As S.C. lawmakers grapple with how to close a recently projected $17 billion gap in the state pension system, 169 state retirees or their beneficiaries earn more than $100,000 annually in retirement benefits, while more than 3,500 individuals in the system receive at least $50,000 yearly, a review by The Nerve has found.
And 14 percent of all individuals in the system earn more in retirement benefits than the state’s per-capita income last year.
State retirement system representatives repeatedly have told The Nerve they are prohibited by law from revealing the identities of individual pensioners, so The Nerve recently requested, under the S.C. Freedom of Information Act, a database of payouts to all current retirees or their beneficiaries – minus any identifying information.
The state retirement system has five divisions: general state and local employees; police officers, firefighters, coroners, magistrates and probate judges; solicitors and higher-level judges; S.C. National Guard members; and state lawmakers.
Each division has its own formula for calculating retirement benefits. As pointed out by The Nerve last year, for example, state lawmakers have been particularly generous to themselves.
The database provided to The Nerve by the S.C. Budget and Control Board, which oversees the retirement system, listed every current monthly payment for all 112,631 retirees or their beneficiaries in the five divisions as of Sept. 12. The Nerve made yearly calculations based on those amounts and ranked the payouts in each category.
Based on those annualized calculations, the top-paid pensioner earns $205,875 annually. That individual is a member of the general employees division – the largest category of the five.
The top-paid individual pensioners in the other divisions are as follows: judges/solicitors, $129,626 (2); police officers, $109,470; state lawmakers, $61,660; and National Guard members, $1,200 (multiple individuals with at least 30 years of service).
Sam Griswold, president emeritus and a board member of the State Retirees Association of South Carolina, said Monday when contacted by The Nerve that he wasn’t surprised by most of the top pension amounts.
“They paid in more when they were working, so there’s an argument that they should be paid more when they retire,” he said.
Griswold said the six-figure pensioners in the general employees division likely include retired university presidents, coaches and research physicians.
Asked who generally earns the top-paid public pensions, Budget and Control Board spokeswoman Lindsey Kremlick declined to provide examples, saying only in a written response to The Nerve that pension amounts depend on the benefit calculation formula for each division.
Most state pensioners don’t receive anything close to six figures, Griswold said, noting that the average benefit is about $19,000 annually, which The Nerve found in its review.
“You’ve got to think about the person living on that $19,000 and a little Social Security,” he said. “It’s the difference between that and desperation.”
Big Deficit, Big Earners
In a related matter, Griswold said he plans to present a proposal this afternoon at a Senate Finance subcommittee calling for public agencies and employees to contribute more toward retirement benefits in an effort to shore up a recently projected $17 billion unfunded liability in the state pension system.
“Employees don’t like it, but they’re buying into the fact that something’s coming out of their pockets,” he said.
Still, Griswold said he’s not in favor of a proposal to cut the maximum annual cost-of-living increase for most retirees to 1 percent from the current 2 percent. He said the maximum rate in 2008 was cut in half from 4 percent, adding, “We’re not interested in cutting it any further.”
Meanwhile, Gov. Nikki Haley said she plans to take steps to end special treatment for lawmaker pensions in the wake of a USA Today review that found that more than 4,100 legislators in 33 states, including South Carolina, could benefit from special retirement laws, according to other media reports.
The Nerve reported last October that as many as 18 senators and a dozen House members could be drawing legislative pensions while still serving in the General Assembly, based on salary and expense records provided by the respective chambers.
The Legislature typically is in session for five months starting around mid-January, though for pension purposes, lawmakers treat themselves as if they were full-time employees.
The Nerve’s latest review found that 271 former or present lawmakers or their beneficiaries receive more than $10,400 – the base annual salary for current legislators – in retirement benefits yearly.
What legislators typically don’t tell constituents is that their taxable legislative income is $22,400 if they accept a monthly $1,000 “in-district” payment on top of their base salary. As of Sept. 12, there were 110 individuals in the lawmaker retirement system earning more than $22,400, records show.
The biggest pension earners are in the general employees, police officers and judges/solicitors divisions,The Nerve’s review found.
In total, 169 individuals in the general employees, police officers and judges/solicitors divisions earn more than $100,000 annually. That works out to be more than $16.9 million annually.
In those divisions and the lawmaker category, 3,537 individuals earn at least $50,000 yearly, or collectively more than $176 million.
The per-capita income in South Carolina last year was $33,163, according to the U.S. Bureau of Economic Analysis. In the state retirement system, 16,099 individuals, or 14 percent, earn at least the 2010 per-capita level annually, The Nerve’s review found.
