South Carolina's police officers and firefighters have joined a lawsuit against the state's retirement system that seeks to overturn a law requiring state employees who return to work under a special incentive program to make payroll retirement contributions.
Circuit Judge John Breeden signed an order this month in Georgetown County giving class-action status to about 1,600 police and firefighters covered by the S.C. Retirement System. They will join about 22,000 other state employees who are part of a class-action suit filed in June against the retirement system.
The state Supreme Court heard arguments in that case in December. It could be weeks before the court rules on the matter.
In the June lawsuit, retirees claimed that state lawmakers broke a contract with participants in the Teacher and Employee Retention program, also known as TERI. That program, established in 2000, let state employees retire after 25 years and then return to work for up to five years, during which time the workers would not have to contribute to the retirement system. Pension benefits for TERI participants are set aside until the workers finally retire.
The General Assembly last year passed a law requiring TERI participants to start making payroll deductions of 6.25 percent toward the state's retirement program. That law is intended to generate more money for annual cost-of-living increases for retirees and address financial concerns about the pension system.
The deductions started in July. They are being put into an escrow account, which pays 4 percent annual interest, pending the Supreme Court's ruling.
Police officers and firefighters were not included in the June lawsuit because the state's Police Officers Retirement System is a different subset of the S.C. Retirement System than the one that originally sued the state.
"The state made a contract with them [retirees] and then pulled the rug out from under them and said they couldn't do it," said Gene Connell, a Surfside Beach attorney representing the police officers and firefighters. "Once you make a written agreement with someone, you can't go back and change it. That doesn't pass the smell test."
In his order, signed Feb. 2, Breeden said police and firefighters deserve the same status as other state employees and should be allowed to piggyback on their lawsuit.
"This court has heard no compelling argument how or why this case is any different from the case currently pending before the South Carolina Supreme Court," Breeden said in his Feb. 2 order.
Breeden also ordered the retirement system to hold police officers' and firefighters' retirement funds in escrow at 4 percent annual interest pending the Supreme Court decision.
"Obviously, this litigation could go on for years without a final decision," Breeden wrote.
Michael Sponhour — a spokesman for the S.C. Budget and Control Board, which oversees the retirement system — said about 1,600 police and firefighters are affected by Breeden's ruling.
Sponhour said the Police Officers Retirement System is the second-largest of four programs administered by the state retirement system. The largest is the S.C. Retirement System, which covers teachers and most public-sector workers. The state also oversees the General Assembly Retirement System and the Judges and Solicitors Retirement System.
Breeden said his decision was based in part on affidavits from James Arnold, an officer with the Georgetown Police Department. Arnold retired in 2004, then rejoined the Police Department under the state's retirement incentive program.
Arnold said state retirement system employees told him all retirement deductions from his paycheck would cease when he returned to work because he was retired. Arnold said he also signed documents stating that no retirement deductions would be made from his paycheck. Beginning July 1, however, the state started making deductions from Arnold's paycheck for the retirement system.
State officials have said overturning legislation requiring deductions would threaten the retirement system's solvency.
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