Report Title:

ERS; New Members; Election for Class C Members

 

Description:

Makes all new public employees class A, contributory members. Allows existing class C noncontributory members to elect to either remain as class C noncontributory members or become class A contributory members.

 

HOUSE OF REPRESENTATIVES

H.B. NO.

756

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to the employees' retirement system.

 

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

SECTION 1. Section 88-47, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There shall be three classes of members in the system to be known as class A, class B, and class C, defined as follows:

(1) Class A shall consist of members covered by [section 88-74(3), those members whose salaries are set forth in sections 26-52 and 26-53, and their county counterparts, managing directors or administrative assistant to the mayor, and other department heads, including agency heads appointed by the mayor, first deputies appointed by the county attorney and prosecuting attorney, the county clerk and deputy county clerk of each county, the administrative director of the courts, the deputy administrative director of the courts, the executive director of the labor and industrial relations appeals board, the executive director of the Hawaii labor relations board, investigators of the department of the attorney general, narcotics enforcement investigators, water safety officers not making the election under section 88-271, public safety investigations staff investigators, and those members in service prior to July 1, 1984, including those who are on approved leave of absence, who are covered by Title II of the Social Security Act on account of service creditable under this part. This class shall consist of:

(A) All employees who enter membership after June 30, 1957, except employees in positions to which coverage under Title II of the Social Security Act is not extended;

(B) All employees who were members on July 1, 1957, who elected to be covered by the Social Security Act; and] Title II of the Social Security Act and shall include:

(A) Members as specified in section 88-74(4); members whose salaries are set forth in sections 26-52 and 26-53, and their county counterparts; managing directors or administrative assistant to the mayor, and other department heads, including agency heads appointed by the mayor, first deputies appointed by the county attorney and prosecuting attorney, the county clerk and deputy county clerk of each county, the administrative director of the courts, the deputy administrative director of the courts, the executive director of the labor and industrial relations appeals board, the executive director of the Hawaii labor relations board, investigators of the department of the attorney general, narcotics enforcement investigators, water safety officers not making the election under section 88-271, and public safety investigations staff investigators;

(B) Members not described in subparagraph (A), who were in service prior to July 1, 1984, including those who are on approved leave of absence; class C members in service on December 31, 2001, who elect to become class A members prior to January 1, 2002, as provided in section 88-271(e); and members entering or re-entering service after December 31, 2001; and

(C) All former class A retirants who return to employment after June 30, 1984, requiring the retirant's active membership;

(2) Class B shall consist of all members who are not class A or class C members; and shall include:

(A) Employees who enter membership after June 30, 1957, who are in positions to which coverage under Title II of the Social Security Act is not extended;

(B) Employees who were members on July 1, 1957, who elected not to be covered by the Social Security Act; and

(3) Except for members described in section 88-47(a)(1), class C shall consist of [all employees] members in positions covered by Title II of the Social Security Act who:

(A) First enter service after June 30, 1984[;], but prior to January 1, 2002, who are in service on December 31, 2001, and who do not elect to become class A members;

(B) Reenter service after June 30, 1984, but prior to January 1, 2002, without vested benefit status as provided in section 88-96(b)[;], who are in service on December 31, 2001, and who do not elect to become class A members;

(C) [Make the election to become a class C member as provided in part VII;] Were in service prior to July 1, 1984, who made the election to become class C as provided in part VII, who are in service on December 31, 2001, and who do not elect to become class A members; or

(D) Are former class C retirants who return to service requiring the retirant's active membership."

SECTION 2. Section 88-74, Hawaii Revised Statutes, is amended to read as follows:

"88-74 Allowance on service retirement. Upon retirement from service, a member shall receive a retirement allowance as follows:

(1) If the member has attained age fifty-five, a retirement allowance of two per cent of the member's average final compensation multiplied by the total number of years of the member's credited service as a class A and B member, excluding any credited service as a judge, elective officer, or legislative officer, plus a retirement allowance of one and one-fourth per cent of the member's average final compensation multiplied by the total number of years of prior credited service as a class C member; provided that:

(A) After June 30, 1968, if the member has at least ten years of credited service of which the last five or more years prior to retirement is credited service as a firefighter, police officer, or an investigator of the department of the prosecuting attorney;

(B) After June 30, 1977, if the member has at least ten years of credited service of which the last five or more years prior to retirement is credited service as a corrections officer;

(C) After June 16, 1981, if the member has at least ten years of credited service of which the last five or more years prior to retirement is credited service as an investigator of the department of the attorney general;

