The dream of retirement is far off for many, and a state program intended to make that dream more attainable is still at least a year away from launch.
Established by a bill signed by then-Gov. David Ige in 2022, the Hawaii Retirement Savings Program is intended to help Hawaii residents prepare for the future by allowing them to enroll in a state-managed individual retirement plan.
Under the program, qualifying private sector employees could elect to have part of their paychecks withheld and deposited into an IRA automatically.
Employees of any business that has not been able to provide retirement plans for its employees over the previous two years would be eligible to enroll. The first 50,000 enrollees also could receive matching IRA contributions up to $500 from the state.
But despite a considerable amount of support at the time, the program still has not begun, and Bill Kunstman, deputy director of the state Department of Labor and Industrial Relations, said it unlikely to launch until 2025.
“The governor has set up the program’s board, but the board is still hiring an executive director,” Kunstman said. “The board could be ready to hire the director in December, but the director will have to put together a feasibility study for the program, which is probably not happening until 2025.”
Kunstman said the feasibility study is necessary to determine the scope of the program. Because of some changes to federal retirement laws made late last year, certain employees previously thought ineligible might now be eligible or vice-versa.
“The changes might impact which businesses are covered,” said AARP Hawaii State Director Keali‘i Lopez. “For example, there might be changes to the definitions of ‘covered employee’ or ‘covered employer.’”
The bill that established the program dedicated a solid page to those very definitions, with several specific caveats laying out what precisely does and does not fit them.
Lopez also said the program might require an interstate compact to share the administrative burden between similarly sized states. She explained that if other states develop similar programs, they can be managed through a central administrative framework, which is less expensive than each state managing them on their own.
Lopez said this practice is common enough, but also requires other states to go through their own setup processes.
While Lopez said the delay of the program is unfortunate — she said AARP hoped it would have started by January of this year — she emphasized that the delay is not the fault of DLIR or any particular agency. She said the Lahaina wildfire disaster pulled the DLIR’s attention away from the program for some time.
When the program finally is up and running, Lopez said it will help insulate other residents from the uncertainties of the future.
“As we’ve seen, you can never 100% plan for all your future needs,” Lopez said. “But we know that if you make no plans for the future, your needs will never be met.”
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
