Getting Discussion of Hawaii Public Pension System Back on Track
Civil Beat is committed to exploring important issues facing Hawaii.
Few are as critical as its public pension mess. The state’s taxpayers are about $9 billion in the hole — the cost of nearly two Honolulu rail systems — to government employees. And the number could get far worse.
That’s why we welcomed a series of thoughtful, analytical articles by Honolulu actuary George Berish explaining what had happened, why and recommending what we as a state should do about it.
On Monday we published a passionate response to Berish’s work from Colbert Matsumoto, chairman of the board of the Hawaii Employees’ Retirement System.
I’m concerned that the water may have been muddied about what Mr. Berish wrote and why Hawaii residents should pay attention to what he said about this difficult topic.
It might be helpful to re-summarize Mr. Berish’s main recommendations. These come in response to the reality that Hawaii taxpayers owe government employees almost $9 billion for their service to date, and the number is only that little if the HERS board earns 8 percent on the assets it holds. This when it’s averaged 3 percent over the past 10 years.
- Separate the administration and investment boards of the retirement system. The two roles are very different, and overseeing investments requires people with more experience managing investment risk.
- Make the actuary more accountable by having the person report to the Legislature and require that the person stand behind all the assumptions used in determining estimates.
- Let government pay equal benefits to its employees. If two employees work the same job in the same year, they should get the same benefits. Employees shouldn’t earn higher benefits because of their seniority or years of service.
When the dust settles, Hawaii residents still need to address their pension crisis, given that, as The Wall Street Journal recently reported, the state’s pension and long-term debate liabilities are the highest in the nation as a percentage of gross domestic product.
I am grateful that Mr. Matsumoto has agreed to provide a second op-ed in which he will address more substantively what the board thinks needs to be done. I look forward to sharing that with you.
That’s where our focus as citizens should be.
