Public worker pension shortfall grows to $12B
HONOLULU (AP) — The shortfall in Hawaii’s public employees’ pension fund has grown to more than $12 billion, meaning taxpayers could have to pay an additional $385 million a year to make up for the budget gap.
A study released this week by an independent actuary shows the Employees’ Retirement System pension fund deficit was up about $4 million from last year.
ERS Executive Director Thom Williams said the pension plan needs the $385 million additional contribution from taxpayers each year to stay afloat. But getting that additional revenue would mean taxpayers would be putting a total of $1.1 billion toward the plan each year.
Senate Ways and Means Committee Chairwoman Jill Tokuda, D-Kailua-Kaneohe, said the new figures were “truly overwhelming.”
“It can rain money out of the sky, it still cannot account for these kinds of payments,” she said.
Dallas-based actuary Gabriel Roeder Smith & Co. said without the taxpayer payment increases, it would take the fund until 2082 to become whole. The pension plan could be fully funded in 2042 with the added $385 million from taxpayers.
A bill being introduced by ERS to help reduce the budget shortfall would increase annual employer contribution rates for police and fire workers to 42.5 percent from the present 25 percent of an employee’s wages beginning July 1. It also seeks to raise employer contribution rates for general employees to about 25 percent from 17 percent.
The pension plan provides retirement, disability and survivor benefits to more than 120,000 active, retired and inactive state and county employees.
About $1.5 billion of the added shortfall is because of life expectancy changes with ERS members living longer. Another $300 million of the shortfall comes as a result of salaries increasing more than anticipated.