Hawaii joins a growing list of states to enact a state-facilitated retirement savings program for private-sector employees who do not have access to employer-sponsored retirement plans.

A covered employer is one who has been in business in the state for more than two years and has one or more employees. Covered employer does not include the state, federal government, or a person who has maintained a tax-qualified retirement plan for its employees in the preceding two years.

A covered employee means an individual who is a resident of the State, is 18 years of age or older, and receives wages from a covered employer. Covered employee does not include an individual covered under the federal Railway Labor Act or on whose behalf of the employer makes contributions to the Taft-Hartley multiemployer pension fund.

The law establishes a retirement savings board to implement and administer a payroll-deduction retirement savings program. The Governor and others shall appoint members to the retirement savings board no later than sixty days after enactment of this Act, for terms of office beginning in October 2022.

Beginning July 1, 2024, a covered employer shall:

• Automatically enroll his/her employees in the program and provide notice to employee explaining the right to opt out,
• Withhold the covered employee’s contribution amount, and
• Transmit the contribution to the program on behalf of its employees no later than the 15^th day of the calendar month following the month in which the contribution was withheld.

The default contribution amount shall be equal to 5% of the covered employee’s salary or wages unless the covered employee elects a higher or lower amount. A covered employer shall not make contributions to the program.

A covered employer may be subject to penalties for failure to enroll a covered employee or failure to submit the contributions.

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