Civil Beat Topics

Hawaii Employees' Retirement System

The Hawaii Employees’ Retirement System provides retirement, disability and survivor benefits for all state and county employees. The system has 115,350 members, with close to 42,000 retirees and beneficiaries as of June 30, 2013. Hawaii’s pension program — like those of many other states — is severely underfunded.

The Latest

The ERS portfolio of investments had a total value of $12.7 billion and a market value of $12.3 billion as of June 30, 2013, up about 4.1 percent and 9.5 percent respectively over June 30,2012. The fund saw a 12.3 percent return on its market value for the fiscal year ended June 30,2013.

At the same time, it faced $8.49 billion in unfunded liabilities as of June 30, 2013, according to the most recent actuarial valuation. The gap between the pension benefits promised to Hawaii’s public workers and the money set aside to pay for them increased by less than 1 percent during the year ended June 30, 2013.

Hawaii’s funded ratio has steadily declined from a high of 95 percent in 2000. As of June 30, 2013 the ERS was 60 percent funded compared to 59.2 percent as of June 30, 2012.

Overview

The ERS provides retirement and survivor benefits for most state and county employees. The system includes some 115,390 members, including 66,266 active members, 41,812 retirees and beneficiaries, and 7,312 inactive vested members.

Since about 90 percent of retirees stay in Hawaii, the pension program is a significant economic driver in the islands.

During the fiscal year ended June 30, 2012, ERS paid out $1.03 billion in benefits, an increase of $48 million over the 2012 fiscal year. It’s estimated by actuaries that Hawaii state and local government will have to contribute $692 million toward retirement benefits during the current fiscal year, which ends June 30, 2014. During the fiscal year ended June 30, 2013, state and local governments paid in $581.4 million, $33 million more than was paid during the 2012 fiscal year.

The program’s total assets were roughly $12.4 billion as of June 30, 2013. The ERS Board of Trustees invests these assets with a goal of a 7.75 percent annual return, a goal that is set by statute. (The fund has averaged just 3 percent the past decade.)

Investments are governed by HRS 88-119.

History

The Legislature established the ERS in 1926.

Pension administrators blame the program’s financial woes on decisions between 1967 and 2005 to divert $1.687 billion of excess investment earnings from the pension program to fund other public programs.

In 1999, the Legislature enacted Act 100, which diverted $346.9 million from ERS investment earnings to help balance the state and county budgets. In 2007, the Hawaii State Supreme Court ruled that Act 100 was unconstitutional.

In 2005, the administration and Legislature halted the diversion of investment earnings, and none of the excess earnings have been diverted since.

In 2008 and 2009, as the result of the global financial crisis, ERS suffered a combined investment loss of $2.4 billion, and like many public retirements funds in the United States, has been struggling to recover.

Plans

The pension program offers three plans: Contributory, Noncontributory and Hybrid.

In an effort to save money, the 2011 Legislature passed new retirement rules for incoming employees hired after June 30, 2012.

Read about the new rules and changes to members’ plans.

ERS members also can find information on their plans on the ERS website, and use an online benefits calculator to figure out their pension benefits.

Key Reports

2013 Actuarial Valuation Report

2012 Actuarial Valuation Report

FY 2011 CAFR (latest)
Trustees

The ERS is administratively attached to the Department of Budget and Finance.

The program is overseen by a board of trustees comprised of eight members. Every decision the board makes requires at least five votes. The trustees are not paid for their service.

Trustees

Pilialoha Lee Loy, chair
Vincent Barfield, vice chair
Patrick Frane
Colbert Matsumoto
Jerome Rauckhorst
Jackie Ferguson-Miyamoto
Wayne Yamasaki
Kalbert Young
Staff

Wesley Machida, administrator
Kanoe Margol, assistant administrator
Vijoy Chattergy, chief investment officer
Ian Wetzel, investment specialist
Andrew Chen, investment specialist
Donna Curry, program specialist
Gerry Konishi, member home loan assistant
Jaime Hirata, recording secretary
Raechele Joyo, secretary
Wanda Kugiya, secretary

State Gets TRO Against Itself

State Gets TRO Against Itself

Hawaii will have to hold off on implementing a law to help Maui hospital workers.

