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H 4576

Special Purpose Districts Retirement

2025-2026 Regular Session Introduced by Bruce Bannister and 1 co-sponsor

SPDs/commissions in SCRS can opt into the State Optional Retirement Program, with a July 1, 2027 start, and employers may pick up employee contributions without reducing pay.

Referred to Committee on Finance
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Bill Summary · H 4576

Summary of H. 4576 (Session 2025-2026) – Special Purpose Districts Retirement (South Carolina)

Date: April 21, 2026

Prepared by: Legislative analyst

1) Purpose and Intent

  • The bill expands access to the State Optional Retirement Program (ORP) to include certain special purpose districts (SPDs) and commissions of public works that are already participating employers in the South Carolina Retirement System (SCRS).
  • It creates a framework allowing qualifying SPDs/commissions of public works to elect to participate in the ORP, in addition to continuing participation in SCRS, subject to board approval and compliance with program rules.
  • The policy aims to provide optional retirement savings vehicles for employees of SPDs/commissions when those entities elect to participate, aligning retirement options with other SCRS-employing entities.

2) Key Provisions and Changes

Definition and Participation

  • Amends Section 9-20-10(1)(e) to include:
    • “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 ORP pursuant to Section 9-20-15.”
  • Amends Section 9-20-10(2)(f) to cover:
    • Employees hired after June 30, 2027, by an SPD/commission of public works that participates in ORP, and employees hired after the employer’s ORP participation date.
    • Excludes employees who opt out of SCRS under Section 9-1-550 from eligibility for ORP.

ORP Participation Process

  • NEW SECTION 9-20-15: Allows an SPD (or a commission of public works) that participates in SCRS to voluntarily become an ORP participating employer by applying to the PEBA Board.
    • Application deadline: at least six months before the desired effective participation date.
    • Effective participation date: July 1, 2027, or the next July 1 after PEBA receipt of the application.

Employee Contributions – “Pick Up” Provisions

  • NEW SECTIONS in multiple chapters (9-1-1085(E), 9-11-225(E), 9-1-1085, etc.) establish an option for employers to pick up employee contributions (i.e., contribute on behalf of employees) for the following fiscal year without reducing or offsetting employees’ pay.
    • Treated as employer contributions for federal tax purposes (414(h)(2)) but credited as employee contributions for retirement system purposes.
    • Employer contributions would be paid from the same funds used to pay earnings.
    • Employees cannot opt to receive picked-up contributions directly; the election is binding for the fiscal year and may be changed for future years.
    • The election to pick up contributions cannot be changed during the current fiscal year but may be changed for future years.

Administrative and Definitions Adjustments

  • Revisions to various definitions and calculation methods to reflect contributions picked up by employers:
    • “Compensation,” “Accumulated contributions,” and related terms continue to reflect both employee-deducted and employer-paid-in-lieu contributions.
    • Clarifications that picked-up contributions are not counted as earnable compensation for certain purposes.

Financial Impact Summary

  • State (PEBA): Minimal impact; the agency indicates the changes can be managed with existing resources and will not affect the SCRS significantly.
  • Local governments/SPDs: Potential participation in ORP if they elect to do so, with no anticipated adverse fiscal impact due to parity in employer contribution rates (18.56% in FY 2025-26) and ORP benefits being available to SCRS-participating SPDs that opt in.

3) Affected Parties

  • Special purpose districts (SPDs) defined in SBC Title 6, Chapter 11 (and commissions of public works under Article 3, Chapter 31, Title 5).
  • Employees of SPDs/commissions of public works who are eligible under SCRS and elect to participate in ORP upon SPD/commission participation.
  • Employers (SPDs/commissions) that elect to participate in ORP and file the application with PEBA.
  • South Carolina Public Employee Benefit Authority (PEBA) – administrative, regulatory, and fiscal impact oversight.

4) Timeline and Procedural Notes

  • Eligibility and Participation:
    • SPD/commission may apply to PEBA to participate in ORP; deadline is six months before the desired July 1 effective date.
    • Earliest possible ORP participation effective date under the bill: July 1, 2027 (or subsequent July 1 after receipt).
  • Employee Eligibility:
    • Employees hired after the SPD’s ORP participation date by an SPD/commission that has elected ORP participation are eligible, subject to opt-out rules for SCRS.
  • Fiscal Rules:
    • Employers may elect to pick up employee contributions no later than July 1 of each fiscal year; changes apply to future fiscal years.
    • Picked-up contributions are not considered part of employee gross compensation for federal tax purposes in the manner specified; however, they remain credited as employee contributions for SCRS/ORP accounting.

5) Plain-Language Takeaway

H. 4576 would allow SPDs and commissions of public works that participate in SCRS to opt into the State Optional Retirement Program, beginning with a July 1, 2027 effective date (subject to PEBA approval and six-month prior application). It also creates a mechanism for employers to pay, on behalf of employees, a portion or all employee retirement contributions (a “pick-up”) without reducing workers’ take-home pay, while preserving tax and retirement accounting treatment. The bill sets specific rules for eligibility, timing, and how compensation and contributions are calculated under the SCRS and ORP frameworks.

Compiled from official sources — confirm details with the bill’s official record.

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