Pub­lic worker pen­sion short­fall grows to $12B

Hawaii Tribune Herald - - PAGE TWO -

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.

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