Report Title:

Retirement Benefits

 

Description:

Eliminates overtime compensation, differentials, and supplementary pay from the calculation of retirement benefits for all employees after 6/30/00. Clarifies that for purposes of determining the amount of a member's contribution to the annuity savings fund, a member's compensation does not include payments for overtime, differentials, and supplementary pay.

 

HOUSE OF REPRESENTATIVES

H.B. NO.

332

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO RETIREMENT BENEFITS.

 

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

SECTION 1. The legislature finds that it is critical that the legislature explore every possible way to promote greater fiscal responsibility for the state budget. One of the most important methods of promoting this responsibility is reevaluating various government payments to ensure that they meet their original goals and purposes. For example, retirement benefits are based on the number of years of service a person has worked as reflected in their wages. Therefore, calculating retirement benefits on wages seems the most direct method.

However, wage payments often include additional allowances such as overtime pay. In most cases, the practice of including overtime pay when determining retirement allowances does not have a significant impact on state fiscal policies. But occasionally, in other cases, overtime pay can, for example, increase retirement benefits to prodigious amounts.

It was not the intent of the legislature that certain individuals, who worked more overtime hours than their counterparts, receive more generous retirement allowances for doing the same job. Based on the instances of individuals who receive significant retirement allowances because of overtime pay, it has become apparent that the fairest policy is to remove overtime pay from the calculation of retirement benefits across-the-board.

The purpose of this Act is to exclude overtime compensation earned or received after the date of this Act from the calculation of retirement benefits.

SECTION 2. Section 88-45, Hawaii Revised Statutes, is amended to read as follows:

"88-45 Employee contributions. After June 30, 1988, each class A and class B member shall contribute seven and eight-tenths per cent of the member's compensation to the annuity savings fund; provided that after June 30, 1989, all firefighters, police officers, corrections officers, investigators of the departments of the prosecuting attorney and of the attorney general, narcotics enforcement investigators, water safety officers not making the election under section 88-271, and public safety investigations staff investigators shall contribute twelve and two-tenths per cent of their compensation to the annuity savings fund for service in that capacity[.]; provided that the payment of overtime compensation, differentials, and supplementary pay to the member shall not be included in the computation of the member's contribution to the annuity savings fund."

SECTION 3. Section 88-81, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Average final compensation is [(1) for]:

(1) For employees who have become members prior to January 1, 1971, the average annual compensation pay or salary upon which a member has made contributions as required by sections 88-45 and 88-46[, (A) during]:

(A) During the member's five highest paid years of credited service[, (B) at];

(B) At the option of the member, during the member's three highest paid years of credited service; provided that no payment of salary in lieu of vacation shall be included in the computation[, or (C) if];

(C) If the member has [less] fewer than three years of credited service, then during the member's actual years of credited service; [or (2) for]

(2) For employees who become [[]members[]] on or after January 1, 1971, the average annual compensation pay or salary upon which a member has made contributions as required by sections 88-45 and 88-46[, (A) during]:

(A) During the member's three highest paid years of credited service; provided that no payment of salary in lieu of vacation shall be included in the computation[, or (B) if]; or

(B) If the member has [less] fewer than three years of credited service, then during the member's actual years of credited service[.];

provided that the payment of any overtime compensation, differentials, and supplementary pay to the member shall not be included in the computation of the member's average final compensation."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2001.

INTRODUCED BY:

_____________________________