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State pensions underfunded by $4.1 trillion, study says

By Erika Engle

LAST UPDATED: 12:03 p.m. HST, Sep 03, 2013

Hawaii is among several states whose retired public employees are threatened by underfunded pensions, according to a new study.

The report, "Promises Made, Promises Broken -- The Betrayal of Pensioners and Taxpayers," by Virginia-based State Budget Solutions, found that Hawaii's Employee Retirement System has nearly $27 billion in unfunded liability.

The state with the highest unfunded liability at $640 billion, is California, the study found.

The report is an evaluation based on fair-market valuations that discounts liabilities at a risk-free rate, versus optimistic investment returns used by most plans, authors say.

A summary of the report and a sortable database of state-by-state information are posted online.


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false wrote:
Well, who should get the money? The people who paid into the fund during their entire working life... or the people who are receiving money from the state who have put nothing into the state coffers?
on September 3,2013 | 07:29AM
RetiredWorking wrote:
IRT false, can you define who the people that are receiving $$ from the state who have put nothing into the state coffers? I need to know.
on September 3,2013 | 07:43AM
RichardCory wrote:
SA relies on a thread-based reply system. You don't need to type "IRT" every time. It's obvious who are replying to based on the position of your post.
on September 3,2013 | 09:17AM
Anonymous wrote:
Nah, sometimes SA mixes it up with their approval delays, or other members post above or below you. I've seen this occur.
on September 3,2013 | 09:31AM
atilter wrote:
plus s/a has to tweak the rubrics for those who use strongly worded but truthful comments!
on September 3,2013 | 07:32PM
1local wrote:
detroit and california have the answer - bankruptcy - all debts will be wiped out - Unions are worried - taxpayers now have a solution to underfunded pensions and healthcare...thank goodness for the American system...
on September 3,2013 | 09:37AM
AhiPoke wrote:
Unfortunately, under current bankruptcy laws, states are not qualified to file. In addition, the Hawaii constitution may be problematic as it "guarantees" public retiree benefits. You gotta give those public unions credit. They, along with our politicians, have one-upped the taxpayers.
on September 3,2013 | 09:47AM
South76 wrote:
Yup, I feel sorry for those who have children/grandchildren who will be stuck with the bills when the boomers who work for the govt retires and start collecting pensions; remember now folks state workers and their spouses are covered with health benefits when the state workers retire. I guess since these state workers are the same one who are anointing the clowns for the square building on Beretania can get on the band wagon for the obamacare....it this health tax is good enough for Joe Blow it is good enough for the retired clowns and the govt unions that got them in the square building.
on September 3,2013 | 10:28AM
what wrote:
No need to file bankruptcy. When the money is gone and the fund depleted, the pension checks will stop being mailed. Government lawmakers have shown that they are not willing to replenish the fund, and voters have show that they are not going to allow taxes to be raised fast enough to keep up with the depletion of the fund. Bankruptcy is not necessary, because when they stop mailing the checks, what are the unions going to do? Cry?
on September 3,2013 | 12:02PM
saywhatyouthink wrote:
Lawmakers will not be able to raise taxes to fund these outrageous benefits at some point, it's but a matter of time.
on September 3,2013 | 04:34PM
localguy wrote:
Not really. States can't file bankruptcy but cities can. City pensions can be discharged under bankruptcy laws. Federal judge just ruled it does not matter what kind of law or agreement is in force. Survival of the city comes first. Unions will have to take what is left.
on September 3,2013 | 12:14PM
EducatedLocalBoy wrote:
AhiPoke, you know not what you write about.The public sector unions are not to blame because, by law, public sector unions have nothing to say about the State Employees Retirement System (ERS). You are right about the politicians though. The politicians help the big corporations raid the ERS through bad investments, just like how the Las Vegas gangsters raided pensions until the Fed. Gov't. passed ERISA. Remember when the governor directed the ERS to buy uku-million dollars of the "Big 5's" Amfac stock at bad market rates in order to prop-up the sale of AmFac to that Chicago real estate outfit? How about the time the corrupt retired ERS administrator was given a little over $100,000,000.00 to invest, even though the stock broker firm he worked for was in the bottom 25% of the stock broker firm ratings? Don't blame the employees, as usual they are the little guys who get the shaft from the big guys and then are blamed by the big guys for bankrupting the system.
on September 3,2013 | 07:15PM
atilter wrote:
yup - where da sun don't shine!!!
on September 3,2013 | 07:33PM
saywhatyouthink wrote:
Public worker Unions should be worried, it's but a matter of time before public pensions and medical benefits must be cancelled as has happened in the private sector. Just ask any UAW or airline worker what has happened to their pensions.
on September 3,2013 | 04:32PM
hanabatadayz wrote:
the folks on welfare?
on September 3,2013 | 07:52AM
Anonymous wrote:
IRT hana, oh.....ok.
on September 3,2013 | 08:51AM
Anonymous wrote:
IRT Anonymous, who is presently aka RetiredWorking. SA keeps logging me out, but letting me post.
on September 3,2013 | 09:33AM
AhiPoke wrote:
The number bounces around but it's clearly unpayable. The larger problem is that our legislture is unwilling to address this issue. They'd rather deal with issues that win them political points. Because of this the probelm will only get worse until there are no reasonable solutions. If I'm not mistaken, the governor has said it'll take $500M for 30 years to fund the shortfall so I don't know if there is a solution. The politicians are afraid to cut benefits as they'll lose union support. If they raise taxes to the amount it'd take to fund the shortfall, I can almost guarantee that they'll be a mass exodus of the people with money which would create an even bigger financial problem for this state.
on September 3,2013 | 07:34AM
Hilofrank wrote:
No, it's "payable." That's what the Democrats are counting on. They are counting the change in our wallets and pockets, because we'll keep voting them in, they will keep raising our taxes and supporting unrealistic union benefit packages. But that's what we like in Hawaii.
on September 3,2013 | 10:09AM
hanabatadayz wrote:
The report, "Promises Made, Promises Broken -- The Betrayal of Pensioners and Taxpayers," by Virginia-based State Budget Solutions, found that Hawaii's Employee Retirement System has nearly $27 million in unfunded liability. is this correct? then we are not in a bad shape after all.
on September 3,2013 | 07:52AM
gicnk wrote:
does this amount cover the unfunded post retirement medical costs?
on September 3,2013 | 11:22AM
E_Ogawa wrote:
Not the post-retirement medical costs, but the post-retirement medical premiums on insurance.
on September 3,2013 | 03:32PM
hanabatadayz wrote:
ahhh SA corrected themselves..it's $27 billion..what a huge mistake for SA to be printing before proofreading their article
on September 3,2013 | 01:28PM
localguy wrote:
$27 Million unfunded pension liability? Sorry, wrong answer. Where did this report get that number? Try $8.15 billion unfunded liability. Ref: http://www.civilbeat.com/articles/2012/03/08/15138-hawaii-public-pension-systems-unfunded-liability-swells-14/ Also confirmed in other areas. Union members will have to face the music, there is no more money. You will not get the full amount you were "Promised" They are running a Ponzi Plan. Need to start living beneath your means, no more excessive bling, start your own Roth IRA. Don't blame the state if you can't retire early, can't depend solely on a state pension to live on. Union bosses knew this was coming but failed to tell you. Kept spreading shibai while demanding more and more from taxpayers. There is no more money.
on September 3,2013 | 07:53AM
NanakuliBoss wrote:
The report also fails to say that the federal ponzi scheme, is actually the blueprint that States ane Counties use. Social Security and government pension plans including veterans pay also is a lose lose situation that's being funded by your taxes.
on September 3,2013 | 08:17AM
saywhatyouthink wrote:
It's 27 BILLION, not million. 8 billion wouldn't even cover
on September 3,2013 | 04:38PM
st1d wrote:
anyone notice that the numbers just don't add up.

