The proposed changes in SB1089 primarily affect new employees who become members of the retirement system after June 30, 2021. For these members and their beneficiaries, the post-retirement allowance will be determined by the discretion of the board of trustees instead of a fixed percentage based on the retirement allowance. This shift aims to create a more flexible and potentially more financially sound system that could better respond to economic conditions affecting the retirement fund.
Summary
Senate Bill 1089 relates to the Employees' Retirement System of Hawaii, aiming to amend the existing post-retirement allowance structure for new employees within the system. This bill seeks to prevent future increases to the unfunded actuarial accrued liability of the Employees' Retirement System while improving its overall funded status. By making adjustments to the retirement benefits structure, the bill is expected to address financial sustainability concerns surrounding the system.
Contention
While supporters believe that SB1089 is a necessary step to safeguard the Employees' Retirement System against growing unfunded liabilities, concerns have been raised about the potential uncertainty this could introduce for employees regarding their retirement benefits. Critics of the bill fear that allowing the board to determine post-retirement allowances could lead to inequities and a lack of transparency in how benefits are allocated. Advocates for workers’ rights are particularly wary of these changes and their implications for the long-term financial security of state employees.