Hawaii pension funding lags
Hawai'i is one of 21 states branded laggards when it comes to public-sector pension funding in a new report by the Pew Center on States.
The report found Ha-wai'i's Employees' Retirement System had funded 68.8 percent of its pension obligations at the end of its 2008 fiscal year, making it the 10th-worst in the nation.
The report, "The Trillion-Dollar Gap," found a $1 trillion gap between states' pledges to pay current and retired workers in pension, health and other benefits, and the money they have now to pay the benefits. The report cited Hawai'i as being one of several states that was grappling with the issue even before the Great Recession began.
It said ERS' unfunded liability at the end of the 2008 fiscal year amounted to $5.17 billion of a total liability of $16.5 billion it will owe over a 30-year period.
The report said several problems led to the underfunding situation, including the Legislature diverting some annual contributions and having a system that before 2006 was noncontributory for employees.
Hawai'i was one of 21 states where the funding ratio was less than the 80 percent that experts advise, the report said. In aggregate, Pew said, state systems were 84 percent funded.
The report said Hawai'i also faces a $10.8 billion unfunded liability bill for state retiree health care and other nonpension benefits. Like most states, Hawai'i has operated on a pay-as-you-go basis when it comes to these costs.
The report said paying as bills come due poses little problem for states that offer minimal benefits, but others that have made significant promises face an enormous burden in the future.