SC Supreme Court Orders State To Pay Back Retirees $40 Million Dollars

The State----

The South Carolina Retirement System must pay back about $40 million in retirement contributions it improperly took from the paychecks of state employees who participated in a program that lets them continue working after retirement, a state judge ruled this week.

The ruling — which affects 12,688 people who retired from their state jobs before July 1, 2005 — stems from class-action lawsuits filed in Georgetown and Richland counties. Those eligible for the refunds should receive a letter.

“I’m excited about the ruling and looking forward to getting that money back,” said James Arnold, a former captain with the Georgetown city police department. “This whole thing has been pretty ludicrous.”

Arnold’s lawsuit against the retirement system, originally filed in 2005, became a class-action case that covered police, firefighters, judges and other public safety officials. It was combined with a second lawsuit that covered other state employees.

The state Retirement System will ask Judge James Williams to reconsider the ruling, said system spokesman Michael Sponhour. The ruling also can be appealed to the S.C. Supreme Court.

The ruling affects workers who were caught in changes to state law that require retiree-to-work participants to make contributions to the retirement system starting July 1, 2005.

Those contributions are not credited to the retirees who make them, but are used to supplement the state’s retirement fund.

The retiree-to-work program was created so state agencies can retain skilled workers beyond retirement age. The program lets workers retire after 25 years and then return to the same job for up to five more years — earning both a salary and pension benefits.

Prior to July 1, 2005, retirees who went back to their state jobs did not have to pay into the retirement system.

When the new law took effect, state officials started taking money from the paychecks of those people who had entered the retiree-to-work program under the old rule.

“When we retired, we were promised no more money would be taken out because we would derive no further benefits,” Arnold said. “It was a promise that didn’t happen.”

Williams said this week that changing the law for workers who already were participating in the program was improper. He ordered the state to refund all the money taken. That money has been held in an escrow account since the lawsuits were filed.

“We’re not looking for any damages. All we want is the money that we’ve already paid,” said Arnold, whose deductions amounted to about $300 every two weeks. “Police and firefighters don’t make a lot of money to begin with, so that’s a big chunk.”

Gene Connell, a Surfside Beach lawyer, and Conway lawyer Brana Williams represented the 2,088 public safety officials covered by the ruling.

Sponhour said he believes the ruling is “in error because we believe the General Assembly has the constitutional authority to amend the law.”

The retirement system lost a similar case in 2006 when the S.C. Supreme Court ruled state officials improperly took retirement deductions from workers participating in the Teacher and Employee Retention Incentive, or TERI, program. The court ordered a refund of all deductions.


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Sources: The State, The (Myrtle Beach) Sun News, Wikipedia, Google Maps