billion, and had accumulated because state lawmakers had not put enough money into the system. Loftis suggested state lawmakers would put off paying into this debt into 2018, which he warns will make the problem worse. He said, " If we push this off until next year, if we push this off until the 2018 year, actually, then it’s going to cost us two, maybe three billion dollars more. So the sooner we fix it the better."

General information

See also: Pension data, U.S. Census

According to the U.S. Census Bureau, South Carolina had four state pension plans as of 2015:

1. South Carolina Judges and Solicitors Retirement System
2. South Carolina General Assembly Retirement System
3. South Carolina Police Officers Retirement System
4. South Carolina Employees Retirement System

In addition to the aforementioned state-level pension systems, there were five locally administered pension systems in South Carolina.

The table below provides general pension system information for South Carolina and surrounding states.

General pension system information, 2015
State	Systems		Total members	Active members		Inactive members
	State	Local		Members	Percent of total	Members	Percent of total
South Carolina	4	5	387,858	214,713	55.36%	173,145	44.64%
Georgia	11	45	678,637	400,285	58.98%	278,352	41.02%
North Carolina	7	62	682,750	485,899	71.17%	196,851	28.83%
Tennessee	2	39	313,237	270,943	86.50%	42,294	13.50%
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2015"

Contributions

See also: Pension contribution and payment data, U.S. Census

Pension contributions are the funds paid into pension systems. These contributions come from the employer (in the case of public pensions, the government) and employees. Investment earnings are the main source of increases in the fund and are listed separately in the rightmost column in the below table.

In fiscal year 2015, the most recent year for which information is available, total contributions of $2.0 billion were made to South Carolina's state and local pension systems. Of this amount, $826.9 million came from employees. The remainder came from state and local governments. The table below provides information about pension contributions in South Carolina and surrounding states in fiscal year 2015.

Pension contributions, fiscal year 2015 (dollars in thousands)
State	Total contributions from employees and employers	Employee contributions		Government contributions		Earnings on investments
		Contributions	Percentage of total	Contributions	Percentage of total
South Carolina	$2,035,353	$826,926	40.63%	$1,208,427	59.37%	$807,001
Georgia	$3,376,261	$832,412	24.65%	$2,543,849	75.35%	$3,944,124
North Carolina	$2,977,264	$1,237,454	41.56%	$1,739,811	58.44%	$2,065,865
Tennessee	$1,661,667	$338,678	20.38%	$1,322,988	79.62%	$1,886,047
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2015"

Payments

See also: Pension contribution and payment data, U.S. Census

Payments are the amounts paid to pension recipients by their pension plans. Pension payments include benefits and withdrawals. Benefits are the regular payments made by a pension plan to the plan's recipients. Pension beneficiaries may also withdraw funds before they are due to receive regular benefits.

In fiscal year 2015, South Carolina's state and local pension systems made payments totaling $3.1 billion. The table below provides pension payment information for South Carolina and surrounding states in fiscal year 2015. The columns labeled "Benefits," "Withdrawals," and "Other" are subsets of total payments. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).

Pension payments, fiscal year 2015 (dollars in thousands)
State	Total payments	Benefits	Withdrawals	Other
South Carolina	$3,108,828	$2,944,581	$112,628	$51,619
Georgia	$6,788,499	$6,478,447	$172,125	$137,926
North Carolina	$5,446,850	$5,295,637	$128,533	$22,678
Tennessee	$3,038,331	$2,866,942	$36,186	$135,203
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2015"

Other post-employment benefits

See also: Other post-employment benefits, data

In addition to standard pension payments, some plans may offer pensioners additional benefits. These benefits, sometimes referred to as "other post-employment benefits," or "OPEBs," consist of health insurance, life insurance or other benefits that the pensioner may have received while employed. The cost of these benefits can prove complicated for actuaries to calculate because of the changes in fields like medicine. This, coupled with the normal challenges in calculating and meeting pension requirements, can result in funding shortages for pension plans.

Unfunded liabilities totaled nearly $500 billion throughout the country for OPEBs. South Carolina was reported to have about $9.7 billion in unfunded liabilities for OPEBs. This was equal to about 1.96 percent of the country's total unfunded liabilities for these other services.

The chart below displays the unfunded liabilities for South Carolina and its surrounding states. All dollar amounts displayed should be multiplied by 1,000,000. For instance, $300 translates to $300,000,000.

Unfunded actuarial accrued liabilities for other post-employment benefits, fiscal year 2013 (dollars in millions)
State	Unfunded liabilities	Percent of total
South Carolina	$9,736	1.96%
Georgia	$18,239	3.66%
North Carolina	$23,117	4.64%
Tennessee	$1,694	0.34%
U.S. total	$497,693	100%
Source: National Association of State Retirement Administrators, "Retiree Health Care Benefits for State and Local Employees in 2014," accessed April 30, 2015. Note: Although this article was dated for 2014, all figures were reported to have come from fiscal year 2013 reports.

