Gov. Neil Abercrombie in his State of the State speech Monday promised to “modernize the terms of our employee retirement system to reflect the economic and social realities of today, so that it can be sustained into the future.
“Absent action in this regard, the retirement system itself is in jeopardy,” he said.
Those are serious words. He’s right.
For that reason, before the session began, Civil Beat approached George Berish, a Fellow of the Society of Actuaries, to explain the system and the huge obligation taxpayers face. Today we begin his series of articles, “A Danger Demanding Sunshine.”
I encourage you to pay attention, if only because Hawaii taxpayers right now owe government employees pension benefits almost equal in value to the price tag of two Honolulu rail systems.
Let’s face it. A retirement system is technical. So we thought it would be worth bringing in somebody independent with deep knowledge of the field to help build a level of understanding that might make it possible for legislators and the public to make informed decisions about what needs to change.
Berish served on the Society of Actuaries’ examination subcommittee for Modern Portfolio Theory, and served as actuary to many of Hawaii’s largest retirement plans, and for several U.S. model Social Security Systems, and the Government Retirement System of West Pacific nations (formerly Trust Territories).
This topic is going to be hot this legislative session.
Among the measures the governor is proposing are:
HB1035: Instituting a moratorium on the enhancement of Employees’ Retirement System benefits until the system’s funded ratio is at least 80 percent.
HB1037: Raising the level of contributions by the state and counties.
HB1038: Raising the contribution rate for employees who start with the state or counties after June 30, 2012.
HB1042: Changing the definition of compensation for the purpose of calculating retirement benefits to exclude overtime, bonuses, lump sum salary supplements, allowances, or differentials, including, but not limited to, differentials for stand—by duty, temporary unusual work hazards, compression differentials, or temporary differentials.