Hawaii Is Suing Itself Over New Benefits Law Nanea Kalani/Civil Beat

Hawaii Is Suing Itself Over New Benefits Law

The state pension system is concerned about the effects of a plan to give certain hospital employees special retirement benefits.

Labor Pains: Still No Deal On Bill To Assist Maui Hospital Workers Cory Lum/Civil Beat

Labor Pains: Still No Deal On Bill To Assist Maui Hospital Workers

State lawmakers plan to reconvene in special session Wednesday as the governor continues talks with union members.

Lawmakers, Governor Seek Compromise On Maui Hospital Bill Cory Lum/Civil Beat

Lawmakers, Governor Seek Compromise On Maui Hospital Bill

UPDATED: The Legislature plans to amend the vetoed measure next week to provide severance pay to unionized workers, address legal flaws in the legislation and honor union contracts.

Honolulu Is Short $1.4 Billion To Cover Retirees’ Pension Benefits PF Bentley/Civil Beat

Honolulu Is Short $1.4 Billion To Cover Retirees’ Pension Benefits

New accounting rules force the city to acknowledge a growing debt it largely has avoided addressing until now.

Hawaii 45th For Fiscal Solvency

Hawaii 45th For Fiscal Solvency

A new survey puts us near the bottom of all 50 states based on things like unfunded pensions and healthcare benefits.

Should Hawaii Stop Investing In Coal, Oil? Cory Lum/Civil Beat

Should Hawaii Stop Investing In Coal, Oil?

A proposed law would require the Employees’ Retirement System to divest from fossil fuel companies in five years.

Hawaii Paid $500,000 To Dead People Over 5 Years, Report Shows PF Bentley/Civil Beat

Hawaii Paid $500,000 To Dead People Over 5 Years, Report Shows

The state says it is doing all it can to avoid payments to deceased pensioners and their beneficiaries.

Hawaii Pension Chief Says Caldwell Wrong About Cayetano Fund Raid

Hawaii Pension Chief Says Caldwell Wrong About Cayetano Fund Raid

Misstatements at debate challenged.
Pension Spiking Measures Await Gov’s OK

Pension Spiking Measures Await Gov’s OK

Bills eliminate overtime from counting toward new hires' benefits, require employers to foot bill.
Digging Hawaii’s Public Pension Fund Out of $8 Billion Hole Will Hurt

Digging Hawaii’s Public Pension Fund Out of $8 Billion Hole Will Hurt

Options are limited, solutions will be painful, pension officials say.

August 2016

Tuesday, August 23

State Gets TRO Against Itself

Tuesday, August 9

Hawaii Is Suing Itself Over New Benefits Law

July 2016

Monday, July 18

Labor Pains: Still No Deal On Bill To Assist Maui Hospital Workers

Tuesday, July 12

Lawmakers, Governor Seek Compromise On Maui Hospital Bill

June 2016

Friday, June 10

Honolulu Is Short $1.4 Billion To Cover Retirees’ Pension Benefits

Wednesday, June 1

Hawaii 45th For Fiscal Solvency

January 2016

Wednesday, January 27

Should Hawaii Stop Investing In Coal, Oil?

October 2015

Friday, October 30

Hawaii Paid $500,000 To Dead People Over 5 Years, Report Shows

October 2012

Tuesday, October 9

Hawaii Pension Chief Says Caldwell Wrong About Cayetano Fund Raid

May 2012

Tuesday, May 15

Pension Spiking Measures Await Gov’s OK

March 2012

Saturday, March 10

Digging Hawaii’s Public Pension Fund Out of $8 Billion Hole Will Hurt

Friday, March 9

Hawaii Public Pension System’s Unfunded Liability Swells 14%

February 2012

Saturday, February 18

Wishing We Didn’t Have to Pay the Piper

January 2012

Friday, January 27

Civil Beat Poll – Hawaii Public Pension Woes Weigh on Voters

Wednesday, January 25

More Work Required to Fix the Public Employee Pension System

Wednesday, January 18

Hawaii Pension System Proposes New OT Rules

December 2011

Wednesday, December 28

Over Past 10 Years, Hawaii Pension Investments At Bottom of Pack

Friday, December 23

Excessive OT for Ambulance Workers Highlights Strain on Pension System

November 2011

Tuesday, November 22

What Can Hawaii Learn From Other States About Pension Spiking?

