RELATING TO HAWAII RETIREMENT SAVINGS ACT.

HB847

HOUSE OF REPRESENTATIVES

H.B. NO.

847

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

RELATING
TO HAWAII RETIREMENT SAVINGS ACT
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

����
SECTION 1.
�
The purpose of
this Act is to:

����
(1)
�
Clarify the definition of "covered
employer" in the Hawaii Retirement Savings Act;

����
(2)
�
Amend and align provisions of the
Hawaii retirement savings program, the state-facilitated payroll‑deduction
retirement savings plan for private sector employees in Hawaii who do not have
access to employer-sponsored retirement plans, to require automatic enrollment
unless the employee opts out;

����
(3)
�
Repeal
the limit on the total fees and expenses that can be spent for the program each
year; and

����
(4)
�
Appropriate
funds for the Hawaii retirement savings program's development and operations.

����
SECTION 2.
�

Section 389-2, Hawaii Revised Statutes, is amended by amending the
definition of "covered employer" to read as follows:

����
""Covered
employer" means any person who is in business in the State and has one or
more individuals in employment.
�
"Covered
employer" does not include:

����
(1)
�
The United States;

����
(2)
�
The State or any of its political
subdivisions; or

����
(3)
�
[
A
person
]

Any employer

that
has
[
been maintaining
]

offered or maintained a retirement plan

for

some or

all employees
[
during
]

at any time in

the preceding

two
years
[
a retirement plan
]
that is tax-qualified under or is
described in and satisfies the requirements of section 401(a), 401(k), 403(a),
403(b), 408(k), or 408(p) of the Internal Revenue Code."

����
SECTION 3.
�

Section 389-4, Hawaii Revised Statutes, is amended by amending
subsections (a) and (b) to read as follows:

����
"(a)
�
The board shall have powers and duties in
accordance with law to:

����
(1)
�
Establish, implement, and maintain the
program;

����
(2)
�
Cause the program and arrangements and
accounts established under the program to be designed, established, and
operated:

���������
(A)
�
In accordance with best practices for
retirement savings vehicles;

���������
(B)
�
To encourage participation, saving,
sound investment practices, and appropriate selection of default investments;

���������
(C)
�
To maximize simplicity and ease of
administration for employers;

���������
(D)
�
To minimize costs, including by
collective investment and other measures to achieve economies of scale and
other efficiencies in program design and administration;

���������
(E)
�
To promote portability of benefits; and

���������
(F)
�
To avoid preemption of the program by
federal law;

����
(3)
�
Arrange for collective, common, and
pooled investment of assets of the program;

����
(4)
�
Determine the eligibility of an
employer, employee, or other individual to participate in the program;

����
(5)
�
Ensure the program's compliance with
all applicable laws and regulations;

����
(6)
�
Establish procedures for the timely and
fair resolution of participant and other disputes related to accounts or
program operation;

����
(7)
�
Develop and implement:

���������
(A)
�
An investment policy that defines the
program's investment objectives and that is consistent with the objectives of
the program; and

���������
(B)
�
Other policies and procedures
consistent with those investment objectives;

����
(8)
�
Cause expenses incurred to initiate,
implement, maintain, and administer the program to be paid from the program and
other available sources;

����
(9)
�
Establish and collect application,
account, and administrative fees;

���
(10)
�
Accept grants, gifts, donations,
legislative appropriations, loans, and other moneys from the State, any unit of
federal, state, or local government, or any other person to defray the costs of
administering and operating the program;

���
(11)
�
Enter into contracts pursuant to
chapter 103D for services that the board deems necessary to carry out the
purposes of this chapter, including:

���������
(A)
�
Services of private and public
financial institutions, depositories, consultants, actuaries, counsel,
auditors, investment advisors, investment administrators, investment management
firms, other investment firms, third-party administrators, other professionals
and service providers;

���������
(B)
�
Research, technical, financial,
administrative, and other services; and

���������
(C)
�
Services of other state agencies to
assist the board in the exercise of its powers and duties;

���
(12)
�
Develop and implement an outreach plan
to gain input and disseminate information regarding the program and retirement
savings in general;

���
(13)
�
Cause moneys to be held and invested
and reinvested under the program;

���
(14)
�
Ensure that all contributions to
individual retirement accounts under the program may be used only to:

���������
(A)
�
Pay benefits to participants under the
program;

���������
(B)
�
Pay the cost of administering the
program; and

���������
(C)
�
Make investments for the benefit of the
program; provided that no assets of the program shall be transferred to the
general fund of the State or to any other fund of the State or otherwise
encumbered or used for any purpose other than those specified in this
paragraph;

���
(15)
�
Provide for the payment of costs of
administration and operation of the program;

���
(16)
�
Evaluate the need for and, if the board
deems necessary, procure:

���������
(A)
�
Insurance against any and all loss in
connection with the property, assets, or activities of the program; and

���������
(B)
�
Pooled private insurance;

���
(17)
�
Indemnify, including procurement of
insurance if and as needed for this purpose, each board member from personal
loss or liability resulting from the member's action or inaction as a board
member;

���
(18)
�
Collaborate with and evaluate the role
of financial advisors or other financial professionals, including in assisting
and providing guidance for covered employees; [
and
]

���
(19)
�
Reimburse, when appropriate, the
general fund of the State of Hawaii for the initial expenses incurred for
initiating, implementing, maintaining, and administering the program; and

���
(20)
�
Take any other action the board deems
reasonably necessary to carry out the purpose of this chapter.