Cash and investment holdings

See also: Pension data, U.S. Census

Investments are a crucial part of the pension process. The goal is that, by investing pension contributions, the pensioner will receive more money when he or she retires than he or she and the employer were able to contribute. These investments can come in the form of cash investments, short-term investments, securities, or other investments. Cash investments are usually low-risk, short-term investments that have a lower rate of return than other types of investments. Other short-term investments are riskier than cash investments, but have the potential for greater returns. Securities can refer to stocks, bonds, or other types of financial certificates that hold some sort of financial value. As the values of these securities change, they can be traded to make a profit. While there are other applications of securities investments, this represents one of the most common practices.

As of fiscal year 2015, South Carolina's state and local pension systems held $30.0 billion in total cash and investment holdings. The table below summarizes pension system cash and investment holdings for South Carolina and surrounding states. The columns labeled "Total cash and short-term investments," "Total securities," and "Total other investments" are subsets of the grand total. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).

Total cash and investment holdings, fiscal year 2015 (dollars in thousands)
State	Grand total	Total cash and short-term investments	Total securities	Total other investments
South Carolina	$29,999,200	$3,452,919	$20,807,852	$5,738,429
Georgia	$93,581,148	$1,944,579	$91,096,395	$540,175
North Carolina	$89,105,827	$1,321,340	$65,829,941	$21,954,545
Tennessee	$53,556,780	$3,899,385	$46,295,041	$3,362,354
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2015"

Pension fund management fees

See also: Public pension fund management fees

In July 2013, the Maryland Public Policy Institute (MPPI) and the Maryland Tax Education Foundation released a report detailing the fees paid for the management of state pension systems. According to MPPI, the 10 state pension funds that paid the most in management fees relative to net assets experienced lower returns over a five-year period than the 10 state pension funds that paid the least in management fees. For example, in fiscal year 2012 South Carolina's pension system paid approximately $296.1 million in total management fees (1.31 percent of total net assets at the beginning of the fiscal year), and its five-year rate of return was 1.46 percent. By contrast, Alabama's pension system paid roughly $13.3 million in management fees (0.05 percent of total net assets), and its five-year rate of return was 7.53 percent.

The table below presents the information collected by MPPI for South Carolina and surrounding states. For each state's pension system, total net assets are listed (both for the beginning and end of the fiscal year in question), as well as the total amount paid in management fees. In addition, the rates of return for the pension systems are presented. Compared to surrounding states, South Carolina had the lowest total net assets, but third-highest total management fees.

Public pension fund management fees, 2011-2012
State	Fiscal year	Total net assets at the beginning of the year	Total net assets at the end of the year	Total management fees	Management fees as % of total net assets	Five-year rate of return
South Carolina	2012	$22,691,660,000	$25,891,849,000	$296,135,000	1.31%	1.46%
Georgia	2012	$69,563,890,000	$68,239,850,000	$53,014,039	0.08%	2.95%
North Carolina	2012	$74,900,000,000	$74,500,000,000	$317,796,275	0.42%	2.64%
Tennessee	2012	$33,663,308,000	$34,912,773,000	$32,379,360	0.10%	3.11%
1"Three states— Hawaii, Nevada and Rhode Island—were excluded because they hadn’t published CAFRs for fiscal years ending December 31, 2011 or later. West Virginia was excluded because its June 30, 2012 CAFR lacked sufficient disclosure." Source: Maryland Public Policy Institute, "Wall Street Fees, Investment Returns, Maryland 49 Other State Pension Funds," accessed April 23, 2015. Note: To access this data, navigate to the list of links below the article and click "Exhibit A."

As published 2015

Public pensions in South Carolina

General information (2013)

Total contributions: $1,880,813,000

Employee contributions: $775,393,000

Government contributions: $1,105,420,000

Total payments: $3,472,453,000

Total cash and investment holdings: $27,627,880,000

Number of state and local pension systems: 6 (4 state systems, 2 local systems)

Active membership: 212,380

Inactive membership: 165,955

Pension health (2012)

Assets: $29,555,334,000

Actuarial accrued liability (AAL): $45,202,202,000

Unfunded actuarial accrued liability (UAAL): $15,646,868,000

Funded ratio: 65.4%

UAAL per capita: $3,468

Public pensions in the states

Alabama • Alaska • Arizona • Arkansas • California • Colorado • Connecticut • Delaware • Florida • Georgia • Hawaii • Idaho • Illinois • Indiana • Iowa • Kansas • Kentucky • Louisiana • Maine • Maryland • Massachusetts • Michigan • Minnesota • Mississippi • Missouri • Montana • Nebraska • Nevada • New Hampshire • New Jersey • New Mexico • New York • North Carolina • North Dakota • Ohio • Oklahoma • Oregon • Pennsylvania • Rhode Island • South Carolina • South Dakota • Tennessee • Texas • Utah • Vermont • Virginia • Washington • West Virginia • Wisconsin • Wyoming

Public pensions • State public pension plans • South Carolina state budget and finances

Note: This page utilizes information from a variety of sources. As such, the currency of the information varies somewhat. The information presented on this page reflects the most recent data available as of March 2015.

South Carolina public pensions are the state mechanism by which state and many local government employees in South Carolina receive retirement benefits.

