A Public Investment

Public workers and retirees make up 11 percent of the adult population of Hawai‘i. Nearly one out of every five adults aged 65 and older is a public worker retiree. Hawai‘i’s state and county governments employ more than 66,000 people who, if they meet eligibility requirements, will eventually receive pension and “other post-employment benefits” (OPEB) such as health insurance coverage in retirement. Over the years, Hawai‘i’s public retirement liabilities have grown as current and promised benefits have outpaced contributions and asset growth to cover them. These retirement costs are sometimes referred to as “unfunded liabilities,” which means that our obligations exceed the funds currently available to pay them.

In this report, we examine the public retirement benefits as a budgetary issue of interest to all Hawai‘i residents, and one that is crucial for policymakers to understand and address effectively. We also identify strategies available to meet public obligations responsibly and equitably.

Tending to the Nest Egg: Plan Could Help Nonprofit Workers Build Retirement Security

In late 2017, Massachusetts launched a state-administered 401(k) plan that small nonprofits — those with 20 employees or fewer — can join5. The plan is administered through the Office of the State Treasurer and Receiver General, which will take on the bulk of the administrative responsibilities. This assists employers with some of the challenges that deter them from offering plans to their workers. And, because of economies of scale, the plan sponsor is better equipped to offer lower fees and expenses than typical private plans.

Massachusetts is one of the only states that has successfully implemented retirement reform and has a program up and running6. This plan — known as the Connecting Organizations to Retirement (CORE) Plan — can begin to address some of the barriers to retirement security for workers in the nonprofit sector.