The Trillion Dollar Gap: South Carolina

South Carolina's management of its long-term pension liability is cause for serious concern and needs to improve how it handles its retiree health care and other benefit obligations. It has funded only 70 percent of its pension bill—below the 80 percent benchmark that the U.S. Government Accountability Office says is preferred by experts—and is facing an unfunded pension liability of $12.1 billion. The state's funding level has been declining since 1999, when 98 percent of the bill was covered. In 2005, the state took steps to improve the governance of its pension investments by creating the South Carolina Retirement System Investment Commission. Meanwhile, South Carolina has set aside less than 2 percent of the long-term bill coming due for retiree health care and other benefits. The state passed legislation to establish the Long-Term Disability Trust Fund in 2008 and provide funding for the State Retiree Health Insurance Trust Fund by raising employer contribution rates.