Pension reform legislation signed into law last month by Governor Nikki Haley has had an immediate positive impact on South Carolina's fiscal condition, according to analysis from Moody's, one of the country's three primary credit ratings agencies. The new law reduces the state's unfunded liability by $2 billion in year one and completely eliminates it over the next 30 years.
"Our pension system's unfunded liability had grown $10 billion over the last decade, and it threatened our long term fiscal health and stability. In talking to credit rating agencies about how to best protect the credit of South Carolina, they repeatedly insisted that the most important action we could take was to reduce those unfunded liabilities," Gov. Haley said. "We did just that this year, and as we can see, it's already paying off. By doing things like getting rid of the TERI program, closing the separate, privileged retirement system for legislators, and cutting the taxpayer dollars going to pay for the retirement of state employees, we have established a solid foundation for the state's two largest retirement systems, and for South Carolina as a whole. This is great news."
Moody's Weekly Credit Outlook for July 9, 2012, reports, "South Carolina's $2 billion pension liability reduction is credit positive for state and local governments Last Tuesday, actuaries for the state of South Carolina (Aaa stable) determined that recently enacted public pension reform legislation reduces the South Carolina Retirement System's (SCRS) current unfunded liability to $12.4 billion from $14.4 billion, a credit positive for the state and for local governments that participate in SCRS the law will reverse liability growth and reduce state and local government contributions requirement over time."