Indicates Matter Stricken

Indicates New Matter

 

Committee Report

April 21, 2026

 

H. 4576

 

Introduced by Reps. Bannister and Clyburn

 

S. Printed 4/21/26--H.

Read the first time January 13, 2026

 

________

 

The committee on House Ways and Means

To whom was referred a Bill (H. 4576) to amend the South Carolina Code of Laws by amending Section 9-20-10, relating to State Optional Retirement Program definitions, so as to include special purpose, etc., respectfully

Report:

That they have duly and carefully considered the same, and recommend that the same do pass with amendment:

 

    Amend the bill, as and if amended, SECTION 1, by striking Section 9-20-10(1)(e) and inserting:

       (e) a special purpose district, as defined in Section 6-11-1610, that participates as an employer in the South Carolina Retirement System. or commission of public works that has made an election to participate in the State Optional Retirement Program pursuant to Section 9-20-15.

Amend the bill further, SECTION 1, by striking Section 9-20-10(2)(f) and inserting:

       (f) an employee, hired after June 30, 2027, by an employer as defined in Section 9-20-10(1)(e). an employee hired by an employer as defined in Section 9-20-10(1)(e) after the employer's effective date of participation in the State Optional Retirement Program pursuant to Section 9-20-15.

    However, an employee who exercises an option to not participate in the South Carolina Retirement System under Section 9-1-550 is not eligible to participate in the State Optional Retirement Program.

Amend the bill further, by adding appropriately numbered SECTIONS to read:

SECTION X.  Chapter 20, Title 9 of the S.C. Code is amended by adding:

 

    Section 9-20-15. A special purpose district, as defined in Section 6-11-1610, or a commission of public works, established pursuant to Article 3, Chapter 31 of Title 5, that participates as an employer in the South Carolina Retirement System, in its discretion, also may become a participating employer in the State Optional Retirement Program by applying to the board to participate in the program and by complying with the requirements and regulations of the board. The application must be filed at least six months prior to the requested effective date of participation, which must be July 1, 2027, or any subsequent July first, next following receipt by the board of such application.

 

SECTION X.  Section 9-1-1085 of the S.C. Code is amended by adding:

 

    (E) In lieu of the deductions from compensation required by Sections 9-1-1020 and 9-1-1160, an employer may elect, no later than July first, to pick up all or a portion of the employee contributions required by this section for the following fiscal year without a reduction or offset from its employees' compensation.  Employee contributions picked up without such reduction or offset from the employee's compensation must be treated as employer contributions in determining federal tax treatment under Section 414(h)(2) of the United States Internal Revenue Code but must be credited as employee contributions for the purposes of the system.  An employer making the election provided by this subsection is considered to have taken formal action to provide that the contributions on behalf of its employees, although designated as employee contributions, must be paid by the employer in lieu of employee contributions. The employer shall pay these employee contributions from the same source of funds which is used in paying earnings to the employee.  The employee, however, may not be given any option of choosing to receive the contributed amount of the pick ups directly instead of having them paid by the employer to the retirement system.  An employer's election to pick up contributions without a reduction or offset from its employees' compensation pursuant to this subsection may not be changed during the fiscal year but may be changed for future fiscal years.

 

SECTION X.  Section 9-11-225 of the S.C. Code is amended by adding:

 

    (E) In lieu of the deductions from compensation required by Section 9-11-210, an employer may elect, no later than July first, to pick up all or a portion of the employee contributions required by this section for the following fiscal year without a reduction or offset from its employees' compensation.  Employee contributions picked up without such reduction or offset from the employee's compensation must be treated as employer contributions in determining federal tax treatment under Section 414(h)(2) of the United States Internal Revenue Code but must be credited as employee contributions for the purposes of the system.  An employer making the election provided by this subsection is considered to have taken formal action to provide that the contributions on behalf of its employees, although designated as employee contributions, must be paid by the employer in lieu of employee contributions. The employer shall pay these employee contributions from the same source of funds which is used in paying earnings to the employee.  The employee, however, may not be given any option of choosing to receive the contributed amount of the pick ups directly instead of having them paid by the employer to the retirement system.  An employer's election to pick up contributions without a reduction or offset from its employees' compensation pursuant to this subsection may not be changed during the fiscal year but may be changed for future fiscal years.

 

SECTION X.  Section 9-1-10(8) of the S.C. Code is amended by adding:

 

    (c) Employee contributions picked up by an employer pursuant to Section 9-1-1085(E) without a reduction or offset from the member's compensation are not earnable compensation for the purposes of the system.

