Like many other states, South Carolina found itself in difficulty with its public pension system in the last two decades.
Years ago, the Social Security model of a defined- benefit pension program was widely adopted by states for their own public employees, but many of these state systems were underfunded. South Carolina’s underfunding resulted from a costly retirement incentive program and some serious errors in managing the funds. The 2000 dot-com crash and the 2008 housing crash took more bites out of the fund. Low pay for state workers and the availability of a 401(k) option for some state workers reduced the ratio of workers paying into the fund of retirees collecting benefits. Underfunding slowed down growth of revenue from the system’s assets even as payouts to retirees were rising.
But like at least a few other states, South Carolina has assumed its responsibilities to current and retired state workers. States like South Carolina increased the employee contribution by a moderate amount and the state contribution by a much larger amount until the system’s assets are at least close actuarially to being properly funded. In the last few years, the fund has actually seen revenue from pension fund contributions exceed payments to beneficiaries. Professional management, closely supervised by a commission with suitable professional qualifications, has made significant progress toward full funding. South Carolina does not give cost-of-living adjustments (COLA), but it does provide an annual 1% increase, subject to a $500 cap…