According to the United States Census Bureau, there were six public pension systems in South Carolina as of 2013. Of these, four were state-level programs, while the remaining two were administered at the local level. As of 2013, membership in South Carolina's various pension systems totaled 378,335. Of these, 212,380 were active members.

According to a 2013 report by Morningstar, an independent financial research group, most states' pension plans continued to be funded below the 80 percent level considered necessary for a healthy fund. Decreased funding and increasing liabilities since the 2008 recession continued to put pressure on local and state budgets, in some cases leading to bankruptcy. Higher pension costs can have the following consequences:

• higher taxes
• less intergovernmental aid for services
• lower credit ratings
• higher interest rates on state borrowing

HIGHLIGHTS

Between fiscal years 2008 and 2012, the funded ratio of South Carolina's state-administered pension plans decreased from 70.1 percent to 65.4 percent. The state paid 100 percent of its annual required contribution, and for fiscal year 2012 the pension system's unfunded accrued liability totaled $15.6 billion. This amounted to $3,468 in unfunded liabilities per capita.

Background

The basic information on this page comes from the U.S. Census Bureau, as reported by the states and pension funds themselves for fiscal year 2013. Also included are comparative data from three different reports, which looked at the states' Comprehensive Annual Financial Reports (CAFRs).

General information

See also: Pension data, U.S. Census

According to the U.S. Census, South Carolina had four state pension plans as of 2013:

1. South Carolina Judges and Solicitors Retirement System
2. South Carolina General Assembly Retirement System
3. South Carolina Police Officers Retirement System
4. South Carolina Employees Retirement System

In addition to the aforementioned state-level pension systems, there were two locally administered pension systems in South Carolina.

The table below provides general pension system information for South Carolina and surrounding states.

General pension system information, 2013
State	Systems		Total members	Active members		Inactive members
	State	Local		Members	Percent of total	Members	Percent of total
South Carolina	4	2	378,335	212,380	56.14%	165,955	43.86%
Georgia	10	24	670,198	402,790	60.1%	267,408	39.9%
North Carolina	6	2	661,278	490,809	74.22%	170,469	25.78%
Tennessee	1	14	283,137	247,390	87.37%	35,747	12.63%
Virginia	1	17	534,205	395,388	74.01%	138,817	25.99%
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2013"

Contributions

See also: Pension contribution and payment data, U.S. Census

Pension contributions are the funds paid into pension systems. These contributions come from the employer (in the case of public pensions, the government) and employees. Investment earnings are the main source of increases in the fund and are listed separately in the rightmost column in the below table.

In fiscal year 2013, total contributions of $1.9 billion were made to South Carolina's state and local pension systems. Of this amount, $775 million came from employees. The remainder came from state and local governments. The table below provides information about pension contributions in South Carolina and surrounding states in fiscal year 2013.

Pension contributions, fiscal year 2013 (dollars in thousands)
State	Total contributions from employees and employers	Employee contributions		Government contributions		Earnings on investments
		Contributions	Percentage of total	Contributions	Percentage of total
South Carolina	$1,880,813	$775,393	41.23%	$1,105,420	58.77%	$2,968,276
Georgia	$2,786,217	$771,885	27.7%	$2,014,332	72.3%	$13,327,765
North Carolina	$2,746,576	$1,187,243	43.23%	$1,559,333	56.77%	$7,506,843
Tennessee	$1,584,479	$321,690	20.3%	$1,262,789	79.7%	$4,299,832
Virginia	$3,080,757	$712,116	23.11%	$2,368,641	76.89%	$8,565,015
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2013"

Payments

See also: Pension contribution and payment data, U.S. Census

Payments are the amounts paid to pension recipients by their pension plans. Pension payments include benefits and withdrawals. Benefits are the regular payments made by a pension plan to the plan's recipients. Pension beneficiaries may also withdraw funds before they are due to receive regular benefits.

In fiscal year 2013, South Carolina's state and local pension systems made payments totaling $3.5 billion. The table below provides pension payment information for South Carolina and surrounding states in fiscal year 2013. The columns labeled "Benefits," "Withdrawals," and "Other" are subsets of total payments. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).

Pension payments, fiscal year 2013 (dollars in thousands)
State	Total payments	Benefits	Withdrawals	Other
South Carolina	$3,472,453	$2,928,202	$102,456	$441,795
Georgia	$5,911,278	$5,682,504	$105,722	$123,052
North Carolina	$5,333,678	$4,803,076	$143,271	$387,331
Tennessee	$2,657,352	$2,505,227	$69,999	$82,126
Virginia	$5,100,461	$4,595,559	$93,219	$411,683
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2013"

Cash and investment holdings

See also: Pension data, U.S. Census

As of fiscal year 2013, South Carolina's state and local pension systems held $27.6 billion in total cash and investment holdings. The table below summarizes pension system cash and investment holdings for South Carolina and surrounding states. The columns labeled "Total cash and short-term investments," "Total securities," and "Total other investments" are subsets of the grand total. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).