 

SECTION X.  Section 9-11-10(12) of the S.C. Code is amended to read:

 

    (12) "Compensation" means the total remuneration paid to a police officer for service rendered to an employer for his full normal working time;  when compensation includes maintenance, fees and other things of value, the board shall fix the value of that part of the compensation not paid in money directly by the employer. Employee contributions picked up by an employer pursuant to Section 9-11-225(E) without a reduction or offset from the member's compensation are not compensation for the purposes of the system.

 

SECTION X.  Section 9-1-10(1) of the S.C. Code is amended to read:

 

    (1) "Accumulated contribution" means the sum of all the amounts either deducted from the compensation of a member or paid by the employer in lieu of employee contributions pursuant to Section 9-1-1085(E) and credited to the members member's individual account in the employee annuity savings fund, together with regular interest on the account, as provided in Article 9 of this chapter.

 

SECTION X.  Section 9-11-10 (2) and (6) of the S.C. Code is amended to read:

 

    (2) "Accumulated contributions" means the sum of all the amounts either deducted from the compensation of a member or paid by the employer in lieu of employee contributions pursuant to Section 9-11-225(E) and credited to the member's individual account in the employee annuity savings fund, together with regular interest on the account, as provided in this chapter.

    (6) "Aggregate contributions" means the sum of all the amounts either deducted from the compensation of a member or paid by the employer in lieu of employee contributions pursuant to Section 9-11-225(E) and credited to the member's individual account in the system, including any amounts transferred from another fund to the system as provided in Section 9-11-210(6).

 

SECTION X.  Section 9-11-260(2) of the S.C. Code is amended to read:

 

    (2) The members' account shall be the account in which shall be held the contributions deducted from the compensation of members and amounts paid by the employer in lieu of employee contributions pursuant to Section 9-11-225(E), together with the interest credited thereon.  Upon the retirement of a member, or upon the death of a member if an allowance is payable to his beneficiary pursuant to Section 9-11-130, the amount of his accumulated contributions shall be transferred to the accumulation account.

 

SECTION X.  Section 9-1-1020, the fourth undesignated paragraph, of the S.C. Code is amended to read:

 

    Section 9-1-1020.  Each department and political subdivisionemployer shall pick up the employee contributions required by this section for all compensation paid on or after July 1, 1982, and the contributions so picked up shall be treated as employer contributions in determining federal tax treatment under Section 414(h)(2) of the United States Internal Revenue Code. For this purpose, each department and political subdivisionemployer is deemed to have taken formal action on or before January 1, 2009, to provide that the contributions on behalf of its employees, although designated as employer employee contributions, shall be paid by the employer in lieu of employee contributions. The department and political subdivisionemployer shall pay these employee contributions from the same source of funds which is used in paying earnings to the employee. The department and political subdivisionemployer may pick up these contributions by a reduction in the cash salary of the employee. compensation of the employee or, if the employer makes an election authorized pursuant to Section 9-1-1085(E), it may pay the amount designated as an employee contribution without a reduction or offset from the employee's compensation.

 

SECTION X.  Section 9-1-1160(B) of the S.C. Code is amended to read:

 

    (B) Each department and political subdivisionemployer shall pick up the employee contributions required by this section for all compensation paid on or after July 1, 1982, and the contributions picked up must be treated as employer contributions in determining federal tax treatment under Section 414(h)(2) of the United States Internal Revenue Code.  Each department and political subdivision shall continue to withhold federal income taxes based upon these contributions until the Internal Revenue Service, or the federal courts, rule, pursuant to Section 414(h) of the United States Internal Revenue Code, that these contributions are not included as gross income of the employee until such time as they are distributed or made available. For this purpose, each employer is considered to have taken formal action to provide that the contributions on behalf of its employees, although designated as employee contributions, must be paid by the employer in lieu of employee contributions. The department and political subdivisionemployer shall pay these employee contributions from the same source of funds which is used in paying earnings to the employee.  The department and political subdivisionemployer may pick up these contributions by a reduction in the cash salarycompensation of the employee or, if the employer makes an election authorized pursuant to Section 9-1-1085(E), it may pay the amount designated as an employee contribution without a reduction or offset from the employee's compensation.  Employee contributions picked up must be treated administered for all purposes of this section in the same manner and to the extent as employee contributions made before the date picked up.

