AARP Hawai‘i: Workers, Public Loses When Hawai‘i Saves Bill Failed to Pass
by Craig Gima, Communications Director
Senate Bill 1374 to create a Hawai‘i Saves Retirement Savings Program died in a conference committee meeting and the meeting ended without an agreement on a final version of the bill.
“Tonight was a huge loss for half of our private-sector employees who currently have no way to save at work via payroll deduction,” said Barbara Kim Stanton, AARP Hawai‘i State Director. “This bill would have helped 216,000 private-sector workers and about 15,000 small businesses in Hawai’i with an easy way to save for retirement at work. It would have saved taxpayers money because when more people save, fewer people will retire broke and the state will not have to spend as much money on social services like housing and food assistance, and medical care.”
Very similar versions of Senate Bill 1374 passed the Senate and House unanimously. The differences are supposed to be resolved in conference committee for a bill to advance. But while the Senate appointed conferees earlier this week, the House did not appoint conferees until just before the deadline Thursday and then scheduled a conference committee meeting just 20 minutes before another deadline to reach agreement on bills. In the end, the Senate agreed to accept the House proposal, but both sides said they didn’t have approval on how much money to put into the bill so the bill cannot proceed.
The decision to appoint House conferees came only after AARP Hawai‘i volunteers rallied at the State Capitol on Wednesday and urged the House not to kill the bill in secret. The bill would have died Thursday if conferees were not appointed. A similar Hawai‘i Saves bill died last year when the House, at the 11th hour, pulled their conferees from meeting.
Senate Bill 1374 had widespread support among small businesses, workers and taxpayers, Stanton said.
About half of Hawai‘i’s private-sector workers are not able to save through payroll deduction, the easiest and most effective way to save. People are 15 times more likely to save if it comes out of their paychecks before they get a chance to spend their money. Only five percent of people will actually go out on their own to save. So creating an easy way to save at work is key to getting more people to save.
Most small businesses find it too complicated and expensive to offer payroll savings programs. The bill would create a public-private partnership to give small businesses who do not have a savings plan and workers access to a payroll savings program at no cost to businesses. The money would not be held by the state, but in individual worker accounts held by private, reputable financial services businesses.
About half of all workers have less than $2,500 in retirement savings. If workers retire broke, taxpayers will likely need to support them with housing, food and medical assistance. If more people save, the state and taxpayers will benefit from reduced future need for public assistance.
In Oregon, the first state to offer a state-facilitated retirement program, more than 72,000 workers have saved more than $16 million in the first 21 months and 72 percent of employees offered the chance to save, stay in the program.