ohio's has the highest unfunded liability at just over $287 million and hawaii is reported to have $27 million in unfunded liabilities.

just for fun: bump up ohio's figure of $287 million to $300 million. multiply $300 million by 50 (to cover all states) and the result is $15 billion.

we know hawaii's unfunded liability is over $12 billion.

hope the feds didn't overpay for this study.

on September 3,2013 | 08:11AM
st1d wrote:
sorry, the first "ohio's" should be "ohio".
on September 3,2013 | 08:13AM
st1d wrote:
it gets worse.

reading the study's figures, it turns out california has the highest unfunded liability at just over $640 million.

multiply $640 million by 50 and the result is $32 billion.

still not adding up to $4.1 trillion.

on September 3,2013 | 08:20AM
st1d wrote:
correction: when you reference the study, california has the largest liability at $640 million, times 50, leaves us with $32 billion in liability. still short of $4.1 trillion. what did we pay for this study?
on September 3,2013 | 08:23AM
localguy wrote:
This study is pure shibai. $640 million? No way. Try about $329 billion. Lot of workers who may have counted on this money are not going to see all of it. How did this happen? Easy. States and unions willfully created a Ponzi Scheme just as Detroit automakers and unions did. Automakers almost went under due to their failures. States are also in trouble. Hang on to your wallet. Ref: http://www.foxbusiness.com/government/2013/06/11/california-on-brink-pension-crisis/ & http://www.ai-cio.com/channel/NEWSMAKERS/Californian_Unfunded_Liabilities__Double_What_We_Thought.html
on September 3,2013 | 08:36AM
serious wrote:
Look at the states, ALL DEMOCRATIC except Alaska but that's due to the Jones Act. Also look at the number of cities that went into bankruptcy or are threatening--all Democratic. Tax and spend, and spend, and spend. Gotta get reelected at all costs--yes, taxpayer costs!!
on September 3,2013 | 09:01AM
primowarrior wrote:
They show the method used to calculate their numbers at the bottom of their website, but it sounds like a bunch of mumbo jumbo to me. Perhaps if a CPA reads this, they could explain it to us.
on September 3,2013 | 09:09AM
E_Ogawa wrote:
Add up the figures and the total is $4.1 trillion. The figures are in thousands, so add three zeros.
on September 3,2013 | 03:34PM
AirRescueFF wrote:
You should thoroughly reference the table from the link before making these statements.
on September 3,2013 | 05:35PM
st1d wrote:
so much easier now that the story and original source have the correct information, thanks e.o. and arff.
on September 3,2013 | 09:24PM
HD36 wrote:
Same thing happening in Chicago Illinois. The Governor though has supended the pay of all legislators until they come up with a budget plan to fund all the promises made by past politicians.
on September 3,2013 | 09:01AM
Kohelele wrote:
Nice, that's a great way to put the pressure on them.
on September 3,2013 | 09:19AM
localguy wrote:
Happened in California too. Pay stopped for lawmakers until a working budget was passed. We need to do this for Congress.
on September 3,2013 | 12:19PM
Hilofrank wrote:
So, when are we, Hawaii voters, going to stop voting for tax and spend, career politicians, who keep sucking up to unions, with promises of higher and higher benefits, and then come to the rest of us in the private sector to pay for their unwillingness to be fiscally responsible. Where's that "red line" that these career politicians cross that would make the rest of us who vote wake up and hold them accountable? Nahhh, we like being stupid and voting for stupid, because accountability and responsibility are hard. Voting for the same person, over and over and over again, regardless of their record and without asking questions is easy.
on September 3,2013 | 10:08AM
HD36 wrote:
As John Mizuno said, the HSTU is the most important backing for any politician.
on September 3,2013 | 10:48AM
DiverDave wrote:
