The Hawaii State Employees’ Retirement System (ERS) has adopted “new option factor tables” that will apply to state and county workers who retired after December 31, 2013.
The ERS announcement can be found online, and anyone anywhere near retirement should take a look.
But exactly what it means isn’t clear.
Here’s the short explanation from the ERS:
Effective January 1, 2014, the new factor tables will be used in the calculation of a Member’s retirement options for all retirement plans. These new factors reflect changes in the investment returns and changes in the life expectancy of our members.
Generally, retirement options without a refund are decreased and options with a refund are increased. In addition, changes in the mortality assumption decrease your pension options at younger ages and increases your pension options at older ages. These new factor changes do not affect the Maximum Allowance.
Of course, investment returns are generally lower in the current economic environment, while people are generally living longer, and these are behind the changes ERS is making. So it seems that the changes must be designed to make up for the system’s lower income and longer payout periods.
But what do the “new option factor tables” mean? It’s very hard to tell. The announcement is full of ERS jargon and never really says exactly what the result of the changes are.
I was forwarded an email concerning the changes sent to faculty in the Shidler College of Business at UH Manoa by John Butler, Associate Dean for Academic Affairs.
Go to the below link and read the message carefully. As near as I can tell it means that if we retire after 12/31/2013 our monthly payout will be lowered.
So “as near as I can tell” is as educated a guess as the assistant dean of the UH business school is able to make. For us mere mortals, it’s clear as mud.
Perhaps ERS has to put some of this into plain language.
Is someone retiring on the first day of 2014 going to receive a lower retirement benefit than if they were to retire on December 31, 2013?
Figuring out how to deal with the economics of retirement is hard enough without this kind of opaque communication from the primary public pension system in the State of Hawaii.
Has anyone out who has digested the changes able to translate them into plain language? We await your comments.