Total cash and investment holdings, fiscal year 2013 (dollars in thousands)
State	Grand total	Total cash and short-term investments	Total securities	Total other investments
South Carolina	$27,627,880	$3,487,950	$22,526,880	$1,613,050
Georgia	$82,222,704	$2,579,828	$79,285,360	$357,516
North Carolina	$79,986,718	$194,704	$67,146,151	$12,645,863
Tennessee	$45,050,770	$1,034,517	$41,077,655	$2,938,598
Virginia	$70,627,037	$1,325,834	$62,214,576	$7,086,627
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2013"

Pension health

Pension health is a term used to describe the overall state of pension systems. It can be difficult to gauge pension health in each state, but many studies use calculations to determine the average liabilities, unfunded liabilities, funded ratio and other data. Most experts believe that pension systems need to be funded at least 80 percent to be considered healthy. This information is then used to provide a snapshot of the state's overall pension health. This section provides information from three studies regarding the health of pensions in South Carolina and neighboring states. They found the following:

• According to the Pew Charitable Trusts, South Carolina paid 100 percent of its required contribution and its funded ratio was only 65 percent in fiscal year 2012.
• According to Morningstar, the state had a per capita pension debt of $3,468 and a funded ratio of 65.4 percent in fiscal year 2012.
• According to State Budget Solutions, which assumed a lower rate of return, South Carolina had a per capita pension debt of $13,280 and a funded ratio of 32 percent in fiscal year 2013.

Pew research

See also: Pew Charitable Trusts pensions study, 2014

According to a 2014 report by the Pew Charitable Trusts, “many states are seeing their pension debt continue to increase, despite reform efforts, because of missed contributions and the continued impact of investment losses.” The funding gap between what state pension systems have promised in benefits (liabilities) and current funding (assets) increased by $158 billion from 2010 to 2012 (14 percent), leaving state-run retirement systems with $915 billion in unfunded liabilities. Only 15 states made at least 95 percent of the annual required contributions (ARCs) for their pensions between 2010 and 2012; the aggregate shortfall in funding for all state plans was $21 billion. Data on these state pensions come from the Comprehensive Annual Financial Reports (CAFRs) that each state’s pension plan prepared for fiscal year 2012; these reports include actuarial valuations based on “the expected rate of return on investments and estimates of employee life spans, retirement ages, salary growth, retention rates, and other demographic characteristics.”

All dollar amounts displayed should be multiplied by 1,000,000 (e.g., $240,000 is equal to $240,000,000,000).

Pension health metrics from the Pew Charitable Trusts report, 2010-2012 (dollars in millions)
State	2012			Funded ratio			Percent of ARC paid
	Liability	Unfunded	ARC	2010	2011	2012	2010	2011	2012
South Carolina	$45,202	$15,647	$974	66%	68%	65%	100%	100%	100%
Georgia	$86,384	$16,776	$1,375	85%	82%	81%	100%	100%	100%
North Carolina	$85,067	$3,880	$1,396	96%	95%	95%	100%	81%	100%
Tennessee	$40,069	$3,389	$1,003	90%	92%	92%	100%	100%	100%
Virginia	$81,207	$28,138	$1,724	72%	69%	65%	67%	46%	59%
Totals in the U.S.	$3,298,643	$914,653	$87,213	75%	74%	72%	78%	77%	77%
Source: The Pew Charitable Trusts, "The Fiscal Health of State Pension Plans: Funding Gap Continues to Grow"

Morningstar report

See also: Pension data, 2013 Morningstar report

In 2013, independent investment research firm Morningstar released "The State of State Pension Plans 2013," a report detailing various metrics of pension system health in all 50 states. Morningstar found a $1.2 trillion gap in 2012 for the largest 100 U.S. public pension plans (according to the actuarial firm Milliman). Based on two key drivers in Morningstar’s analysis—the funded ratio and the unfunded actuarial accrued liability (UAAL) per capita—the fiscal solvency and management of these plans varied greatly. Overall, the firm found that "more than half of all states fall below Morningstar’s fiscally sound threshold of a 70 percent funded ratio" and all state plans combined were "72.6 percent funded with a UAAL per capita of roughly $2,600.”

According to Morningstar's research, South Carolina's state pension system was funded at a rate of 65.4 percent in fiscal year 2012. The table below provides state pension system health metrics for South Carolina and surrounding states in fiscal year 2012. Figures in the columns labeled "Assets," "AAL," and "UAAL" are rendered in thousands of dollars (for example, $2,400,000 translates to $2,400,000,000). Figures in the remaining columns have not been abbreviated. To view the full report, click here.

