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Who Lost with "Hawaii Saves" Bill Defeat?

Taxpayers, small businesses and 216,000 workers without an easy way to save at work lost a huge opportunity to have a more secure retirement when the Legislature failed to pass Senate Bill 1374, which would have taken the first steps toward creating a Hawai‘i Saves Retirement Savings Program.

About half of Hawai‘i’s private-sector workers do not have access to payroll savings — the easiest and most effective way to save. The Legislature’s failure to pass the Hawai‘i Saves bill means these workers run the risk of retiring broke.

Taxpayers lost because we will have to pay more in the future for social services for kupuna who lack adequate retirement savings instead of saving an estimated $32.7 million in 15 years if people had saved enough to generate an additional $1,000 a year in retirement income for themselves.

Small businesses lost a chance to be more competitive by being able to offer a savings benefit. Seventy percent of Hawai‘i small businesses without a payroll savings program welcomed the state’s help in setting one up. They found it too expensive, complex and time-consuming to do it individually. They are taxpayers, too, so it’s a double loss for them.

SB1374 would have set up a public-private partnership to create an auto-Individual Retirement Account savings program to offer payroll savings to employees at no cost to the business. That’s impor-

tant because workers are 15 times more likely to save if the money comes out of their paycheck before they have a chance to spend it. Furthermore, only one in 20 people will save on their own outside of work.

Similar to a college 529 savings plan, the state would have set up the program with a reimbursable loan, but the private financial services companies would run it. The money in the savings accounts would be contributed by individual savers who could continue to contribute to their account even if they changed employers.

The bill had overwhelming legislative support. Very similar versions of the bill passed unanimously in both houses, and lawmakers would have similarly voted in support once it reached the floor for a final vote.

So why did it die?

House leadership killed the bill this year by not coming to the table in good faith to reconcile the House and Senate versions of the legislation. Speaker of the House Scott Saiki did not appoint conferees until AARP volunteers protested about killing the bill in secret. Even then, conferees were given only 20 minutes prior to the legislative deadline to reconcile their differences. When House co-chair and Finance Committee Chair Sylvia Luke failed to show up to meet with the Senate conferees, all hope of resolving differences ended and the bill was killed for this session despite the Senate’s offer to accept the House draft.

The public loses when bills are killed without transparency, accountability and an honest effort to reach agreement. Both Saiki and Luke voted in public for the bill. But their actions behind closed doors hurt the public process and trust.

We’ll be back next year on behalf of workers, taxpayers and small business. Lawmakers need to serve the public purpose and pass Hawai‘i Saves next session. This bill is too important to do otherwise.

Barbara Kim Stanton has been the state director of AARP Hawai‘i since 2005. She writes about living a life of real possibilities, where age is not a limit and experience equals wisdom

This story originally appeared in "The Hawaii Herald."

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