The ERS portfolio of investments had a total value of $12.7 billion and a market value of $12.3 billion as of June 30, 2013, up about 4.1 percent and 9.5 percent respectively over June 30,2012. The fund saw a 12.3 percent return on its market value for the fiscal year ended June 30,2013.
At the same time, it faced $8.49 billion in unfunded liabilities as of June 30, 2013, according to the most recent actuarial valuation. The gap between the pension benefits promised to Hawaii's public workers and the money set aside to pay for them increased by less than 1 percent during the year ended June 30, 2013.
Hawaii's funded ratio has steadily declined from a high of 95 percent in 2000. As of June 30, 2013 the ERS was 60 percent funded compared to 59.2 percent as of June 30, 2012.
The ERS provides retirement and survivor benefits for most state and county employees. The system includes some 115,390 members, including 66,266 active members, 41,812 retirees and beneficiaries, and 7,312 inactive vested members.
Since about 90 percent of retirees stay in Hawaii, the pension program is a significant economic driver in the islands.
During the fiscal year ended June 30, 2012, ERS paid out $1.03 billion in benefits, an increase of $48 million over the 2012 fiscal year. It's estimated by actuaries that Hawaii state and local government will have to contribute $692 million toward retirement benefits during the current fiscal year, which ends June 30, 2014. During the fiscal year ended June 30, 2013, state and local governments paid in $581.4 million, $33 million more than was paid during the 2012 fiscal year.
The program's total assets were roughly $12.4 billion as of June 30, 2013. The ERS Board of Trustees invests these assets with a goal of a 7.75 percent annual return, a goal that is set by statute. (The fund has averaged just 3 percent the past decade.)
Investments are governed by HRS 88-119.
The Legislature established the ERS in 1926.
Pension administrators blame the program's financial woes on decisions between 1967 and 2005 to divert $1.687 billion of excess investment earnings from the pension program to fund other public programs.
In 1999, the Legislature enacted Act 100, which diverted $346.9 million from ERS investment earnings to help balance the state and county budgets. In 2007, the Hawaii State Supreme Court ruled that Act 100 was unconstitutional.
In 2005, the administration and Legislature halted the diversion of investment earnings, and none of the excess earnings have been diverted since.
In 2008 and 2009, as the result of the global financial crisis, ERS suffered a combined investment loss of $2.4 billion, and like many public retirements funds in the United States, has been struggling to recover.
The pension program offers three plans: Contributory, Noncontributory and Hybrid.
In an effort to save money, the 2011 Legislature passed new retirement rules for incoming employees hired after June 30, 2012.
Read about the new rules and changes to members' plans.
ERS members also can find information on their plans on the ERS website, and use an online benefits calculator to figure out their pension benefits.
2013 Actuarial Valuation Report
2012 Actuarial Valuation Report
FY 2011 CAFR (latest)
The ERS is administratively attached to the Department of Budget and Finance.
The program is overseen by a board of trustees comprised of eight members. Every decision the board makes requires at least five votes. The trustees are not paid for their service.
Pilialoha Lee Loy, chair
Vincent Barfield, vice chair
Wesley Machida, administrator
Kanoe Margol, assistant administrator
Vijoy Chattergy, chief investment officer
Ian Wetzel, investment specialist
Andrew Chen, investment specialist
Donna Curry, program specialist
Gerry Konishi, member home loan assistant
Jaime Hirata, recording secretary
Raechele Joyo, secretary
Wanda Kugiya, secretary