Victory in South Carolina! Last week, Gov. Henry McMaster signed a bill increasing contributions to the state pension fund. While this is an important step towards improving the health of the fund, the cause for celebration is the part of the bill that did not make it to Gov. McMaster’s desk: an amendment to close the pension system upon reaching full funding and move new hires to risky defined contribution 401(k)s was struck down.
Closing a pension plan is a surefire way to cause funding levels to plummet. We’ve seen this before in states like Michigan and West Virginia (you can read more in our latest piece in The Hill). In Michigan, the state employees’ pension plan was 109% funded when it was closed, but dropped to just 60% funded fifteen years later.
Thanks to the efforts of public employees and their allies, the retirement security of South Carolina’s public servants will not be jeopardized. This is a win for pensions and, most importantly, for working families. The legislation to shore up pension funding in South Carolina passed with large bipartisan majorities in the state legislature because policymakers heard directly from the people that would be affected.
Unfortunately, pension opponents in South Carolina are likely to make another attempt to force public employees into risky and unreliable 401(k)-style plans. This is happening in other states as well. The leader of the state senate in Michigan wants to close the pension plan for public school employees– a plan that failed late last year after a backlash from working people. The best way to stop misguided efforts like these is for legislators to hear from the people who have worked hard to earn their pensions.
Please make your voice heard in the fight to protect pensions and sign up here for our email list and then follow us on Facebook and Twitter. Victories like the one in South Carolina depend on the efforts of people who understand the true value of a pension.
