(a) The actuary shall conduct an annual stress test of the system.
Terms Used In Hawaii Revised Statutes 88-105.5
Amortization: Paying off a loan by regular installments.
Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
Baseline: Projection of the receipts, outlays, and other budget amounts that would ensue in the future without any change in existing policy. Baseline projections are used to gauge the extent to which proposed legislation, if enacted into law, would alter current spending and revenue levels.
Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
(b) The board shall submit an annual report to the legislature, not later than twenty days prior to the convening of each regular session, on the results of the actuary’s stress test.(c) For the purposes of this section, a “stress test” shall address:
(1) Projections of assets, liabilities, pension debt, service costs, employee contributions, employer contributions, net amortization, benefit payments, payroll, and funded ratio for the system for each of the next thirty years based upon the then-current actuarial assumptions, including the assumed rate of return;(2) Projections for the items listed in paragraph (1), assuming that investment returns are two percentage points lower than the assumed rate of return and that the State makes employer contributions:
(A) Based upon the then-current funding policy for the system; and(B) That are held constant at the levels calculated for paragraph (1);(3) Estimates of the items listed in paragraph (1), if there is a one year loss on planned investments of twenty per cent followed by a twenty-year period of investment returns two percentage points below plan assumptions, with the following assumptions regarding contribution policy:
(A) Employer contributions are adjusted based upon current policy; and(B) Employer contributions are held constant at the levels calculated for the baseline projections; and(4) The estimated actuarially accrued liability, the total plan normal cost for all benefit tiers, and the employer normal cost for all benefit tiers, calculated using:
(A) A discount rate equal to the assumed rate of return; and(B) The ten-year average of the yield of thirty-year treasury notes.
