As a Matter of Fact: Don’t Believe Claim About Hawaii Pension System
The woes of the Hawaii Employees’ Retirement System have got the attention of the state’s largest newspaper.
The Honolulu Star-Advertiser published an editorial Sunday with the headline, “.” The editorial blamed the Legislature for the problem.
“How did things come to this? In the late 1990s, Hawaii legislators reduced contributions to the retirement fund for more than 90,000 current and future retirees so they could provide public employees with pay raises and still comply with the constitutional requirement of a balanced budget. State Auditor Marion Higa chastised the lawmakers in 2000, warning that relying on returns of at least 10 percent was ‘detrimental to the system’s unfunded actuarial liability.'”
Well, it’s important that we get the facts about this very important problem straight.
And the paper got them wrong.
In the year 2000 — well after alleged 1990s underfunding by the Legislature — the system was over-funded, i.e. its $9.9 billion of assets was 103 percent of the taxpayers’ $9.6 billion liability. So all of today’s almost $9 billion funding shortfall arose after, not before, 2000.
As for the allegations by State Auditor Marion Higa that lawmakers are relying on 10 percent returns, the fact is that for the last decade every annual actuarial report used by lawmakers to set contributions was based on 8 percent returns. If non-public studies exist that use 10 percent, Higa should make them public.
