Report Title:
ERS; Contributory Members; Withdrawal of Funds
Description:
Allows contributory members of the ERS to withdraw, for one time only, part or all of the member's contributions under certain conditions of economic hardship.
HOUSE OF REPRESENTATIVES |
H.B. NO. |
990 |
TWENTY-SECOND LEGISLATURE, 2003 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to the employees' retirement system.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Findings and purpose. The legislature finds that the current economic situation in Hawaii may have an adverse impact on families with one or more adults working in the public sector. Under the current retirement system for public employees, there is one group of employees who entered service after 1984, who do not make any contributions to their retirement fund, and are generally referred to as class C or non-contributory members. On the other hand, there is a group of employees who are referred to as class A and class B members, who belong to the contributory plan. Most members of the contributory plans contribute seven and eight-tenths per cent of the member's compensation toward the member's retirement fund, while certain other members such as police officers, firefighters, and various investigators contribute twelve and two-tenths per cent. There are different benefits and eligibility guidelines for retirement for members who belong to the contributory as opposed to the non-contributory class. In general, a contributory member has less take-home pay as compared to a class C member. The legislature is concerned about contributory members who may need extra funds for their families in the event of a financial hardship, for example should a second paycheck be lost due to job restructuring or other reductions in force. There are many families in Hawaii who live from paycheck to paycheck and who have little savings to fall back on. The legislature finds that a contributory member's retirement funds may contain funds that could be used by the member to pay for unusually high medical expenses, higher education costs, or even the cost of elder care. The purpose of this Act is to permit, on a one-time basis, a contributory member to withdraw, under certain conditions of economic hardship, part or all of that member's contributions.
SECTION 2. Chapter 88, Hawaii Revised Statutes, is amended by adding a new section to part II, C, to be appropriately designated and to read as follows:
"§88- Withdrawal of funds from the contributory plan; when allowed. (a) Notwithstanding any other provisions of this chapter, a member may apply to the board pursuant to rules, for a one-time withdrawal of funds from the member's contributions in the event of economic hardship.
(b) For purposes of this section, "economic hardship" means financial hardship due to medical costs from injury or a lengthy illness of a member or the member's child or spouse; elder care for a member's parent or spouse's parent; or for full-time college or university costs for a member's child. Other examples of economic hardship shall include:
(1) Inability to purchase automobile, life, homeowner's, fire hazard, hurricane, and flood insurance or pay real property taxes;
(2) Frequent delinquencies on mortgage or rent of home (foreclosure notice has been given);
(3) Untimely payment of utilities;
(4) Collection notices for medical or lab services rendered;
(5) Partial payments for income taxes and tax services;
(6) No savings to fall back on;
(7) Difficulty purchasing food and clothing and paying automobile expenses and school expenses, such as lunch money, bus transportation, school supplies, uniforms, and school dues;
(8) Unable to obtain any type of loan because of mortgage or rent and other personal loan delinquencies;
(9) Only one vehicle for household and unable to obtain a loan for second vehicle due to loan delinquencies and mortgage or rent payments; and
(10) Inability to make up-front payments for special medical, dental, or lab services for children and selves as parents.
(c) The board, in developing rules to implement this section, among other factors, shall describe:
(1) The kinds of verification needed in its application forms for withdrawal of funds for hardship cases;
(2) Whether a member shall be vested before filing an application under this section;
(3) The actuarial impact the withdrawal will have on the member's future retirement benefits; and
(4) Whether a spouse shall also be required to approve the withdrawal of funds for hardship."
SECTION 3. New statutory material is underscored.
SECTION 4. This Act shall take effect upon its approval.
INTRODUCED BY: |
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