Pension health metrics from the Morningstar report, fiscal year 2012
State	Assets	Liabilities (AAL)	Unfunded liabilities (UAAL)	Funded ratio	Unfunded liabilities per capita
South Carolina	$29,555,334	$45,202,202	$15,646,868	65.4%	$3,468
Georgia	$68,054,871	$83,100,245	$15,045,374	81.9%	$1,589
North Carolina	$59,076,841	$62,926,627	$3,849,785	93.9%	$415
Tennessee	N/A
Virginia	$54,473,000	$78,423,000	$23,950,000	69.5%	$3,054
Totals in the U.S.	$2,157,578,916	$2,979,267,860	$821,688,945	72.40%	N/A
Source: Morningstar, "The State of State Pension Plans 2013: A Deep Dive Into Shortfalls and Surpluses," accessed September 16, 2013

State Budget Solutions report

See also: Pension data, State Budget Solutions report

State Budget Solutions is "a nonpartisan, nonprofit, national public policy organization with the mission to change the way state and local governments do business." It should be noted that although the organization is technically nonpartisan, its ideology and mission have conservative leanings. In November 2014, the organization released a research report that used a fair market valuation based on a discount rate of 2.743 percent to determine the unfunded liabilities of public pension plans. The group concluded that "state public pension plans were underfunded by $4.7 trillion in 2014, up from $4.1 trillion in 2013. Overall, the combined plans' funded status ... dipped 3 percentage points to 36 percent. Split among all Americans, the unfunded liability [was] over $15,000 per person."

According to the State Budget Solutions report, South Carolina's pension plans were funded at a rate of 32 percent. To read the full report, click here.

Note that all dollar amounts displayed (excluding those under the "Unfunded liability per capita" column) should be multiplied by 1,000 (e.g., $240,000 is equal to $240,000,000).

Pension health metrics from the State Budget Solutions report, fiscal year 2013 (dollars in thousands)
State	Assets	Market liability*	Funding ratio	Unfunded liability	Unfunded liability per capita	Unfunded liability as % of 2013 gross state product
South Carolina	$29,882,998	$93,293,796	32%	$63,410,798	$13,280	35%
Georgia	$70,119,741	$172,429,158	41%	$102,309,417	$10,239	23%
North Carolina	$81,198,252	$162,199,270	50%	$81,001,018	$8,225	17%
Tennessee	$36,680,782	$79,109,037	46%	$42,428,255	$6,531	15%
Virginia	$53,069,000	$149,498,613	35%	$96,429,613	$11,674	21%
Totals in the U.S.	$2,679,831,466	$7,416,319,293	36%	$4,736,487,827	$15,052	29%
Source: American Legislative Exchange Council, "Promises Made, Promises Broken 2014: Unfunded Liabilities Hit $4.7 Trillion"

Other factors

Rate of return

According to a 2012 analysis by the Pew Center for the States, most state pension plans assumed an 8 percent rate of return on investments at that time. Proponents argued that an 8 percent rate of return would bear out over the long-term (15-30 years). Critics asserted that this assumption was unrealistic, citing changing market conditions and lower investment returns across the board in preceding years.

Assuming a lower rate of return to predict investment earnings increases current plan liabilities, thereby lowering the percent funded ratio and requiring increased employer contributions (ARCs). This is because future plan liabilities are discounted based on the rate of return, so smaller expected investment returns result in larger actuarially accrued liabilities. For example, on September 21, 2012, the Illinois Teachers Retirement System voted to lower its rate of return from 8.5 percent to 8.0 percent. This change increased the state's fiscal year 2014 ARC from $3.07 billion to $3.36 billion. Similarly, when California's CalPERS reduced its projected annual rate of return from 7.75 percent to 7.5 percent in March 2012, it cost the state an additional $303 million for fiscal year 2013.

Financial crisis

In the wake of the 2008 recession, proponents of a lower assumed rate of return argued that the standard 8 percent assumptions could cause pension fund managers to engage in more risky investments and imprudent stewardship of public funds. Jeffrey Friedman, a senior market strategist at MF Global, said, "To target 8 percent means some aggressive trading. Ten-year Treasury [bonds] are yielding around 2 percent, economists say we are headed for a double-dip, and house prices aren't getting back to 2007 levels for the next decade, maybe.".

Advocates of the 8 percent return rate argued that the dip following the 2008 financial crisis did not prove that there was a long-term downward trend in investment returns. According to Chris Hoene, executive director of the California Budget Project, "The problem with [the market rate] argument is there isn’t significant evidence other than the short term blip during the economic crisis that there’s been that shift. It’s a speculative argument coming out of a very deep recession."

The National Association of State Retirement Administrators researched the median annualized rate of return for public pensions for the 1-, 3-, 5-, 10-, 20- and 25-year periods ending in 2013 and found it was 7.9 percent over the 20-year period, and exceeded 8 percent for the 1-, 3- and 25-year periods. It is important to note that the NASRA data reported the median returns, which means that median annualized returns of investment portfolios for half of the examined public pension funds failed to meet an 8 percent assumed rate of return.

Pension fund management fees

See also: Public pension fund management fees

In July 2013, the Maryland Public Policy Institute (MPPI) and the Maryland Tax Education Foundation released a report detailing the fees paid for the management of state pension systems. According to MPPI, the 10 state pension funds that paid the most in management fees relative to net assets experienced lower returns over a five-year period than the 10 state pension funds that paid the least in management fees. For example, in fiscal year 2012 South Carolina's pension system paid approximately $296.1 million in total management fees (1.31 percent of total net assets at the beginning of the fiscal year), and its five-year rate of return was 1.46 percent. By contrast, Alabama's pension system paid roughly $13.3 million in management fees (0.05 percent of total net assets), and its five-year rate of return was 7.53 percent.

