This document provides an overview of the South Carolina Retirement Systems (SCRS) and Police Officers Retirement System (PORS), including membership statistics, benefits details, funding status, and challenges. It notes that as of 2010, SCRS had 458,504 members total and assets of $19.7 billion while being only 65.5% funded. PORS had 51,033 members and $2.9 billion in assets while being 74.5% funded. Both systems face issues with lowering their assumed rates of return and recognizing investment losses. The document discusses reforms to address sustainability issues.

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2. The South Carolina Retirement Systems
VS
The S.C. Retirement System Investment Commission
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3. SCRS PORS GARS JSRS NGRS Total
Annuitants 111,394 12,566 346 194 3,951 128,451
Inactive
156,871 11,899 36 4 2,683 171,493
Members
Active
190,239 26,568 196 144 12,445 229,592
Members
Total 458,504 51,033 578 342 19,079 529,536
*Data as of July 1, 2010, actuarial valuation
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4. Monthly benefit payable for the member’s lifetime
Retirement age
65 with 5 years of service; or
any age with 28 years of service
The benefit is equal to 1.82% of members 3-year average
compensation times their years of service
Example: John Smith retires with an average final compensation of
$48,000 and 28 years of service
Annual retirement benefit is $24,460 (1.82% x $48,000 x 28)
Replaces almost 50% of the members pre-retirement pay
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5. The Depth
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6. Is the defined benefit plan as it existed at
7/1/2010 sustainable?
Who bears the “risks and costs” of the
plan?
Can the system “invest” itself out of the
problem?
What changes, if any, can “permanently
fix” the plan?
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7. SCRS PORS
Assets
Market Value $19.7B $2.9B
Actuarial Value $25.4B $3.6B
Liabilities
Actuarial Accrued Liability $38.8B $4.9B
Actuarial Information
Unfunded Actuarial Liability $13.4B $1.2B
Amortization Period 30 years 30 years
Funded Ratio 65.5% 74.5%
Unamortized Losses $5.7B $761M
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8. Funded Ratios for SCRS, PORS 1999-2010
100%
90%
80%
70%
60%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
SCRS PORS
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9. Actuarial assumptions:
One part educated guess
One part art
One part luck
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11. Significant sources of revenue to the plans:
Employee Contribution: 6.5 percent
Employer Contributions:
SCRS – 10.6 percent Beginning July 1, 2012
PORS – 12.3 percent Beginning July 1, 2012
Investment income
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12. *12.09%
14.00%
10.600%
12.00%
9.535%
9.39%
9.39%
9.39%
9.21%
10.00%
8.20%
7.70%
6.85%
6.85%
6.85%
6.85%
6.85%
6.85%
6.85%
*6.50%
6.50%
6.50%
6.50%
6.50%
6.50%
6.50%
6.50%
8.00%
6.25%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
4.00%
2.00%
0.00%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Employer Contributions Employee Contributions
*Expected
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14. Make up a large share of An average over last 17
public pension revenues for years:
mature plans Investment Earnings – 60%
Employer contributions – 27%
Employer Employee contributions – 13%
Contributions
27%
Employee Investment
Contributions Earnings
13% 60%
*Chart source: NASRA, 2010 (based on U.S. Census data). Reprinted in the Center on Budget
and Policy Priorities May 12, 2011 report. 14

15. 25.00%
20.00% 18.59%
15.00%
13.35% 14.62%
8.76%
10.00% 7.15% 8.88% 7.02%
7.25% 8%
5.00% 4.75% 5.13%
2.45% 0.93%
0.00%
Actual
-5.00% -2.56% Return
Assumed
-10.00% Rate of
Return
-15.00%
-20.00%
-19.60%
-25.00%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Average for 13-Year Period – 5.34%
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16. Reduced actuarial assumed rate of return to 7.5
percent from 8 percent
Statute governing the provision of COLAs resulted in:
SCRS – automatic 1 percent
PORS – granted on an ad-hoc basis
Decrease inflation assumption from 3% to 2.75%
Improve the mortality assumption
Other miscellaneous demographic assumptions
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17. Change retirement eligibility
Actuarial cost for service purchase
Longer average final compensation period
Longer vesting period
Eliminate TERI/RTW provisions
Increased employee contribution
Pay benefit adjustments out of excess earnings
Payments for unused annual leave not included in AFC
Unused sick leave no longer counted as service credit in benefit
calculation
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20. SCRS and PORS are cost-sharing employer plans
Pension expense – the annual required contribution
amount (ARC)
Employer’s balance sheet liability is the difference between
the ARC and actual contribution
The Unfunded Liability is reported in notes to the
Retirement Systems’ financial statements
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21. GASB issued two Exposure Drafts in July 2011
Will amend financial statement reporting
Statement 25 deals with the financial statements
of pension plans
Statement 27 deals with the financial
statements of covered employers
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22. The employment exchange creates a future obligation
To disconnect the accounting for pensions from the
funding of pensions
Add additional note disclosures and required supplemental
information
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23. Require employers to recognize a portion of the Unfunded
Pension Liability on their balance sheet
Market value of assets used in calculating net pension
liability
New measure of pension expense in the financial
statements
Replacing most notes disclosures and removing actuarial
funding information
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24. Employer has covered payroll of $20.4 million
Total covered payroll of all SCRS employers equals $7.4
billion
End-of-year market value of assets equals $19.1 billion
($20.4m/$7.4b = .002757 X $19.1b =
$52.7 million net pension liability to be recognized by
employer on the face of the financial statements
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25. Employer has covered payroll of $60.9 million
Total covered payroll of all SCRS employers equals $7.4
billion
End-of-year market value of assets equals $19.1 billion
($60.9m/$7.4b = .008230 X $19.1b =
$157.2 million net pension liability to be recognized by
employer on the face of the financial statements
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28. THE LANGUAGE USED IN THIS PRESENTATION DOES NOT CREATE ANY CONTRACTUAL
RIGHTS OR ENTITLEMENTS AND DOES NOT CREATE A CONTRACT BETWEEN THE
MEMBER AND THE SOUTH CAROLINA RETIREMENT SYSTEMS. THE SOUTH CAROLINA
RETIREMENT SYSTEMS RESERVES THE RIGHT TO REVISE THE CONTENT OF THIS
PRESENTATION. OPINIONS EXPRESSED DURING THIS PRESENTATION AS TO THE
APPROPRIATE PUBLIC POLICY TO BE FOLLOWED REGARDING THE PLANS
ADMINISTERED BY THE SOUTH CAROLINA RETIREMENT SYSTEMS ARE THOSE OF THE
SPEAKER AND DO NOT NECESSARILY REFLECT THE OPINION OF THE RETIREMENT
SYSTEMS, THE S.C. BUDGET AND CONTROL BOARD, THE GENERAL ASSEMBLY OR ANY
PARTICULAR MEMBER OF THE GENERAL ASSEMBLY.
This presentation is meant to serve as a guide but does not constitute a binding representation of
the South Carolina Retirement Systems. The statutes governing the South Carolina Retirement
Systems are found in Title 9 of the South Carolina Code of Laws, and should there be any conflict
between this presentation and the statutes or Retirement Systems’ policies, the statutes and
policies will prevail.
Employers covered by the South Carolina Retirement Systems are not agents of the
Retirement Systems.
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