 

SECTION X.  Section 9-11-210(11) of the S.C. Code is amended to read:

 

    (11) Each department and political subdivisionemployer shall pick up the employee contributions required by this section for all compensation paid on or after July 1, 1982, and the contributions so picked up shall be treated as employer contributions in determining federal tax treatment under Section 414(h)(2) of the United States Internal Revenue Code. For this purpose, each department and political subdivisionemployer is deemed to have taken formal action on or before January 1, 2009, to provide that the contributions on behalf of its employees, although designated as employer employee contributions, shall be paid by the employer in lieu of employee contributions. The department and political subdivisionemployer shall pay these employee contributions from the same source of funds which is used in paying earnings to the employee. The department and political subdivisionemployer may pick up these contributions by a reduction in the cash salarycompensation of the employee or, if the employer makes an election authorized pursuant to Section 9-11-225(E), it may pay the amount designated as an employee contribution without a reduction or offset from the employee's compensation. The employee, however, must not be given the any option of choosing to receive the contributed amount of the pickups directly instead of having them paid by the employer to the retirement system. Employee contributions picked up shall be treated administered for all purposes of this section in the same manner and to the extent as employee contributions made prior to the date picked up.

Renumber sections to conform.

Amend title to conform.

 

B.W. BANNISTER for Committee.

 

 

statement of estimated fiscal impact

Explanation of Fiscal Impact

State Expenditure

This bill as amended changes the definition of an employer for the state ORP to include SPDs or commissions of public works that have elected to participate in the ORP. The bill specifies that SPDs or commissions of public works that participate in the SCRS may also become participating employers in the ORP by applying to the board of PEBA. The application must be filed at least six months prior to the requested effective date of participation, which must be July 1, 2027, or any subsequent July first. The bill further changes the definition of an employee eligible to participate in the ORP to include employees hired by SPDs or commissions of public works after the employer's effective date of participation in the ORP.

PEBA indicates that providing the ORP benefit to employees of SPDs or commissions of public works who have elected to participate in the program under the requirements of the bill will have a minimal effect on the retirement system. The agency further notes that implementing the amended bill will be managed with existing resources. Therefore, this bill as amended will have no impact on PEBA or the state retirement system.

 

Local Expenditure

This bill allows SPDs and commission of public works to participate in the OPR, if they are participants of the SCRS and meet the requirements of this bill.

This bill is not expected to have an impact on local SPDs or commissions of public works in the state, as the employer contribution rate for the ORP is the same as SCRS at 18.56 percent in FY 2025-26. Further, the ORP benefit would only be available to current SCRS participant SPDs or commissions of public works that elect to participate in the ORP under the requirements of the bill.

 

 

Frank A. Rainwater, Executive Director

Revenue and Fiscal Affairs Office

 

_______

 

 

 

 

 

 

 

 

A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 9-20-10, RELATING TO STATE OPTIONAL RETIREMENT PROGRAM DEFINITIONS, SO AS TO INCLUDE SPECIAL PURPOSE DISTRICTS IN THE DEFINITION OF "EMPLOYER."

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Section 9-20-10(1) and (2) of the S.C. Code is amended to read:

 

    (1) "Employer" means:

       (a) a school district that receives funding from the State from the annual appropriation to the Department of Education for Aid to School Districts-Employer Contributions in the annual general appropriations act;

       (b) a four-year and postgraduate institution of higher education supported and under the control of the State;

       (c) a technical college supported and under the control of the State;

       (d) the State or any of its departments, agencies, bureaus, commissions, and institutions, provided that such entity does not meet the definition of item (1)(a), (b), or (c) of this section.; or

       (e) a special purpose district, as defined in Section 6-11-1610, that participates as an employer in the South Carolina Retirement System.

    (2) "Eligible employee" means:

       (a) a person hired on or after July 1, 2001, by an employer as defined in Section 9-20-10(1)(a) to fill a permanent full-time position;

       (b) a person hired on or after July 1, 2002, by an employer as defined in Section 9-20-10(1)(b), (c), or (d) to fill a permanent full-time position;

       (c) a person hired on or after July 1, 2003, by an employer as defined in Section 9-20-10(1)(a), (b), (c), or (d) to fill a temporary position or a part-time permanent position;

       (d) a person employed by an employer as defined in Section 9-20-10(1) who, as of June 30, 2001, was a participant of the Optional Retirement Program for Teachers and School Administrators or who, as of June 30, 2002, was a participant of the Optional Retirement Program for Publicly Supported Four-Year and Postgraduate Institutions of Higher Education;  or

       (e) an employee, hired on or after January 1, 2003, by the State or any of its departments, agencies, bureaus, commissions, or institutions who is not covered by the State Employee Grievance Procedure but who is eligible to participate in either the South Carolina Retirement System or the Police Officers Retirement System.; or

       (f) an employee, hired after June 30, 2027, by an employer as defined in Section 9-20-10(1)(e).

    However, an employee who exercises an option to not participate in the South Carolina Retirement System under Section 9-1-550 is not eligible to participate in the State Optional Retirement Program.

 

SECTION 2.  This act takes effect upon approval by the Governor.

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