The is something a miss here in this article. It states "Hawaii Employee Retirement System has nearly $27 million in unfunded liability". That's way low! In a article published earlier in the year (May 8, 2013) at watchdog.org it said; "Kalbert Young, director of the state Department of Budget and Finance, said the Employee Union Trust Fund total unfunded liability exceeds $18 billion. To put it in perspective, the state’s biennium operating and capital budgets are $24 billion during the next two fiscal years. Hawaii is responsible for covering $15 billion of the debt to the EUTF. The remaining $3 billion is owed by the four counties and the University of Hawaii". So the real number is not $27 million, but $24 Billion. Why would this article print incorrect information?
on September 3,2013 | 10:17AM
DiverDave wrote:
For the above article search: Hawaii's unfunded liability.
on September 3,2013 | 10:20AM
mcc wrote:
One paper town. They print trash and human interest stories, like a tabloid.
on September 3,2013 | 10:52AM
localguy wrote:
Here is the correct amount. Try about $329 billion. Lot of workers who may have counted on this money are not going to see all of it. How did this happen? Easy. States and unions willfully created a Ponzi Scheme just as Detroit automakers and unions did. Automakers almost went under due to their failures. States are also in trouble. Hang on to your wallet. Ref: http://www.foxbusiness.com/government/2013/06/11/california-on-brink-pension-crisis/ & http://www.ai-cio.com/channel/NEWSMAKERS/Californian_Unfunded_Liabilities__Double_What_We_Thought.html
on September 3,2013 | 12:20PM
localguy wrote:
My bad, confused city with state. Here it is, $8.15 billion unfunded liability. Ref: http://www.civilbeat.com/articles/2012/03/08/15138-hawaii-public-pension-systems-unfunded-liability-swells-14/
on September 3,2013 | 12:22PM
mcc wrote:
Where did all the money go???
on September 3,2013 | 10:49AM
AhiPoke wrote:
When FDR authorized the creation on unions, he also warned against allowing government employees to unionize. Why? Because unlike private companies that base compensation at least somewhat on profitability, there is no profit in government. Effectively, public unions negotiate for more tax money with no one there to represent the taxpayers. Even George Meany, a former president of the AFL-CIO, thought that unionization of the public sector was absurd. Well it happened anyway. Now we have a system where both the public sector workers as well as politicians are robbing the taxpayers blind. It has reached the point that public sector workers' earnings (pay and benefits) are the highest in the nation.
on September 3,2013 | 11:18AM
ChrisJConklin wrote:
The article cites incorrect numbers, and understates Hawaii's unfunded pension liability by a factor of one thousand - the table in the report lists amounts in thousands - so Hawaii's unfunded liability is nearly $27 BILLION, not $27 million. Does anyone not see the irony in this....?
on September 3,2013 | 11:48AM
bsdetection wrote:
To reach this result, State Budget Solutions used a rate of return on investments of 3.225%. Historical averages are between 7% and 8%. Over the past year, the rate of return has been 12.4%, and over the past 5 years (including the Bush recession) it has been 5.2%. There is a serious problem, but there is no need to cook the books to this degree to make that point.
on September 3,2013 | 12:15PM
what wrote:
You mean Bush-Obama recession. Whatever you might think Bush did to cause the recession, Obama has amplified and intensified thus killing the cyclic recovery.
on September 3,2013 | 12:29PM
sailfish1 wrote:
$4.1 trillion?? Wow! The entire Federal debt is around $16 trillion. So Hawaii's unfunded pension liability is 1/4 of the entire federal debt. Incredible!
on September 3,2013 | 12:25PM
IAmSane wrote:
$4.1 trillion overall. Between SA using "million" instead "billion" and all the comments from confused people, this has been a mess of a read.
on September 3,2013 | 01:04PM
st1d wrote:
article quotes numbers right from study. a way overpaid for study apparently.
on September 3,2013 | 01:14PM
E_Ogawa wrote:
The numbers in the study are in thousands, so add three zeros to the figures in the table.
on September 3,2013 | 03:20PM
st1d wrote:
thanks e.o. didn't notice the article and source had been updated and corrected.
on September 3,2013 | 11:10PM
Maneki_Neko wrote:
Hawaii's Employee Retirement System has nearly $27 billion in unfunded liability.