Thursday, November 10

Hawaii Public Pension Fund Lost $1.4 Billion Since June

October 2011

Friday, October 21

Hawaii Retirement System Looks to Curb Pension Scams

September 2011

Tuesday, September 13

Hawaii Public Pension System Will Get $2.4M Efficiency Overhaul

August 2011

Wednesday, August 17

Hawaii Pension Fund Gains 21% Through June

July 2011

Saturday, July 2

I Was Wrong In Article About Lawmaker Pensions

June 2011

Tuesday, June 21

Hawaii Budget Chief: Tax Hikes Likely to Cover Cost of Retirees’ Health Care

Monday, June 13

Hawaii Lawmakers’ 2011 Retirement System Bill Nothing to Brag About

Saturday, June 11

Hawaii Retirement, Health Benefit Costs Down On Paper, Up in Reality

May 2011

Wednesday, May 25

Did Hawaii Do Enough To Fix Public Pensions?

Saturday, May 14

Temple’s Take: Lawmakers Should Have Taken Own Pension Medicine

Thursday, May 5

Hawaii Lawmakers Agree to Pension Reform for New Hires

April 2011

Saturday, April 23

How Realistic Is Hawaii Pension Fund’s New Expected Rate of Return?

Sunday, April 17

Only Changes to Design of Hawaii Public Employees Pension System Can Fix It

Sunday, April 3

Pension Execs, Lawmaker Offer Steps to Fix Hawaii Public Pension System

Fixing Hawaii’s Public Employees’ Pension Plan

Berish Series Misleading

March 2011

Tuesday, March 22

Getting Discussion of Hawaii Public Pension System Back on Track

Friday, March 18

Chairman of ERS Board Responds to Civil Beat Series on Public Pensions

Tuesday, March 1

Hawaii, Like U.S., Getting Old and Turning Gray

February 2011

Monday, February 21

Dear Legislator: Don’t Pass Any Retirement Bills

Wednesday, February 16

A Way To Save Hawaii’s Government Employees’ Retirement System

Friday, February 11

Personal Insults Flung at Gov During Senate Hearing

Wednesday, February 9

Actuary Challenges Claims of Retirement Board Chair

Lawmakers Commit $300 Million to Fix Pension Mess

Monday, February 7

The Why and What Of ‘Retirement Systems’

Friday, February 4

Week 40: It’s All About Serving You

Tuesday, February 1

As a Matter of Fact: Don’t Believe Claim About Hawaii Pension System

January 2011

Friday, January 28

Hawaii Ranks Near Top for Debt and Pension Liability

Thursday, January 27

Actuary Examines Hawaii Employees’ Retirement System

Wednesday, January 19

A Danger Demanding Sunshine — The Consequences of Hawaii’s Public Pension Shortfall

Tuesday, January 18

Hawaii’s Retirement System — A Danger Demanding Sunshine

Tuesday, January 11

Capitol Watch: Jan. 12

Friday, January 7

Hawaii’s 3 Growing Liabilities: Pensions, Health Care, Debt

July 2010

Friday, July 16

Week 11: Serious Financial Reporting Challenging

Monday, July 12

On the Hook – Part 2

Friday, July 9

Discussion: On the Hook

On The Hook – Part 1

Saturday, July 3

Q&A With Top State Pension Administrators

Top Pension Official: “We Have Taken the Steps to Catch Up”

June 2010

Tuesday, June 29

New Top Administrator for State Pension Fund

Friday, June 25

UPDATE: Top State Pension Administrators Sit Down with Civil Beat

Wednesday, June 23

UPDATE: Meeting Set With ERS

Thursday, June 17

Sizing Up Our State Pension Program

Wednesday, June 16

Discussion: Hawaii State Pension Fund

Hawaii Employees' Retirement System