Changes Made to Hawai’i Retirement System
By Wendy Osher
Governor Neil Abercrombie signed into law House Bill 1038, designed to address the state’s retirement system. The act raises the retirement age for certain new employees from 55 to 60, and for most others from 62 to 65. It also raises employee and employer contribution rates, and increases the number of years for state employees to be vested into retirement from five to 10 years.
Finance Director Kalbert Young said the measure will help curtail and minimize the future growth in the overall pension liability. “We are addressing the very same problem that many other states are struggling with. It’s a problem which represents a growing burden on governments and taxpayers,” said Young.
“This action is the first phase in our overall strategy to tackle the underlying reasons for growth in the state’s long-term pension liabilities,” said Young.
The state’s liability for the Employees Retirement System (ERS) is approximately $7 billion. The changes are intended to ensure the long-term viability of the program and address the rising costs.
“This measure will assist the ERS to achieve a better-funded status,” said Wesley Machida, ERS Administrator. “However, the ERS and its Board of Trustees recognize that this is not a complete solution. It will have to be closely monitored and evaluated, annually, to ensure that necessary measures are taken to ensure the financial sustainability of the system,” said Machida.
“This is a good start,” he said.