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House Pension Bill Protects Current Lawmakers

When the S.C. House recently passed a retirement-system reform bill, it was widely reported that state lawmakers would no longer be able to receive a state pension while serving in office.

That's not true, however – at least for the more than two dozen legislators currently receiving state pensions.

The bill (H. 4967), which was introduced by the House Ways and Means Committee and passed the full House on March 22, contains a grandfather clause that exempts lawmakers already receiving pensions, a review by The Nerve found.

“I like the grandfather clause,” said Ways and Means Committee Chairman Brian White, R-Anderson, who doesn’t receive a state pension, when questioned last week by The Nerve about the bill. “I like the clause that cuts out double dipping.”

Under Section 9-9-60 of the S.C. Code of Laws, legislators can receive a pension and continue to serve if they have 30 years of service. The law requires them to give up their annual base $10,400 legislative salary if they receive a pension, though they can continue to receive $12,000 yearly “in-district” expense payments, which are considered income and factored into their state retirement benefits.

There’s good reason why lawmakers would want to trade their base salaries for state pensions. The current retirement formula allows legislators with 30 years of service to earn more than $32,000 annually in retirement benefits – three times the amount of their base salaries, or about 1.5 times more than the combined total of their base salaries and in-district payments.

And if they’re short of 30 years, they can purchase the balance based on the number of years they served in other public positions, allowing them to earn larger pensions while remaining in office.

H. 4967, now before the Senate Finance Committee, would cut out the section allowing lawmakers to receive pensions while continuing to serve. But it adds the grandfather clause protecting current lawmakers.

 “I use that term ‘blessed,’” longtime Rep. Grady Brown, D-Lee, told The Nerve last week when asked about his legislative pension. “That (lawmaker retirement) system was put in place decades ago, long before I began serving.”  

The Nerve first reported in October 2010 that from 2008 through mid-2010, as many as 18 senators and a dozen House members might have been receiving state pensions, based on expense records for the period that showed they accepted no annual base $10,400 salary. State retirement officials have told The Nerve that they are prohibited by law from revealing the identities of pension recipients.

As of Sept. 12 last year, 350 current or former lawmakers, or their beneficiaries, were receiving state retirement benefits for a total annual payout of $6.5 million, The Nerve reported then, based on a review of retirement system records. At the time, the average annual payout for the group was $18,589; the highest recorded yearly benefit was $61,660.

Lawmakers can begin drawing pensions after they turn 60 and have eight years of service, though they cannot continue serving in office, a spokeswoman for the S.C. Budget and Control Board, which oversees the state retirement system, earlier told The Nerve. Lawmakers who have at least 30 years of service, which can include purchased years of credit, or who have reached age 70 can continue to serve in office while receiving their legislative pensions.

Updated General Assembly expense records obtained by The Nerve under the S.C. Freedom of Information Act show that as of late last year, the following 18 senators and nine House members received no base $10,400 salary, indicating that they receive a state pension:

Senators: Ralph Anderson, D-Greenville; John Courson, R-Richland; Dick Elliott, D-Horry; Mike Fair, R-Greenville; Robert Ford, D-Charleston; Wes Hayes, R-York; John Land, D-Clarendon; Hugh Leatherman, R-Florence; Phil Leventis, D-Sumter; Larry Martin, R-Pickens; John Matthews, D-Orangeburg; Yancey McGill, D-Williamsburg; Harvey Peeler, R-Cherokee; Glenn Reese, D-Spartanburg; Mike Rose, R-Dorchester; John Scott, D-Richland; Nikki Setzler, D-Lexington, and David Thomas, R-Greenville.

Representatives: Jimmy Bales, D-Richland; Liston Barfield, R-Horry; Grady Brown, D-Lee; Greg Delleney, R-Chester; Jerry Govan, D-Orangeburg; George Hearn, R-Horry; Lonnie Hosey, D-Barnwell; Denny Neilson, D-Darlington; and Roland Smith, R-Aiken.

In addition, then-Republican Senate President Pro Tempore Glenn McConnnell of Charleston, who last month became lieutenant governor after Ken Ard’s resignation, also receives a legislative pension, records show.

House Clerk Charles Reid in a written response to The Nerve last September confirmed the identities of the nine House members receiving state pensions.

In a 2010 written response to The Nerve, Senate Clerk Jeffrey Gossett said senators who receive no base salary are “most likely retired,” adding he was not aware of any senator who was not receiving a pension but who voluntarily declined to accept the base salary.

Gossett since then has repeatedly declined to identify the senators who receive pensions but no base salaries, even after The Nerve in November submitted an FOIA request asking him to confirm their identities.

When reminded again last week, Gossett replied in an email: “It appears you have the list of names. I am unclear what other information you are requesting.”

Two senators on the list -  Land, 71, the Senate minority leader whose legislative career started in 1975; and Leventis, 66, who has been in the Senate since 1981, recently announced they would not seek re-election.

Golden Parachutes?

As for the amounts of their pensions, state law does not require lawmakers to report retirement benefits on their required state ethics forms, according to Cathy Hazelwood, attorney for the State Ethics Commission.

“Retirement is not income and we tell our folks that they don’t have to disclose it,” Hazelwood said in a written response to The Nerve last week.

