Sen. David Thomas Addresses Pension Controversy

In an e-mail to constituents on Friday, Senator David Thomas (R-8) explained the pension system that was raised in a USA Today story published last fall. The story suggested that Thomas was one of many state representatives from across the country benefiting financially from a system that allows them to receive a pension while holding office. The story set off a firestorm of controversy and has led to four different candidates--Chad Groover, Jim Lee, Joe Swann and Ross Turner--stepping up to challenge Thomas for his seat.

Thomas' e-mail in full:

Over the past few months, I have received many questions regarding the State Retirement Systems and specifically the General Assembly Retirement System.  The question I receive the most often is why am I drawing a salary and retirement at the same time.  I am not.  Legislators cannot draw their salary and retirement at the same time.  By drawing my retirement in lieu of a salary, I have saved the taxpayer more than $70,000 over the last six years, because no taxpayer dollars fund retirement pensions after retirement.  Nineteen Senators have opted out of the General Assembly pay and draw their pay from the Retirement System. The total savings to the taxpayer over the last six years is approximately 1.3 million dollars.

There are too many details in the SC Retirement Systems to fully enumerate every aspect in a newsletter.  Below is a brief overview of the SC Retirement Systems with some helpful links.  If you would like more information, please contact my Senate office, and we will answer your specific questions.

Sincerely,

David L. Thomas

South Carolina Retirement Systems Brief Overview

The State of South Carolina has six retirement systems: South Carolina Retirement System (SCRS), Police Officers Retirement System, which includes firefighters (PORS), Judges and Solicitors Retirement System (JSRS), the General Assembly Retirement System (GARS), the National Guard Retirement System (NGRS), and the State Optional Retirement Program (ORP). Information on four of the systems is bulleted below and more information is available at http://www.retirement.sc.gov:

• SCRS • covers all state employees not covered by the other retirement systems. SCRS members may draw full retirement after 28 years of service, regardless of their age. For example, if an SCRS member begins working at 22, the SCRS member could retire at 50 years of age and receive full retirement benefits. The retiree’s pension would be approximately 55% of the average of his highest three years of salary. Since 2001 active members of SCRS have been allowed to participate in the Teacher and Employee Retention (TERI) Program, which allows them to retire but continue working and receiving a salary for 5 years. During this 5 year period, their retirement benefits go into a tax-deferred account.

• PORS • members may retire after 25 years of service. Therefore, a police officer could retire at 45 with full pension benefits if he began working at age 20.

• JSRS • members who are judges may draw full retirement after 25 years of service and solicitors after 24 years of service. Their pension benefits are 71.3% of their salaries, but can go up to 90% depending on years of service. If a judge began serving at age 35, he could retire at 60 years of age.

• GARS • allows a legislator who has 30 years of service to draw full retirement only after he reaches 55 years of age. Other state retirement systems allow a retiree to draw his salary and pension simultaneously. Legislators cannot do this nor can they participate in TERI. The pension for a GARS member is approximately $32,000. Their base salary is $10,400 annually. GARS members receive an additional $1,000 per month to pay for in-district expenses related to their legislative duties such as mileage, postage, lodging, etc. Legislators’ contributions to GARS are a percentage of their salaries and expenses.

Active members of the above four retirement systems can purchase additional service years for years they have worked in other areas of public service, such as the military and up to five years of non-public service, which is purchased at a higher rate than public service.

There is a difference in the Retirement Systems’ multiplier used to calculate a member’s benefit. The multiplier for SCRS is 1.82, which is calculated as follows: Members highest earnings for 12 consecutive quarters X 1.82 X years of service = member’s pension benefit. The multiplier for GARS is 4.82, PORS is 2.14, and JSRS’s benefit is calculated as follows: 71.3% of the current active salary of the position from which the member retired, plus an additional 2.67% of compensation for each year of service beyond 25 years for judges and 24 years for solicitors and public defenders but not to exceed 90% of active salary of respective position.

The reason the multiplier is higher for legislators’ retirement is to compensate for the low salaries they are paid while they serve. The average annual salary for a Department of Transportation engineer or attorney is approximately $64,000. Their pension benefit after 28 years of service would be approximately $35,200, and a legislator’s pension who has served for 30 years is approximately $32,000.

This policy is under examination by the Senate Committee reviewing pensions. If the multiplier is changed, then the argument will be made that legislators deserve to be paid a higher salary.

It has been the policy of the state for legislative pay to remain low but to provide a reasonable retirement to offset their low salary. Over the years, I have adamantly supported the low-pay policy and been opposed to salary increases. Legislators should serve for the good of the State and not for a high salary.

In Summary:

• Legislators must contribute to General Assembly Retirement • System for 30 years before they can retire.
• Legislators cannot receive their salary and pension at the same time.
• No taxpayer dollars fund retirement pensions after retirement.
• Taxpayers actually save money when a legislator retires because his pension comes out of the GARS retirement funds, and the General Fund is no longer paying his salary, Social Security and employer contributions to the retirement fund.
• Currently 19 Senators and 9 House members are receiving retirement benefits and continuing to serve. The Chairmen of the House and Senate Ethics Committees, for instance, have taken this option. The retirement system framework was in place before the 28 General Assembly members currently drawing retirement were elected.
• One substantial change was made 10 years ago to GARS. The change allowed a legislator to draw his retirement at 55 years of age if he had 30 years of service. This change brought GARS more in line with the other state retirement systems. Previously, a legislator had to be 70 years old before he could draw his retirement.
• SC Legislators are among the lowest paid in the nation and according to one study are third from the bottom. The SC General Assembly is in session for 5 ½ months. However, when we are in session and out of session, we take calls, review e-mails and letters and answer questions and work with constituents and local governments to address problems they are experiencing. We also attend and participate in meetings, conferences, public hearings and in-district events year round.

Currently, a bipartisan Senate Finance Subcommittee is analyzing all of the South Carolina Retirement Systems. They are focusing on financial soundness as well as other aspects of the systems. You can view their meeting information at http://www.scstatehouse.gov/committeeinfo/SenateFinanceSpecialRetirementSubcommittee/sfinretiresubcomm.php.