The table below presents the information collected by MPPI for South Carolina and surrounding states. For each state's pension system, total net assets are listed (both for the beginning and end of the fiscal year in question), as well as the total amount paid in management fees. In addition, the rates of return for the pension systems are presented. Compared to surrounding states, South Carolina had the lowest total net assets, but third-highest total management fees.

Public pension fund management fees, 2011-2012
State	Fiscal year	Total net assets at the beginning of the year	Total net assets at the end of the year	Total management fees	Management fees as a percentage of total net assets	Five-year rate of return
South Carolina	2012	$22,691,660,000	$25,891,849,000	$296,135,000	1.31%	1.46%
Georgia	2012	$69,563,890,000	$68,239,850,000	$53,014,039	0.08%	2.95%
North Carolina	2012	$74,900,000,000	$74,500,000,000	$317,796,275	0.42%	2.64%
Tennessee	2012	$33,663,308,000	$34,912,773,000	$32,379,360	0.10%	3.11%
Virginia	2012	$54,562,257,000	$53,309,180,000	$307,706,000	0.56%	0.80%
1"Three states— Hawaii, Nevada and Rhode Island—were excluded because they hadn’t published CAFRs for fiscal years ending December 31, 2011 or later. West Virginia was excluded because its June 30, 2012 CAFR lacked sufficient disclosure." Source: Maryland Public Policy Institute, "Wall Street Fees, Investment Returns, Maryland 49 Other State Pension Funds," accessed July 1, 2013

Other post-employment benefits

See also: Other post-employment benefits, data

In addition to standard pension payments, some plans may offer pensioners additional benefits. These benefits, sometimes referred to as "other post-employment benefits," or "OPEBs," consist of health insurance, life insurance or other benefits that the pensioner may have received while employed. The cost of these benefits can prove complicated for actuaries to calculate because of the changes in fields like medicine. This, coupled with the normal challenges in calculating and meeting pension requirements, can result in funding shortages for pension plans.

Unfunded liabilities totaled nearly $500 billion throughout the country for OPEBs. South Carolina was reported to have about $9.7 billion in unfunded liabilities for OPEBs. This was equal to about 1.96 percent of the country's total unfunded liabilities for these other services.

The chart below displays the unfunded liabilities for South Carolina and its surrounding states. All dollar amounts displayed should be multiplied by 1,000,000. For instance, $300 translates to $300,000,000.

Unfunded actuarial accrued liabilities for other post-employment benefits, fiscal year 2013 (dollars in millions)
State	Unfunded liabilities	Percent of total
South Carolina	$9,736	1.96%
Georgia	$18,239	3.66%
North Carolina	$23,117	4.64%
Tennessee	$1,694	0.34%
Virginia	$2,128	0.43%
U.S. total	$497,693	100%
Source: National Association of State Retirement Administrators, "Retiree Health Care Benefits for State and Local Employees in 2014," accessed April 30, 2015. Note: Although this article was dated for 2014, all figures were reported to have come from fiscal year 2013 reports.

Public pensions in 2012

As of the end of 2012, South Carolina public pensions had total estimated liabilities of $43.5 billion, but had 67.8 percent of those liabilities funded, resulting in unfunded liabilities of $13.9 billion.

The following data was retrieved from the 2012 Actuarial Valuation Reports for the five separate pension funds, which measured fund status as of July 1, 2012. Valuation reports are annual reports produced by outside consultants, using unaudited data provided by the pension systems themselves, in order to determine what employers in the system should contribute in the coming year to maintain or improve the fiscal health of the pension funds. The valuations were conducted by Gabriel Roeder Smith & Company.

Basic pension plan information -- SCPEBA
Plans	Current Value	Percentage funded		Unfunded liabilities		Membership
		State Figure	SBS Figure	State Figure	SBS Figure
South Carolina Retirement System	$25,540,749,000	64.7 percent		$13,916,959,000		185,817 active members
Police Officers Retirement System	$3,808,934,000	71.1 percent		$1,548,558,000		26,184 active members
General Assembly Retirement System	$39,233,000	52.8 percent		$35,099,000		170 active members
Judges and Solicitors Retirement System	$145,604,000	57.8 percent		$106,125,000		144 active members
National Guard Retirement System	$20,814,000	34.2 percent		$40,128,000		12,097 active members
TOTALS	$29,555,334,000	65.3 percent	36 percent	$15,646,869,000	$53,166,507,000	224,412 active members

The percent funded figure is calculated by comparing the current actuarial value of the fund and the total liabilities. The current actuarial value for the South Carolina plans is generated with the assumed rate of return of 7.5 percent. While a percent funded ratio of 80 percent is commonly cited by institutions such as the Government Accountability Office (GAO) and Pew Research Center as the threshold for a "healthy" pension fund, the American Academy of Actuaries recommends that all pension systems "should have a strategy in place to attain or maintain a funded status of 100 percent or greater."

