Report Title:

ERS; Defined

 

Description:

Proposes defined contribution retirement plan for certain public employees as an optional retirement plan. (HB1223 HD1)

 

HOUSE OF REPRESENTATIVES

H.B. NO.

1223

TWENTY-FIRST LEGISLATURE, 2001

H.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO EMPLOYEES' RETIREMENT SYSTEM.

 

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

SECTION 1. It is the policy of this State to attract and retain the most qualified elected officials and public employees in order to preserve and enhance the ability of the State to provide the highest quality service to the people of Hawaii. In order to attract and retain such officials and employees, it is imperative that state government have the maximum flexibility to provide optional retirement plans. It is the purpose of this Act to make suitable provisions for the accomplishment of this policy.

SECTION 2. Chapter 88, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . OPTIONAL RETIREMENT PLAN

§88-A Definitions. As used in this part, unless a different meaning is plainly required by the context:

"Committee" means the state defined contribution retirement committee.

"Defined contribution plan" means a plan or plans established pursuant to this part for the benefit of eligible employees.

"Eligible employee" means a state officer or employee who is exempt from the civil service pursuant to section 76-16(4), (5), (6), (7), (10), and (16).

"Eligible position" means a position with an employer for which a defined contribution plan is available pursuant to this part.

"Employer" means the State, the governor, the state legislature, the attorney general, and any state department that employs an eligible employee.

"Existing retirement system" means any existing state retirement system including, but not limited to, the retirement system contained in chapter 88, part II.

§88-B Optional retirement committee; creation; establishment of defined contribution plans. (a) There is created the optional retirement committee consisting of five members, two members shall be appointed by the governor, one member shall be appointed by the attorney general, one member of the house of representatives shall be appointed by the speaker of the house of representatives, and one member of the senate shall be appointed by the president of the senate. Each member shall participate in a defined contribution plan. The senate member and house of representatives member shall serve for the duration of the member's elected or appointed term of office. The remaining members shall serve terms of four years. A member may be removed by the appointing authority for just cause. A vacancy shall be filled for the unexpired term in the same manner as the office was previously filed.

(b) The committee shall have the authority to establish and administer one or more defined contribution plans pursuant to this part. The committee shall establish at least one such plan on or before                    . The department of human resources development shall provide necessary administrative support to the committee in connection with the establishment and operation of any defined contribution plan established by the committee.

§88-C Requirements for defined contribution plan; contributions and purchases of contracts. (a) The committee shall establish the terms and conditions of any defined contribution plan established by the committee. Benefits under any defined contribution plan established pursuant to this part may be provided through annuity contracts, certificates, or a combination of annuity contracts and certificates or similar instruments and contracts, and may be fixed or variable in nature. Any such defined contribution plan may provide retirement and death benefits.

(b) The committee, for each defined contribution plan established by the committee, shall:

(1) Provide for the administration of that defined contribution plan; and

(2) Designate from time to time the companies from which contracts for the defined contribution plan shall be purchased. In designating the companies, the committee shall take into consideration:

(A) The nature and extent of the rights and benefits those contracts will provide to the eligible employees electing to participate in the defined contribution plan and for the beneficiaries of those eligible employees;

(B) The relation of the rights and benefits to the amount of contributions to be made;

(C) The suitability of the rights and benefits to the needs and interests of eligible employees electing to participate in the defined contribution plan and to the interests of the state government in the employment and retention of eligible employees;

(D) The ability of the designated companies to provide the required rights and benefits under the contract or contracts for the defined contribution plan; and

(E) The efficacy of the contracts in the recruitment and retention of qualified public officials and employees.

(c) No fewer than three separate and distinct providers of investment products shall be selected for each defined contribution plan established. Providers shall service their accounts or pay a fee to the committee for defined contribution plans established so that the committee may service the accounts. In addition, providers shall pay fees to provide for the actual costs of administration of the defined contribution plan. All fees collected pursuant to this subsection shall be transmitted and credited to the defined contribution plan administration fund.

§88-D Defined contribution plan fund; established. The defined contribution plan fund is hereby created. The legislature shall make annual appropriations from the fund for the direct and indirect costs of administration of any plan established under this part. All investment products provided by a defined contribution plan shall be portable.

§88-E Employer and employee contributions. Rates for employer and employee contributions to a defined contribution plan established pursuant to this part shall be the same as the rates that would have been payable by such employer and employee to the existing retirement system if the employee had participated in the existing retirement system pursuant to chapter 88, part II.

§88-F Participation. (a) Only eligible employees of an employer for which a defined contribution plan is offered may elect to participate in a defined contribution plan.

(b) Any eligible employee who is not a member of the existing retirement system and who is initially appointed to an eligible position on or after the effective date of the establishment of a defined contribution plan shall make a one-time irrevocable written election within sixty days of commencing employment in such position to participate in the existing retirement system or in a defined contribution plan. In the absence of that written election, that person shall be a member of the applicable existing retirement system.

(c) Any eligible employee who is a member of the existing retirement system at the time the employee is initially appointed to or initially holds an eligible position, as long as such employee remains employed in that eligible position, may make a one-time irrevocable written election during the months of January and February of each year to participate in a defined contribution plan. In the absence of that written election, that person shall be a member of the applicable existing retirement system.

(d) Any eligible employee who elects to participate in a defined contribution plan shall specify one of the following options:

(1) To terminate future contributions to the existing retirement system beginning on the date of election while maintaining rights as provided by the laws applicable to the existing retirement system relative to any contributions or benefits accrued prior to that election; or

(2) To terminate membership in the existing retirement system and to require payment by the existing retirement system of all member contributions, accrued interest on those contributions, and matching employer contributions, to the extent provided by the laws applicable to the existing retirement system, to the defined contribution plan in which the employee has elected to participate. The election shall constitute a waiver of all rights and benefits provided by the existing retirement system except as otherwise provided by this part. Within ninety days after receipt of notice of an election to terminate membership pursuant to the provisions of this paragraph, the existing retirement system shall pay to the defined contribution plan in which the employee has elected to participate, on behalf of the eligible employee, all amounts the employee is entitled to pursuant to the existing retirement system.

(e) Any election to participate in a defined contribution plan pursuant to the provisions of this section shall be in writing and shall be filed with the employees' retirement system and with the eligible employee's employer.

(f) Any election by an eligible employee to participate in a defined contribution plan shall be irrevocable and shall be accompanied by an appropriate allocation, where required, for the issuance of a contract or contracts under the defined contribution plan.

§88-G State tax; applicability. Any pension, annuity contract, or certificate purchased under a defined contribution plan established pursuant to this part shall not be subject to state tax and shall not be assignable either in law or in equity or be subject to execution, levy, attachment, garnishment, or any other legal process."

SECTION 3. This Act shall take effect on July 1, 2020.