����
(b)
�
The board may develop and disseminate
information designed to educate covered employees about the impacts of [
opting
in to
] the program on take-home pay, savings strategies, and the benefits
of planning and saving for retirement to help covered employees in deciding
whether to participate and at what level participation may be
appropriate."

����
SECTION 4.
�

Section 389-5, Hawaii Revised Statutes, is amended as follows:

����
1.
�

By amending its title to read:

����
"[
[
]�389-5[
]
]
�
Hawaii retirement savings program; due
diligence; establishment; payroll deduction [
upon election to contribute
].
"

����
2.
�
By amending subsections (d) through (f) to
read:

����
"(d)
�
[
Any covered employee may elect to
contribute a portion of the employee's salary or wages to an individual
retirement account provided by the program through payroll deduction.
]
Each
covered employer shall enroll its covered employees in the program and withhold
and remit payroll deduction contributions from each covered employee's paycheck
unless the covered employee has elected not to participate.

����
(e)
�
Beginning on a date to be determined by the
board pursuant to subsection (a), a covered employer shall:

����
(1)
�
[
Allow a
]
Automatically
enroll
covered [
employee to enroll
]
employees
into the
program after [
providing
]
the program administrator provides
the
[
covered employee
]
employees
with a written notice of the [
employee's
]
right
of the employees
to opt [
in;
]
out;
and

����
(2)
�
For any covered employee who [
has
opted in to
]
is enrolled into
the program[
:
]
and has not
opted out, a covered employer shall:

���������
(A)
�
Withhold the covered employee's
contribution amount from the employee's salary or wages; and

���������
(B)
�
Transmit the covered employee's payroll
deduction contribution to the program on the earliest date the amount withheld
can reasonably be segregated from the covered employer's assets, but no later
than the fifteenth day of the calendar month following the month in which the covered
employee's contribution amounts are withheld.

����
(f)
�
The program shall establish for each enrolled
employee a Roth IRA, into which the contributions deducted from [
an
]
the

employee's payroll shall be deposited.
�

The board may add an option for all participants to affirmatively elect
to contribute to a traditional IRA in addition to
or in lieu of
a Roth
IRA."

����
SECTION 5.
�

Section 389-7, Hawaii Revised Statutes, is amended by amending
subsection (b) to read as follows:

����
"(b)
�

The program manager shall keep total fees and expenses as low as
practicable[
; provided that the total fees and expenses of the program each
year shall not exceed seventy-five basis points of the total assets of the
program; provided further that this limit shall not apply during the initial
three-year period following the establishment of the program
]."

����
SECTION 6.
�

Section 389-14, Hawaii Revised Statutes, is amended by amending
subsection (a) to read as follows:

����
"(a)
�
Any covered employer who fails to enroll a
covered employee into the program in accordance with section 389-5(e)(1)
without equitable justification shall be liable:

����
(1)
�
To the covered employee, in an amount
equal to the contribution amount that would have been made by the employee into
the program and interest at a rate of six per cent per year on the contribution
amount, beginning from the date the contribution would have been made into the
account; provided that the sum of the contribution amount and interest thereto
shall be transmitted by the covered employer to the program to be paid into the
covered employee's IRA; and

����
(2)
�
A penalty of:

���������
(A)
�
$25 for each month the covered employee
was not enrolled in the program; and

���������
(B)
�
$50 for each month the covered employee
continues to be unenrolled in the program after the date on which a penalty has
been assessed with respect to the covered employee who [
had elected to
participate
]
should have been enrolled
in the program."

����
SECTION 7.
�

There is appropriated out of the general revenues of the State of Hawaii
the sum of $720,000 or so much thereof as may be necessary for fiscal year
2025-2026 and the same sum or so much thereof as may be necessary for fiscal
year 2026-2027 for the development and operation of the Hawaii retirement
savings program, including but not limited to expenses for legal, outreach,
communication, and marketing services, and consultants, audits, and insurance.

����
The sums

appropriated shall be expended by the department of labor and
industrial relations for the purposes of this Act.

����
SECTION 8.
�

Statutory material to be repealed is bracketed and stricken.
�
New statutory material is underscored.

����
SECTION 9.
�

This Act shall take effect on July 1, 2025.

INTRODUCED BY:

_____________________________

Report Title:

DLIR;
Hawaii Retirement Savings Act; Hawaii Retirement Savings Program; Covered
Employer; Definition; Automatic Enrollment; Opt-Out Option; Appropriations

Description:

Clarifies
the definition of "covered employer" under the Hawaii Retirement
Savings Act.
�
Requires covered employers
to automatically enroll covered employees into the Hawaii Retirement Savings
Program unless the employee chooses to opt out.
�

Repeals the limit on the total fees and expenses that can be spent for
the Program each year.
�
Appropriates
funds to the Department of Labor and Industrial Relations for the development
and operation of the Program.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.