Retired solicitors and higher-level judges, who are eligible to receive at least 71.3 percent of their salary as their pension, easily outpace all other retirees, earning an average of $75,594 yearly.
In comparison, the average yearly pension is $19,460 for general employees, $19,141 for police officers and $18,589 for lawmakers. The Nerve reported in August 2010 that the average pension then for lawmakers slightly edged the other two groups, based on information then provided by the Budget and Control Board.
Billions Paid Out
Based on annualized calculations of the state retirement benefit database, The Nerve’s latest analysis found that a total of $2.1 billion would be paid out yearly to retirees or their beneficiaries, about $1.9 billion of which, or 90 percent, would be spent in the general employees division. The Nerve’s review did not include disability benefits paid out by the retirement system.
Following is a breakdown of the projected payouts in each of the five divisions:
General Employees
- Total number of members/beneficiaries as of Sept. 12: 96,535
- Number of individuals earning more than $100,000 annually: 111
- Number of individuals earning more than $50,000 annually: 3,064
- Number of individuals earning more than $33,163 (2010 S.C. per-capita income): 14,268
- Average annual benefit: $19,460
- Total annual payout: $1.87 billion
Police Officers
- Total number of members/beneficiaries as of Sept. 12: 11,273
- Number of individuals earning more than $100,000 annually: 4
- Number of individuals earning more than $50,000 annually: 340
- Number of individuals earning more than $33,163 annually: 1,655
- Average annual benefit: $19,141
- Total annual payout: $215.7 million
State Lawmakers
- Total number of members/beneficiaries as of Sept. 12: 350
- Number of individuals earning more than $100,000 annually: 0
- Number of individuals earning more than $50,000 annually: 2
- Number of individuals earning more than $33,163 annually: 25
- Average annual benefit: $18,589
- Total annual payout: $6.5 million
Judges/Solicitors
- Total number of members/beneficiaries as of Sept. 12: 196
- Number of individuals earning more than $100,000 annually: 54
- Number of individuals earning more than $50,000 annually: 131
- Number of individuals earning more than $33,163 annually: 151
- Average annual benefit: $75,594
- Total annual payout: $14.8 million
S.C. National Guard
- Total number of members/beneficiaries as of Sept. 12: 4,277
- Number of individuals earning more than $100,000 annually: 0
- Number of individuals earning more than $50,000 annually: 0
- Number of individuals earning more than $33,163 annually: 0
- Average annual benefit: $924
- Total annual payout: $3.9 million
Devil in the Details
As The Nerve reported in August 2010, the retirement formula for state lawmakers is more generous compared to the formula for general employees and police officers.
Retirement pay for legislators is 4.82 percent of “earnable compensation” times years of service, according to information from the retirement system. “Earnable compensation” is a lawmaker’s base annual $10,400 salary plus their eligible yearly $12,000 in-district expense payments, for a total of $22,400.
By comparison, the formula for general employees is 1.45 percent (for “Class 1” service) or 1.82 percent (for “Class 2” service) of their “average final compensation,” or the 12 highest consecutive quarters of pay divided by 3, multiplied by years of service, according to information from the retirement system.
For the police officers division, the formula is $10.97 per month for each year of Class 1 service and 2.14 percent of average final compensation times years of service for Class 2 members.
Legislators can draw retirement benefits when they turn 60 and have at least eight years of service, though they cannot continue to serve in the General Assembly, BCB spokeswoman Kremlick told The Nerve in a written response this week.
Legislators who are 70 or have 30 years of service can draw pensions while continuing to serve, Kremlick said. The Nerve reported last year, quoting Senate Clerk Jeffrey Gossett, that under state law, lawmakers who receive state retirement benefits are not entitled to their annual base $10,400 salary but can continue to receive expense reimbursements.
Government workers generally can retire with full benefits after 28 years of service, though critics contend that the service requirement being lowered to 28 years from 30 years has contributed to billions of dollars of unfunded liability in the state pension system.
Unfunded liability has been defined as the difference between the value of system’s assets and what is owed to current and future retirees. A projection earlier this year put the unfunded liability at nearly $13.4 billion; a different consultants’ report released earlier this month pegged it at $17 billion.
It would take the state more than 60 years to cover the $17 billion gap, according to one estimate; government accounting standards generally recommend no more than a 30-year payoff period.
Proposals to fill the hole have included increasing employer and employee contributions, raising retirement service requirements, reducing or eliminating cost-of-living increases, and lowering pension fund investment expectations.
Legislative panels in the S.C. House and Senate recently began meeting to address the problem. It likely will be a major issue when the full General Assembly returns to session in January.
Reach Brundrett at (803) 254-4411 or rick@thenerve.org.