The House Committee on Finance
Wednesday, February 22, 2017
3:00 pm, Room 308
Attention: Chair Sylvia Luke, Vice Chair Ty Cullen and Members of the Committee
The University of Hawaii Professional Assembly (UHPA) supports the intent of HB 1182, HD1, requiring the Employeesʻ Retirement System (ERS) actuary to perform annual stress tests of the system and the ERS Board to submit annual reports of the tests to the legislature.
Due to market indicators nationally, the ERS Board had previously taken a responsible approach by slowly lowering the assumed rate of return 50 basis points over a five year period. However, the recent decision by the ERS Board to reduce the assumed rate of return 50 basis points all at once has caused a great deal of anxiety for beneficiaries and the public as a whole. That one action by the ERS Board immediately increased the unfunded liability by $1.7 Billion, and has statutorily forced the legislature to review the required employer contributions. When actions by the ERS Board have statewide fiscal implications, additional oversight may be required to ensure the beneficiaries have confidence their interests are being addressed.
Requiring the ERS actuary to perform an annual stress test and report its findings to the legislature will provide a level of transparency that is currently not in place and ensure that the decisions of the ERS Board are not made in a vacuum since the decision to reduce the assumed rate has statewide implications.
UHPA supports the intent of HB 1182, HD1.