(D) After June 30, 1989, if the member has at least ten years of credited service of which the last five or more years prior to retirement is credited service as a narcotics enforcement investigator;

(E) After December 31, 1993, if the member has at least ten years of credited service of which the last five or more years prior to retirement is credited service as a water safety officer; and

(F) After June 30, 1994, if the member has at least ten years of credited service, of which the last five or more years prior to retirement are credited service as a public safety investigations staff investigator;

then for each year of service as a firefighter, police officer, corrections officer, investigator of the department of the prosecuting attorney, investigator of the department of the attorney general, narcotics enforcement investigator, water safety officer, or public safety investigations staff investigator, the retirement allowance shall be two and one-half per cent of the member's average final compensation. The maximum retirement allowance for those members shall not exceed eighty per cent of the member's average final compensation. If the member has not attained age fifty-five, the member's retirement allowance shall be computed as though the member had attained age fifty-five, reduced in accordance with factors of actuarial equivalence adopted by the board upon the advice of the actuary; provided that no reduction shall be made if the member has at least twenty-five years of credited service as a firefighter, police officer, corrections officer, investigator of the department of the prosecuting attorney, investigator of the department of the attorney general, narcotics enforcement investigator, public safety investigations staff investigator, sewer worker, or water safety officer, of which the last five or more years prior to retirement is credited service in such capacities;

(2) If a member who has class C service becomes a class A or class B member after December 31, 2001, the member's retirement allowance shall be computed in accordance with paragraph (1), except that the allowance for the member's class C service shall be reduced by one-half per cent for each month the member is less than age sixty-two at retirement, unless the member retires after attaining age fifty-five but before age sixty-two and has at least thirty years of total credited service;

    [(2)] (3) If the member has made voluntary additional contributions for the purchase of an additional annuity and has not applied for a refund as permitted by section 88-72, the member may accept the refund at the time of retirement or, in lieu thereof, receive in addition to the retirement allowance provided in [paragraph] paragraphs (1)[,] and (2), an annuity that is the actuarial equivalent of the additional contributions with regular interest;

    [(3)] (4) If the member has credited service as a judge, the member's retirement allowance shall be computed on the following basis:

(A) For a member who has credited service as a judge before July 1, 1999, irrespective of age, for each year of credited service as a judge, three and one-half per cent of the member's average final compensation in addition to an annuity that is the actuarial equivalent of the member's accumulated contributions allocable to the period of such service; and

(B) For a member who first earned credited service as a judge after June 30, 1999, for each year of credited service as a judge, three and one-half per cent of the member's average final compensation in addition to an annuity that is the actuarial equivalent of the member's accumulated contributions allocable to the period of such service. If the member has not attained age fifty-five, the member's retirement allowance shall be computed as though the member had attained age fifty-five, reduced in accordance with factors of actuarial equivalence adopted by the board upon the advice of the actuary; or

(C) For a judge with other credited service, as provided in paragraphs (1) [and], (2)[.], and (3). If the member has not attained age fifty-five, the member's retirement allowance shall be computed as though the member had attained age fifty-five, reduced in accordance with factors of actuarial equivalence adopted by the board upon the advice of the actuary; or

(D) For a judge with credited service as an elective officer or as a legislative officer, as provided in paragraph [(4).] (5).

No allowance shall exceed seventy-five per cent of the member's average final compensation. If the allowance exceeds this limit, it shall be adjusted by reducing the annuity included in subparagraphs (A) and (B) and the portion of the accumulated contributions specified in the subparagraphs in excess of the requirements of the reduced annuity shall be returned to the member. The allowance for judges under this paragraph, together with the retirement allowance provided by the federal government for similar service, shall in no case exceed seventy-five per cent of the member's average final compensation; or

    [(4)] (5) If the member has credited service as an elective officer or as a legislative officer, the member's retirement allowance shall be derived by adding the allowances computed separately under subparagraphs (A), (B), (C), and (D) as follows:

(A) Irrespective of age, for each year of credited service as an elective officer, three and one-half per cent of the member's average final compensation as computed under section 88-81(d)(1), in addition to an annuity that is the actuarial equivalent of the member's accumulated contributions allocable to the period of service; and

(B) Irrespective of age, for each year of credited service as a legislative officer, three and one-half per cent of the member's average final compensation as computed under section 88-81(d)(2), in addition to an annuity that is the actuarial equivalent of the member's accumulated contributions allocable to the period of service;

(C) If the member has credited service as a judge, the member's retirement allowance shall be computed on the following basis:

