A new law signed last week by Gov. Nikki Haley will cut $2 billion from South Carolinas $15 billion retirement shortfall and eliminate it completely by 2044, according to a recently released analysis.

The new law makes it difficult for public employees to retire early, which forces them to work longer and means less money will be withdrawn from the states $25 billion retirement fund. Without the changes, taxpayers would have had to increase their annual contributions to the system by nearly 4 percent, or about $337 million, according to the most current payroll information. But because the changes make the retirement system more financially strong, taxpayers will have to increase their contributions by 0.42 percent, or about $39.4 million. That means they can spend that $300 million difference on other things.

Thats huge, said Rep. Brian White, R-Anderson and chairman of the House Ways and Means Committee. Thats what we were after.

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Accountants estimate the states $25 billion retirement fund will run out of money sometime over the next 30 years, falling about $15 billion short. The retirement fund has three sources: investment returns, employee contributions and taxpayer contributions. The funds shortfall was getting larger every year because of two problems: poor investment returns and people retiring earlier while living longer.

Lawmakers have now addressed those issues. Last summer, the State Budget and Control Board lowered the projected investment return on the retirement fund to 7.5 percent from 8 percent. And the new law eliminates some popular retirement incentives that encouraged public employees to retire early, including:

Eliminating the TERI program. TERI, short for Teacher and Employee Retirement Incentive, allowed workers to retire and continue working for up to five years, receiving a retirement check and a paycheck at the same time. The program will be phased out gradually, closing for good on June 30, 2018.

Restricting the states return-to-work program. Beginning in January, if employees retire and return to work at their same job, they will have to forfeit their retirement checks once they earn $10,000 in salary in one year.

Making it tougher to retire early because of a disability. The law adopts the federal Social Security standards, which are more difficult to meet than the existing state standards. This does not take effect until Dec. 31, 2013.

Police officers and firefighters are upset about the disability changes. They have more dangerous jobs than the average state employe and have a higher rate of disability retirements. That is why lawmakers delayed the disability changes for nearly two years.

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Retirement bill to save billions, end shortfall