Membership

According to U.S. Census data, as of March 2011, South Carolina had 281,786 total public employees. In Fiscal Year 2012, the state had a total of 534,273 members in the retirement plan. This included 224,282 active members and 268,433 inactive members. Membership figures divide plan participants into two broad categories: active and other. Active members are current employees contributing to the pension system. Other members include retirees, beneficiaries, and other inactive plan participants (usually terminated employees entitled to benefits but not yet receiving them).

Annual Required Contribution

According to the 2012 CAFR, in the five years from FY2007 to FY2012, the ARC grew from $763.9 million to $973.8 million, while the state's actual contributions grew that same amount. Over that period, the state contributed only 100 percent of the ARC.

ARC historical data
Fiscal year	SCRS		PORS		GARS		JSRS		NGRS
	Annual Required Contribution (ARC)	Percentage contributed	Annual Required Contribution (ARC)	Percentage contributed	Annual Required Contribution (ARC)	Percentage contributed	Annual Required Contribution (ARC)	Percentage contributed	Annual Required Contribution (ARC)	Percentage contributed
2012	$824,652,000	100%	$134,299,000	100%	$2,532,000	100%	$8,414,000	100%	$3,937,000	100.8%
2011	$808,343,000	100%	$129,314,000	100%	$2,414,000	100%	$8,414,000	100%	$3,905,000	100%
2010	$818,523,000	100%	$129,163,000	100%	$2,598,000	100%	$8,414,000	100%	$3,945,000	102.7%
2009	$827,502,000	100%	$124,148,000	100%	$2,495,000	100%	$8,414,000	100%	$3,979,000	101.8%
2008	$774,269,000	100%	$114,098,000	100%	$2,440,000	100%	$7,613,000	100%	$3,823,000	103.3%
2007	$644,350,000	100%	$106,753,000	100%	$2,358,000	100%	$6,706,000	100%	$3,811,000	103.6%

On June 25, 2012, the Government Accounting Standards Board (GASB) approved a plan to reform the accounting rules for state and local pension funds. These revised standards were set to take effect in fiscal years 2013 and 2014. As a result, ARCs were removed as a reporting requirement. Instead, plan administrators and accountants were instructed to use an actuarially determined contribution or a statutory contribution for reporting purposes.

Historical data

Historical pension plan data - SCRS
Year	Value of Assets	Accrued Liability	Unfunded Liability	Funded Ratio
2006	$22,293,446,000	$32,018,519,000	$9,725,073,000	69.6%
2007	$23,541,438,000	$33,766,678,000	$10,225,240,000	69.7%
2008	$24,699,678,000	$35,663,419,000	$10,963,741,000	69.3%
2009	$25,183,062,000	$37,150,315,000	$11,967,253,000	67.8%
2010	$25,400,331,000	$38,774,029,000	$13,373,698,000	65.5%
2011	$25,604,823,000	$38,011,610,000	$12,406,78,000	67.4%
Change from 2006-2011	$47,898,269,000	$70,030,129,000	$22,131,860,000	-2.2%

Historical pension plan data - PORS
Year	Value of Assets	Accrued Liability	Unfunded Liability	Funded Ratio
2006	$2,935,841,000	$3,466,281,000	$530,440,000	84.7%
2007	$3,160,240,000	$3,730,544,000	$570,304,000	84.7%
2008	$3,363,136,000	$4,318,955,000	$955,819,000	77.9%
2009	$3,482,220,000	$4,564,111,000	$1,081,891,000	76.3%
2010	$3,612,700,000	$4,850,457,000	$1,237,757,000	74.5%
2011	$3,728,241,000	$5,122,501,000	$1,394,260,000	72.8%
Change from 2006-2011	$6,664,082,000	$8,588,782,000	$1,924,700,000	-11.9%

Historical pension plan data - GARS
Year	Value of Assets	Accrued Liability	Unfunded Liability	Funded Ratio
2006	$46,075,000	$69,734,000	$23,659,000	66.1%
2007	$46,925,000	$71,014,000	$24,089,000	66.1%
2008	$47,189,000	$69,122,000	$21,933,000	68.3%
2009	$45,891,000	$68,491,000	$22,600,000	67%
2010	$43,712,000	$68,671,000	$24,959,000	63.7%
2011	$41,484,000	$74,604,000	$33,120,000	55.6%
Change from 2006-2011	$87,559,000	$144,338,000	$56,779,000	-10.5%

Historical pension plan data - JSRS
Year	Value of Assets	Accrued Liability	Unfunded Liability	Funded Ratio
2006	$124,837,000	$211,384,000	$86,547,000	59.1%
2007	$132,990,000	$229,388,000	$96,398,000	58%
2008	$138,323,000	$213,406,000	$75,083,000	64.8%
2009	$141,797,000	$214,363,000	$72,566,000	66.1%
2010	$142,871,000	$215,823,000	$72,952,000	66.2%
2011	$144,927,000	$243,514,000	$98,587,000	59.5%
Change from 2006-2011	$269,764,000	$454,898,000	$185,134,000	+0.4%

