Bill Text: HI SB2333 | 2018 | Regular Session | Introduced
Bill Title: Relating To Retirement Savings.
Spectrum: Partisan Bill (Democrat 7-0)
Status: (Engrossed - Dead) 2018-04-27 - Received notice of discharge of conferees (Hse. Com. No. 688). [SB2333 Detail]
Download: Hawaii-2018-SB2333-Introduced.html
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THE SENATE |
S.B. NO. |
2333 |
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TWENTY-NINTH LEGISLATURE, 2018 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
Relating to retirement savings.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that there is an imminent retirement security crisis in the State, as many individuals do not have access to an employer-sponsored retirement plan. Individuals without a retirement plan are at significant risk of not having enough retirement income to meet basic expenses during retirement. A retirement savings plan can help employees achieve economic security, improve economic mobility, and reduce wealth disparity.
In 2017, Oregon was the first state to implement a retirement saving plan that covers private sector workers who do not otherwise have access to a savings plan provided by their employer. With many small businesses operating in Oregon, the state calculated that it had more than one million employers who did not offer any form of retirement savings. The plan was actually adopted earlier in 2015, as the Obama administration tried to encourage states to promote retirement savings. Other states have similar programs including California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, and Vermont.
The legislature also finds that individuals need a lifelong savings system that provides them with the opportunity to build their assets and attain future financial stability. Private sector employees with access to employer-sponsored retirement plans provides a reliable way to accumulate savings needed for a secure retirement.
The legislature further finds that approximately fifty per cent of the State's private sector employees work for an employer that does not offer a retirement plan or are not eligible for the plan offered. The lack of opportunity to participate in an employer-provided retirement plan spans all levels of education and earnings. Employees of Hawaii businesses with fewer than one hundred employees are much less likely to have access to a retirement plan than employees of larger businesses. Employees who are offered the opportunity to save through the employee's place of employment are significantly more likely to participate and make steady contributions to build retirement savings.
The purpose of this Act is to establish a Hawaii retirement savings board to administer the Hawaii retirement savings plan for private sector employees.
SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:
"Chapter
HAWAII RETIREMENT SAVINGS PLAN
§ -1 Definitions. As used in this chapter, unless the context otherwise requires:
"Board" means the Hawaii retirement savings board.
"Plan" means the Hawaii retirement savings plan.
§ -2 Hawaii retirement savings board; establishment. (a) There is established within the department of budget and finance for administrative purposes the Hawaii retirement savings board.
(b) The board shall consist of the following nine members:
(1) The director of finance or the director's designee;
(2) The director of commerce and consumer affairs or the director's designee;
(3) The comptroller or the comptroller's designee;
(4) A member of the senate to be selected by the president of the senate;
(5) A member of the house of representatives to be selected by the speaker of the house of representatives;
(6) A representative of the employees' retirement system to be selected by the governor pursuant to section 26‑34;
(7) A representative of the Chamber of Commerce Hawaii to be selected by the governor pursuant to section 26-34; and
(8) Two members from the small business industry to be selected by the governor pursuant to section 26-34.
(d) The representative of the employees' retirement system, the representative of the Chamber of Commerce Hawaii, and the members from the small business industry shall serve terms of years; provided that such members shall serve no more than consecutive terms. The senate member shall serve at the pleasure of the senate president. The member of the house of representatives shall serve at the pleasure of the speaker of the house of representatives. All other members shall serve in an ex officio capacity.
(e) The members of the board shall serve without pay but shall be entitled to reimbursement for necessary expenses, including travel and board and lodging expenses, while attending meetings of the board or when actually engaged in business relating to the work of the board.
(f) The director of finance or the director's designee shall serve as chairperson of the board.
(g) The board may employ, without regard to chapter 76, staff necessary for the performance of its functions and fix their compensation.
§ -3 Duties of the board. The board shall:
(1) Establish, implement, and maintain the Hawaii retirement savings plan pursuant to section -4;
(2) Adopt rules for the general administration of the plan as provided in section -5;
(3) Direct the investment of the funds contributed to accounts in the plan consistent with the investment restrictions established by the board; provided that the restrictions shall be consistent with the objectives of the plan and the board shall exercise the judgement and care then prevailing that persons of prudence, discretion, and intelligence exercise in the management of their own affairs with due regard to the probable income and level of risk from certain types of investments of money, in accordance with the policies established by the board;
(4) Collect application, account, or administrative fees to assist the costs of administering the plan;
(5) Make and enter into contracts, agreements, or arrangements, and retain, employ, and contract for any of the following considered necessary or desirable, for carrying out the purposes set forth by this chapter:
(A) Services for private and public financial institutions, depositories, consultants, investment advisers, investment administrators, and third-party plan administrators;
(B) Research, technical, and other services;
(C) Services of other state agencies to assist the board in its duties;
(6) Evaluate the need for, and procure as needed, pooled private insurance of the plan; and
(7) Develop and implement an outreach plan to gain input and disseminate information regarding the plan and retirement savings in general.