And yet the politicians tell us we have a healthy economy. Folks - these are real debts, actual obligations. Pretending they are not there doesn't work.

on September 3,2013 | 02:46PM
saywhatyouthink wrote:
You must be a state worker. There will come a time when lawmakers will not be able to raise taxes fast enough to fund these outrageous pension and medical benefits. That time is coming sooner than you think, if I were you, I wouldn't count on receiving a state pension and medical for life.
on September 3,2013 | 04:42PM
AirRescueFF wrote:
Typical of the horrible proofreading, verifying, and editing by the SA.
on September 3,2013 | 03:32PM
saywhatyouthink wrote:
Public pensions should go the same way the private sector pensions went .... away. Taxpayer should not be forced to provide benefits that are not available to the vast majority of americans who are employed by the private sector. Economic globalization and foreign competition have brought an end to private sector pensions, the public sector must adjust to this new reality as well, it's only fair.
on September 3,2013 | 04:29PM
Anonymous wrote:
IRT say, I received a lump sum pension from a private-sector company (They're still offering it to their employees). In 16 years, I'll receive a state pension. I'm definitely in an outlying position.
on September 3,2013 | 09:30PM
atilter wrote:
pure governmental mis-management and thievery under the guise of "moving funds" to pay for mis-guided, "feel-good" projects!!!!! we surely deserve whatever the current situation as it is now for turning a trusting and blind eye toward resolving this issue for too damn long.
on September 3,2013 | 07:29PM
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