PIERRE, S.D. (AP) — A state Senate committee endorsed a plan to limit annual increases in retirement benefits to improve the South Dakota Retirement System’s financial condition after two years of investment losses.
The Retirement Laws Committee approved three bills aimed at helping the system recover asset losses. The bills next go to the full Senate for debate. The measures were submitted to the Legislature by the Retirement System’s Board of Trustees.
The main bill would reduce the annual cost-of-living adjustments at least temporarily in the retirement system that covers public employees throughout South Dakota.
“We do not want to lower anyone’s retirement benefits, but we want to slow down the growth in those benefits,” said Rob Wylie, executive director of the Retirement System.
The system has more than 70,000 members, most of whom are still working. It includes employees of state government, cities, counties and school districts. The system pays retirement benefits of more than $300 million a year.
The Retirement System’s assets fell to $5.6 billion by the end of the last fiscal year ending June 30, down more than 20 percent from $7.3 billion a year earlier, because of a loss in value of stocks and other investments. It also lost 8.7 percent of its value in the previous year.
Officials said Thursday that about $1 billion of the loss has been recovered in the past six months as the stock market has risen.
The committee voted unanimously to approve the bill that would trim annual benefit increases.
It would set the annual cost-of-living increase in benefits at 2.1 percent initially, down from 3.1 percent. The annual increase could vary between 2.1 percent and 3.1 percent as inflation and the financial health of the system change in future years.
Another measure, passed on a 3-2 vote, would restrict a program that allows some public employees to retire and then be rehired in public jobs, drawing both paychecks and retirement benefits.
One of the changes would cut retirement benefits by 15 percent for people who return to work after retiring.
School administrators asked the lawmakers to reject the bill dealing with retirees who return to work. The restrictions would prevent teachers and administrators from coming out of retirement to fill crucial jobs in schools, forcing schools to spend more to hire younger teachers, said Jim Holbeck, superintendent of the Harrisburg School District.
Another bill endorsed by the Senate panel would trim refunds for those who choose to take their retirement money with them when they leave the system before retirement.