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Hawaii’s most powerful unions are fighting legislation that would cut the retirement benefits of future public employees.

Gov. Neil Abercrombie’s administration maintains that the state must take steps to reduce the pension system’s $8.4 billion unfunded liability.

Hawaii Government Employees Association Executive Director Randy Perreira understands the need to ensure the system’s solvency, but said the legislative proposal further deteriorates the already scaled-back benefits package and creates another lower tier of employees.

would cut in half the amount of retirement service credited for accumulated sick leave for employees who join the system after June 30, 2014. They currently get one month of service for every 20 days of unused sick leave.

Employees’ Retirement System Executive Director Wes Machida said at the current rate, it’ll take 28 years for the system to become fully funded. If the bill passes in its current form the system would be fully funded 12 to 18 months sooner and it would reduce the state and counties’ future contributions by $581 million.

HGEA, United Public Workers, the University of Hawaii Professional Assembly, firefighters and others oppose the measure. They say it will make it hard to retain employees and attract new ones and creates morale problems among current workers because they would receive different benefits.

“An office could potentially hire three employees, within the past few years, performing the same duties, but each of the three with significantly different retirement packages,” last month.

“This continued, piecemeal and haphazard policy approach is destructive to morale and recruitment.”

Finance Director Kalbert Young said there is already a diversity of retirement benefit programs for employees, even prior to the pension reform measures passed in 2011 and 2012.

Dayton Nakanelua, the director of UPW, which represents some 14,000 public employees, told House lawmakers that reducing retirement benefits hinders the ability to recruit the best applicants, hurts retention and negatively affects morale because it does not follow the union’s ideal of “equal pay for equal work.”

ERS enrollment statistics show a steady increase in members from 2010 to 2013, and the number of employer applications has similarly been on the rise, Machida said.

The state Department of Human Resources Development received 6,755 applications in 2010, increasing to 15,504 in 2011, 21,930 in 2012 and 24,435 in 2013. There were 13,077 during the first half of fiscal 2014, which started July 1.

Young noted that the very definition of unfunded liability is that the system pays benefits for which it does not receive adequate funding.

“That is exactly what is happening when we allow for increasing of a person’s pension benefits without any contribution of funds from either employer or employee,” he said.

The state and counties currently pay 23 percent for police and fire retiree benefits and 16 percent for general employees. Those are set to increase by 1 percent for police and fire and 0.5 percent for general employees on July 1.

General employees get 21 vacation days and 21 sick days each year. Vacation days are capped at 90 days, but there is no limit on how many sick days they can accumulate.

On average, Machida said, employees accumulate 11 to 12 sick days a year.

The House passed HB 2263 with 10 members voting no and 18 voting yes with reservations. The bill awaits a hearing before the Senate Judiciary and Labor Committee, chaired by Clayton Hee, who some suspect has no inclination to advance the legislation. His office staff said Hee hasn’t made a decision on whether or not to hear the bill.

• Contact Nathan Eagle via email at neagle@civilbeat.com or Twitter at .