(i) For a member who has credited service as a judge before July 1, 1999, irrespective of age, for each year of credited service as a judge, three and one-half per cent of the member's average final compensation as computed under section 88-81(d)(3), in addition to an annuity that is the actuarial equivalent of the member's accumulated contributions allocable to the period of such service; and

    (ii) For a member who first earned credited service as a judge after June 30, 1999, and has attained the age of fifty-five, for each year of credited service as a judge, three and one-half per cent of the member's average final compensation as computed under section 88-81(d)(3), in addition to an annuity that is the actuarial equivalent of the member's accumulated contributions allocable to the period of such service. If the member has not attained age fifty-five, the member's retirement allowance shall be computed as though the member had attained age fifty-five, reduced in accordance with factors of actuarial equivalence adopted by the board upon the advice of the actuary; and

(D) For each year of credited service not included in subparagraph (A), (B), or (C), the average final compensation as computed under section 88-81(d)(4) shall be multiplied by two per cent, two and one-half per cent, or one and one-quarter per cent, as applicable to the credited service earned as a class A, B, or C member, respectively. If the member has not attained age fifty-five, the member's retirement allowance shall be computed as though the member had attained age fifty-five, reduced in accordance with factors of actuarial equivalence adopted by the board upon the advice of the actuary.

The total retirement allowance shall not exceed seventy-five per cent of the member's highest average final compensation calculated under section 88-81(d)(1), (2), (3), or (4). If the allowance exceeds this limit, it shall be adjusted by reducing any annuity accrued under subparagraphs (A), (B), and (C) and the portion of the accumulated contributions specified in these subparagraphs in excess of the requirements of the reduced annuity shall be returned to the member. If a member has service credit as an elective officer or as a legislative officer in addition to service credit as a judge, then the retirement benefit calculation contained in this paragraph shall supersede the formula contained in paragraph [(3).] (4)."

SECTION 3. Section 88-76, Hawaii Revised Statutes, is amended to read as follows:

"88-76 Allowance on ordinary disability retirement. Upon retirement for ordinary disability, a member shall receive a retirement allowance of one and three-fourths per cent of the member's average final compensation for each [full] year of credited service; except that for each year of credited service as a judge, an elective officer, or a legislative officer, the member shall receive a retirement allowance computed as provided in section [88-74(3) or (4),] 88-74(4) or (5), as applicable[.] and except for each year of credited service as a class C member, the member shall receive a retirement allowance computed as provided in section 88-284(c). The minimum retirement allowance payable under this section shall be thirty per cent of the member's average final compensation."

SECTION 4. Section 88-271, Hawaii Revised Statutes, is amended to read as follows:

"88-271 Election. (a) Any class A or class B member who:

(1) Is in service on June 30, 1984, or who returns to service after June 30, 1984, and has vested benefit status as provided in section 88-96(b); and

(2) Is in a position covered by Title II of the Social Security Act, may elect to become a class C member effective January 1, 1985; or upon return to service, by filing an election form with the board.

The election shall be made prior to December 1, 1984, or within thirty days of return to service and shall be irrevocable. A class A or class B member who makes such an election shall be refunded all accumulated contributions and shall not be required to make further contributions upon becoming a class C member. The refund shall be made by March 31, 1985, or within ninety days after return to service. Upon the effective date of the election, all rights as a class A or class B member shall be extinguished.

(b) After June 30, 1984, a class A or class B member, who returns to service prior to January 1, 2002, but does not have vested benefit status as provided in section 88-96(b), shall become a class C member upon return to service and shall be refunded all accumulated contributions.

(c) Any water safety officer who is in service on July 1, 1994, may elect to become a class C member by filing an election form with the board. The election shall be made prior to September 1, 1994, and shall be irrevocable. The accumulated contributions of a water safety officer who makes this election shall be returned to the water safety officer through payroll adjustments or another procedure as determined by the board. Upon the effective date of the election, all rights as a class A member shall be extinguished. All persons first employed as a water safety officer after July 1, 1994, but prior to January 1, 2002, shall be class C members.

(d) Any class A member who elects and is approved to withdraw the member's contributions may become a class C member in accordance with section 88-46.5. Upon approval of the election:

(1) All rights as a class A member shall be extinguished;

(2) The member's accumulated contributions shall be refunded; and

(3) The member shall not be required to make further contributions to the system.

This election shall be irrevocable.

(e) Any class C member in service on December 31, 2001, may elect to become a class A member effective January 1, 2002, by filing an election form with the board prior to January 1, 2002.

[(e)] (f) The system shall provide information explaining the effects of any election made under subsection (a), (c), [or] (d)[.], or (e)."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:

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