Historical pension plan data - NGRS
Year	Value of Assets	Accrued Liability	Unfunded Liability	Funded Ratio
2006	$14,046,000	$48,755,000	$34,709,000	28.8%
2007	$15,937,000	$55,917,000	$39,980,000	28.5%
2008	$17,426,000	$53,534,000	$36,108,000	32.5%
2009	$18,600,000	$53,421,000	$34,821,000	34.8%
2010	$19,458,000	$54,153,000	$34,695,000	35.9%
2011	$20,138,000	$60,388,000	$40,250,000	33.3%
Change from 2006-2011	$34,184,000	$109,143,000	$74,959,000	+4.5%

Reforms

2011

• On Nov. 3, 2011, the State Budget and Control Board voted to reduce the cost of living adjustment for retiree payments from 2% to 1%. The dollar amount varied per person, but the average retiree received $19,000 a year, meaning a 1 percent cut would equal $190 a year.

2012

H4967 - Pension Reform

This legislation was signed into law in June 2012, and includes numerous reforms for the state's pension plans:

• Most pension changes impact SCRS and PORS participants, but all participants (including Optional Retirement Plan members) are impacted by a change in the employee contribution rate, adjusted from 6.5% to 7%.
• GARS member contribution rate increases from 10 percent to 11 percent.
• SCRS employee contribution rate increased from 6.5 percent to 8.0 percent in 0.5 percent increments annually from July 1, 2012 to July 1, 2014
• PORS employee contribution rate increased from 6.5 percent to 8.0 percent in 0.5 percent increments annually from July 1, 2012 to July 1, 2014
• PORS employer contribution rate will be 12.3 percent beginning July 1, 2012, will increase to 12. 5 percent July 1, 2013, and will increase to 13 percent July 1, 2014.
• More changes can be found in the link below.

In May 2012 the South Carolina State Senate approved a pension reform plan that puts most of the changes on new employees. The changes would increase the funded ratio in the state's main retirement system from 65 percent this year to 84 percent in 29 years. The changes would apply only for employees hired after June 30. The House plan applied those anti-spiking efforts to current workers, too. The Senate plan also eliminates in 2018 a special retirement program that allows public workers to officially retire but remain on the job for up to five years and accumulate pension benefits.

South Carolina paid $344 million to hedge fund managers and private equity deal makers in 2011 for pension fund investments. The results of those high costs have yet to manifest, according to a NY Times investigation. Today, the pension fund has a higher share riding on private-equity and hedge-fund plays — called “alternative investments” in some circles — than almost any other state’s: $13 billion, or more than half its total. S.C. faces a $14.4 billion shortfall in its pension funding.

2013

S484 - Police Officers Retirement System Disability Provisions

The bill, signed into law in June 2013, amends the SC Code of Laws relating to disability retirement for members of the Police Officers Retirement System (PORS) to delete the provision that would have required PORS members who apply for disability retirement after December 31, 2013, to provide proof of Social Security disability benefits to continue to receive a disability retirement benefit after three years. This bill also amends other sections in order to require all PORS disability retirement claims be reviewed by a medical board of three physicians.

H3624 – PEBA Indemnification Bill (R35, Act 24)

The bill, signed into law in May 2013, amends the SC Code of Laws of 1976 by adding a section to provide that the state shall defend members of the Board of Directors of the South Carolina Public Employee Benefit Authority (PEBA) against claims and suits arising out of performance of their official duties and to require that the state indemnify these directors for any loss or judgment incurred by them with respect to such a claim or suit. The bill also provides that the state shall defend PEBA officers and management employees against claims and suits arising out of performance of their official duties unless the officer or management employee was acting in bad faith, and requires that the state indemnify those parties for loss or judgment incurred by them with respect to such a claim or suit.

105.7. (PEBA: FY 2014 State Health Plan)

This bill, enacted as part of a general appropriations bill during 2013 legislative session, includes funds authorized for the State Health Plan in Plan Year 2014 and will result in an employer premium increase of 6.8 percent and a subscriber premium increase of 0 percent for each tier (subscriber, subscriber/spouse, subscriber/children, full family) for the Standard State Health Plan in Plan Year 2014. Co-payment increases for participants of the State Health Plan in Plan Year 2014 shall not exceed 20 percent. Notwithstanding the foregoing, pursuant to another section of the law, the Public Employee Benefit Authority may adjust the plan, benefits, or contributions of the State Health Plan during Plan Year 2014 to ensure the fiscal stability of the plan.

105.8 (PEBA: Exempt National Guard Pension Fund)

This bill, enacted as part of a general appropriations bill during 2013 legislative session, adds a new proviso to exempt the National Guard Pension Fund in the calculation of any across-the-board cuts mandated by the Budget and Control Board or General Assembly. The amount of the appropriation for the National Guard Pension Fund shall be excluded.

See also

• Public pensions in the United States
• South Carolina state budget and finances
• Tax policy in South Carolina
• Pension statistics
• Public pension health by state
• Public pensions

External links

• Pension Tsunami
• Pension Calculator from Public Sector Inc.
• Center for Retirement Research at Boston College, "How did state/local plans get so underfunded?"
• South Carolina Retirement System
• S.C. law hides pension records, The Post and Courier, March 4, 2012

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