However, at least six lawmakers and McConnell reported their pensions on their most recently filed statements of economic interests with the Ethics Commission. Following are those who reported their annual pension amounts:

  • Rep. Bales: $77,004.90 (Bales is a retired Richland School District 1 administrator. It is unclear whether any of his pension is from the General Assembly Retirement System; he did not return written or phone messages from The Nerve last week seeking comment.);
  • Former Sen. McConnell: $48,515.04;
  • Sen. Leatherman: $36,148.92;
  • Sen. Thomas: $32,290.40;
  • Sen. McGill: $27,859.20;
  • Sen. Scott: $27,177.60 (Listed as family income instead of personal income, though Scott earlier told The Nerve that he receives a legislative pension); and
  • Rep. Roland Smith: $22,038.24

The Nerve last week sent written messages to all 27 current lawmakers and McConnell asking them for details on their state pensions but didn’t receive responses from the vast majority of them.

Of the few who did respond, Sen. Courson, who has been in the Senate since 1985 and became the Senate president pro tempore last month with McConnell’s elevation to lieutenant governor, told The Nerve that he receives a $32,348 annual pension and has been in the retirement system for two years.

He added that because he receives a pension, he does not receive an annual $21,400 salary as the Senate president pro tempore.

“I didn’t want to come under it (the legislative retirement system),” Courson, 67, said. “It was mandated – like Social Security.”

Courson said he believes that had he been allowed to invest his state pension contributions in the private market, he would have seen a greater return over the years, adding that his family will not receive his state pension after he dies.

Still, as The Nerve has pointed out previously, lawmakers over the years have been pretty generous to themselves when it comes to their own pensions.

Their current retirement formula, for example, is 4.82 percent of “earnable compensation” times years of credited service. In comparison, for most general state employees, their retirement pay generally is based on years of service multiplied by 1.82 percent of the worker’s “average final compensation,” or the 12 highest consecutive quarters divided by three.

Earnable compensation for lawmakers is their annual base $10,400 salary, plus their yearly $12,000 in-district expense payments, for a total of $22,400. Lawmakers currently contribute 10 percent of their pay toward their retirement; H. 4967 would increase that rate to 11 percent while raising the contribution rate paid by general state employees to 7.5 percent from 6.5 percent.

Under state law, legislators can purchase credit for years of service in other public positions to get them to the 30-year mark and allow them to continue serving while receiving their pensions.The credit-purchase program, which also is available to other state employees, allows the purchase cost - generally set at 16 percent of an employee's current salary or highest fiscal-year salary, whichever is greater, for each year of service - to be deducted  in installment payments, with interest charged at the prime rate plus 2 percent, from their legislative paychecks.

Courson, for example, estimated he spent about $24,000 to purchase credit for the six years he served in the U.S. Marine Corps Reserves.

Asked about the grandfather clause in the House bill that would allow him to continue serving in the Legislature while receiving his pension, Courson replied: “I was told by an attorney that you can’t change a pension plan once it’s in effect. It’s against federal law.”

‘Time-Consuming’ Job

In a written response to The Nerve last week, Sen. Fair, 65, who has been in the Senate since 1995 after serving 11 years in the House, didn’t reveal the amount of his pension. But he said he spent “in the neighborhood” of $20,000 to $25,000 to purchase credit for the six years he previously served on Greenville County Council, noting that the purchase “wiped out my wife’s 401k.”

In his written response, Sen. Thomas, 62, who was quoted in a USA Today story last year on legislative pensions nationwide, didn’t directly answer The Nerve’s questions, though he attached a copy of a constituent newsletter from him addressing the pension issue after the USA Today article was published.

“Being a legislator is time-consuming year-round,” Thomas, an attorney and a senator since 1985, wrote. “If money had been my objective over the past 30 years, my business income would have far exceeded my Senate salary or pension had I been actively engaged in my law practice twelve months out of the year.

“I could also have chosen to begin drawing my Senate retirement and not run for re-election. I support the right of every hard-working employee, whether in the public or private sector, to draw their retirement benefits when they become eligible.”

Rep. Brown, 67, who has been a House member since 1985, said he receives a monthly legislative pension of $2,340, or $28,080 annually. He couldn’t recall the exact year when he started receiving it, though he said he quit taking his base salary more than six years ago after former House leaders – whom he declined to identify – asked him and other legislators to enter the retirement system as a way to cut salary costs in the House chamber’s budget.

Brown, who pointed out he is the Legislature’s only barber, said that “at no time” did he simultaneously receive his state pension and base legislative salary, though he acknowledged he continues to receive his annual $12,000 in-district expense payments. That amount is reported on his most recent statement of economic interests filed with the Ethics Commission, though his pension amount is not listed.

Brown estimated he spent about $30,000, which he noted was paid in installments at 6 percent annual interest, to purchase 14 years of credit for his service in the S.C. Air National Guard and as a member of Lee County Council.

Asked about critics’ contentions that part-time legislators shouldn’t receive state pensions, Brown replied, “Anyone who says the Legislature is a part-time job either has their head buried in sand or they’re watching the wrong Legislature.”

Reach Brundrett at (803)254-4411 or rick@thenerve.org.

 

 

 

 

Accountability General Assembly Legislation State Retirement System Transparency Legislative Power Trip

Sen. Mike Rose Sen. Mike Fair Sen. John Scott Sen. Harvey Peeler Rep. Jimmy Bales Sen. Wes Hayes Rep. Denny Neilson Sen. Yancey McGill Rep. Liston Barfield Sen. Ralph Anderson Rep. Greg Delleney Sen. David Thomas Sen. Robert Ford Rep. Jerry Govan Sen. John Matthews Sen. Hugh Leatherman Rep. Roland Smith Rep. Grady Brown Rep. George Hearn Sen. Nikki Setzler Sen. John Courson Sen. Larry Martin Sen. Dick Elliott Rep. Lonnie Hosey Sen. Phil Leventis Sen. Glenn Reese Sen. John Land