Hawaii Pension Fund Shortfall Hits $12 Billion

Honolulu Civil Beat ^ | 10 January 2017 | Nathan Eagle

[Lorianne]

Hawaii lawmakers are set to open the 2017 session on Jan. 18 with millions of dollars in projects and services on their respective wish lists. But the budget is getting whacked before they even begin.

They learned last week that the state is expecting to collect roughly $155 million less in tax revenues than expected.

And this week they found out that the state pension system, which covers more than 120,000 public employees and retirees, is not coming close to meeting its financial goals.

It would require hundreds of millions of dollars extra each year to get the Employees’ Retirement System back on track, largely due to weak investment earnings and people living longer in Hawaii.

The ERS Board of Trustees had expected 7.65 percent returns from its market investments in 2016. Instead, the investments lost 1.2 percent, the worst showing since 2009. The system averaged 5.7 percent over the past 15 years, according to a report released Monday by the state’s independent actuarial consultant, Gabriel Roeder Smith & Company.

The market value of the system’s assets is $14.1 billion. It’s deferring $929 million in losses from 2016, whereas the previous year it had $42 million in gains.

Meanwhile, life expectancy is steadily increasing, which means more years — and more money — for government employers to pay the retirement benefits promised to public workers.

Hawaii residents are living 81.3 years on average; they are among the nation’s longest-living.

All this means it’s expected to take the state twice as long to eliminate its unfunded liability, which stretched to $12.4 billion in 2016 from $8.8 billion the prior year.

The actuary determined it would take 66 years instead to make the system solvent. The funded ratio dropped to 54.7 percent, calculated by dividing the value of the assets by the liabilities.

Gabriel Roeder Smith & Company, the state’s independent actuarial consultant, projects the unfunded actuarial accrued liability to top $12 billion based on new assumptions, including longer life expectancy and lower investment returns.

In a letter Monday to the ERS Board of Trustees, the actuarial consultants said, “66 years is an inappropriate amount of time to allow for amortizing” the current unfunded actuarial accrued liability.

SNIP

[minnesota_bound]

#13 I bought nvidia stock at $62.25 back in late August 2016
Now at $103. Had been at near $120. It started the year around $30. Keep an eye out for AMD stock. It went from about $1.75 to around $12 last year.

They must be investing in democrat futures which explains the big losses like in their elections.

I almost doubled my money in 4 months. Why can’t these pros do so?

[minnesota_bound]

I will also point out they do not pay taxes on the profits as the rest of us have to and they still lose money!

[SgtHooper]

I think only the high level Rats should get a pension raise, since that are the smartest, and all other rats take a haircut, since they are stupid. It’s only fair!!