§ -4 Establishment of the Hawaii retirement savings plan. (a) There is established the Hawaii retirement savings plan to be administered by the board, which shall:
(1) Allow eligible individuals employed for compensation in the State to contribute to an account established under the plan through payroll deduction;
(2) Require an employer to offer its employees the opportunity to the plan through payroll deductions unless the employer offers a qualified retirement plan, including but not limited to a plan qualified under section 401(a), section 401(k), section 403(a), section 403(b), section 408(k), section 408(p), or section 457(b) of the Internal Revenue Code of 1986, as amended;
(3) Provide automatic enrollment of employees and allow employees to opt out of the plan;
(4) Offer a default contribution rate set by the board;
(5) Offer default escalation of contribution levels that can be increased or decreased within the limits allowed by the Internal Revenue Code of 1986, as amended;
(6) Provide contributions to the plan to be deposited directly with the investment administrator for the plan;
(7) Whenever possible, use existing employer and public infrastructure to facilitate contributions to the plan, recordkeeping, and outreach;
(8) Require no employer contributions to employee accounts;
(9) Require the maintenance of separate records and account for each plan account;
(10) Provide reports on the status of plan accounts to be provided to plan participants at least annually;
(11) Allow account owners to maintain an account regardless of place of employment and to roll over funds into other retirement accounts;
(12) Pool accounts established under the plan for investment;
(13) Be professionally managed;
(14) Provide that the State and employers that participate in the plan have no proprietary interest in the contributions to or earnings on amounts contributed to accounts established under the plan;
(15) Provide that the investment administrator for the plan is the trustee of all contributions and earnings on amounts contributed to accounts established under this plan;
(16) Does not impose any duties under the Employee Retirement Income Security Act of 1974, as amended, on employers;
(17) Keep administration fees in the plan low;
(18) Allow the use of private sector partnerships to administer and invest the contributions to the plan under the supervision and guidance of the board; and
(19) Allow employers to establish an alternative retirement plan for some or all employees.
(b) The plan, the board, each board member, and the State shall not guarantee any rate of return or any interest rate on any contribution; provided that the plan, the board, each board member, and the State may not be liable for any loss incurred by any person as a result of participating in the plan.
§ -5
Rules. The board shall adopt rules, pursuant to
chapter 91, necessary for the purposes of this chapter.
§
-6 Confidentiality. Individual
account information for accounts under this plan, including but not limited to
names, addresses, telephone numbers, personal identification information, amounts
contributed, shall be confidential and shall be maintained as confidential:
(1) Except to the extent necessary to administer the plan in a manner consistent with sections -2 to -8, the tax laws of the State, and the Internal Revenue Code of 1986, as amended; or
(2) Unless
the person who provides the information or is the subject of the information expressly
agrees in writing that the information may be disclosed.
§ -7 Hawaii
retirement savings plan administrative fund. (a)
There is created in the state treasury a special fund to be known as the
Hawaii retirement savings plan administrative fund, into which shall be
deposited:
(1) All interest collected under this chapter on and after the establishment of the plan;
(2) Appropriations
made by the legislature to the fund;
(3) All
fees collected as provided in section
-3; and
(4) Moneys
transferred to the fund from the federal government, other state agencies, or
local governments.
(b)
The director of finance shall be the treasurer and custodian of the
administrative fund.
(c)
Moneys in the Hawaii retirement savings plan administrative fund shall
be used to pay the administrative costs and expenses by the board and plan and
for any other purpose described in sections -2 to
-8.
§ -8 Annual
report. The board shall prepare an
annual report detailing the board's activities for the previous fiscal year. The annual report shall be submitted to the
governor and legislature no later than twenty days prior to the convening of
each regular session of the legislature."
SECTION 3. (a) Before establishing the Hawaii retirement savings plan, the Hawaii retirement savings board established pursuant to section 2 of this Act shall:
(1) Conduct a market analysis to determine:
(A) The feasibility of the plan; and
(B) Whether and to what extent plans with the characteristics described in section -4, Hawaii Revised Statutes, currently exist in the private market;
(2) Obtain legal advice regarding the applicability of the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended, to the plan;
(3) Investigate whether employers that are not required to participate in the plan can make the plan available to their employees;
(4) Investigate how to allow individuals who are not automatically enrolled in the plan to opt in to the plan and make contributions to an account, either through payroll contributions or another method of contribution;
(5) Conduct an analysis of the potential costs to employers, including administrative costs, and costs associated with providing automatic payroll deductions for participation in the plan, as well as recommendations on how to eliminate or reduce those costs through incentives, tax credits, or other means;
(6) Prepare a timeline for implementation of the Hawaii retirement savings plan; and
(7) Make recommendations to the legislature regarding ways to increase financial literacy in the State.
(b) The report shall be submitted to the legislature no later than twenty days prior to the convening of the regular session of 2019.
SECTION 4. There
is appropriated out of the general revenues of the State of Hawaii the sum of $
or so much thereof as may be necessary for fiscal year 2018-2019 to be
deposited into the Hawaii retirement savings plan administrative fund.
SECTION 5. There
is appropriated out of the Hawaii retirement savings plan administrative fund
the sum of $ or so
much thereof as may be necessary for fiscal year 2018-2019 for administrative
and operating expenses for the Hawaii retirement savings board.
The sum appropriated shall be expended by
the department of budget and finance for the purposes of this Act.
SECTION 6. This Act shall take effect on July 1, 2018; provided that the Hawaii retirement savings board established pursuant to section 2 of this Act shall establish the Hawaii retirement savings plan so that individuals may begin making contributions to the plan no later than July 1, 2020; provided further that if the board determines that the plan would qualify as an employee benefit plan under the Employee Retirement Income Security Act of 1974, as amended, the board shall not establish the plan.
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INTRODUCED BY: |
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Report Title:
Retirement Savings Plan; Retirement Savings Board; Private Sector; Appropriation
Description:
Establishes a retirement savings board to administer the Hawaii retirement savings plan. Establishes the Hawaii retirement savings plan administrative fund. Requires the board to report to the legislature before establishment of the Hawaii retirement savings plan. Requires the board to annually report to the governor and legislature. Appropriates funds.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
