Relating To The Employees Retirement System.
This legislative adjustment seeks to align the service requirements across different tiers of membership, which would likely enhance the recruitment and retention of qualified employees for both state and county employers. The reduction in the minimum years required for Tier 2 members is projected to have a minimal impact on the financial health of the Employees' Retirement System, increasing the full funding period by an estimated four months without necessitating higher contribution rates.
House Bill 2410 relates to the Employees' Retirement System in Hawaii and primarily aims to adjust the eligibility criteria for vested benefit status among Tier 2 members. Currently, Tier 1 members who became part of the system before July 1, 2012, require a minimum of five years of credited service to achieve vested benefits. In contrast, Tier 2 members, who joined after this date, must have at least ten years of service. The bill proposes to reduce this requirement for Tier 2 members from ten years to five years.
The adjustments proposed in HB 2410 may raise questions regarding the balance between improving employee benefits and ensuring the sustainability of the retirement system. Critics may express concerns about how these changes will affect the unfunded liability of the retirement system, which is already a significant issue. However, proponents of the bill argue that the benefits of reduced employee turnover and increased retention outweigh the potential long-term financial impacts. The bill is positioned as a necessary step to ensure a strong workforce within public service jobs, which can help mitigate higher employer costs associated with training and hiring new employees.