The pension plan for the public (government) employees of the State of South Carolina is managed by the Public Employee Benefit Authority (PEBA). It handles the contributions as well as the disbursements of the trust funds of the pension. It does that in partnership with the public employers in the State so that the employees can take advantage of a pension plan that suits them.
South Carolina PEBA was formed on 1st July 2012. It was created by the South Carolina General Assembly. It became a part of Act No. 278. It works as a State Agency that is responsible for the administration of the retirement benefit systems of the state employees.
PEBA is offered to State Employees, Police Officers (PORS), Teachers, Fire Department, General Assembly, Judges, Solicitors and National Guards.
Basic Plan Information for State Employees
Employee contributes a tax-deferred 7.5% of gross salary into the South Carolina Retirement System Account. This will rise to 8% with effect from 1st July 2014.
The contributions are remitted for accumulation on a tax-deferred system. If the employee has not retired, his or her account will earn 4% interest that is compounded annually on the balance as of the previous midyear schedule or 30th June.
There is a clause that in case of an increase in the additional contribution, both the employee and the employer contribution rates are also increased to maintain a differential of 2.90 between the rates. There is no scope for any decrease in the contribution rates until the pension system is funded to a minimum of 90%.
The Average Final Compensation will be based on the employee’s five highest years of earned service compensation with effect from 1st July 2012. But the payments for annual leave that is unused will not be included in this AFC. Service credit is not given for unused sick leave at retirement.
Eight years of earned service is required for eligibility to be vested for service retirement benefits and disability benefits.
Service Retirement Eligibility
An employee has to put in twenty eight years of service on the retirement date and five of them have to be with service earned. As an alternative, the employee has to be sixty five years of age or older with a minimum of five years of service earned on the retirement date.
Employees have to meet the Rule of 90 requirements. The employee’s age and number of years of service have to add up to the figure of ninety. An employee who is 55 years old and has put in 35 years in service with eight years of earned service would qualify for normal retirement or the employee has to be sixty five years of age after having put in eight years earned service on the retirement date.
Early Retirement with a Reduced Benefit
Employee has to be sixty years of age after having earned service for five years. Annuity is reduced by 5% for every year taken into account less than sixty five or the employee has to be fifty five years of age and older with twenty five years of employment and as minimum of five earned service years. The benefit is reduced by 4% for every year served less than twenty eight.
Employee has to be sixty years of age and should have earned a minimum of eight years as earned service. The benefit is reduced by 5% for every year taken into account less than sixty five.
It has to be noted that if the employee membership started before 1st January 2001, the five year minimum earned service requirement does not apply if the employee had five years of creditable service that was accrued as of 31st December 2000.
Your contribution to the SCRC retirement account is seven percent of your gross pay, the amount is not taxable. With effect from July 1, 2013, they enhanced the employee’s contribution to 7.5 percent and this will rise once more, to eight percent, starting from July 1, 2014. You will have an interest payment of @4 percent compounded annually on the amount available in your account as on 30 June of the previous year, until your retirement or your account becomes inoperative. The employer’s contribution to the SCRC account is 10.6% as on 1 July 2013 and 10.9% for 1 July 2014.
Payment Options at Retirement
Three types of monthly annuity options are available to the employee at retirement. The employee cannot change these options once the annuity becomes payable.
- Option 1 (Maximum Retiree Annuity Monthly) – The option offers maximum annuity on monthly basis and pays a lifetime annuity based on the average final compensation, the number of years served and a multiplier which is done at 0.0182. After the death of the employee, the retirement benefits will be given lump sum to the designated beneficiary or the estate.
- Option 2 (100% Joint Retiree- Survivor Annuity Monthly) – The employee will get a reduced annuity on monthly basis for life. After the death of the employee, the same 100% annuity will be given to the beneficiary or beneficiaries throughout their lifetime. If the designated beneficiaries do not survive the employee, the annuity will revert back to Option 1.
- Option 3 (100%-50% Joint Retiree- Survivor Annuity Monthly) – The employee will get a reduced monthly annuity for life. After the death of the employee, half of the annuity will continue to be given throughout the lifetime of the beneficiary. If the beneficiaries do not survive the employee, then the annuity will again revert back to Option 1.
Three kinds of beneficiaries may be designated by the employee.
- Primary Beneficiaries – For in-service death benefit. Multiple beneficiaries can share equally in these survivor benefits.
- Contingent Beneficiaries – In case of the death of the primary beneficiary or beneficiaries, contingent beneficiaries are paid as survivors.
- Incidental Death Benefit Beneficiaries – After an estate is designated, the beneficiaries are listed.
Benefit Estimate Calculators
An employee’s monthly benefit is calculated at retirement on individual particular parameters such as compensation records, service time credits, number of days of annual or sick leave and the benefit multiplier for the retirement system of state employees.
Cost of Living Adjustment (COLA)
Estimates indicate that as on June 2012 in South Carolina, 88.5% of the average national cost is enough to retain the existing standard of living, and on 1 July each year, retirees eligible under PORS and SCRS would receive a cost of living adjustment (COLA) of 1% of their yearly annuity, subject to a maximum amount of $500.
South Carolina Public Employee Benefit Authority has added on some new features to the Online Member Access. The employee members may view their retirement account status and edit that information. Active members will be able to view as well as project the amount of service they will have at the end of a certain month or year or at a certain age. They will also be able to view the information on their service or disability retirement application and its status. In order to register, the members have to enter the details of their names and the social security number. They have to provide their date of birth and email contact address. The members who are retired have to furnish the amount of one of the recent annuity payments they have received. All this can be done at www.retirement.sc.gov/contact/email.htm. (Source: https://www.retirement.sc.gov/news/29 April 2013).
Stephan Beale, reports for the GoLocal Prov News Contributor as on 25 April 2013 that that in the year 2012, the fiscal fund suffered a loss of over $200 million, due to a questionable move into hedge funds and other non-lucrative investments, prompted by the strategy that Gina Reynolds, the general treasurer orchestrated.