Report Title:

ERS; Average Final Compensation; Calculation Based upon Highest Years of Credited Service

Description:

Requires all retiring employees' average final compensations be calculated based upon a member's three or five highest paid years of credited service as applicable. Removes calendar year average final compensation calculation requirement for members retiring after December 31, 2002.

THE SENATE

S.B. NO.

795

TWENTY-SECOND LEGISLATURE, 2003

 

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 88-81, Hawaii Revised Statutes, is amended to read as follows:

"§88-81 Average final compensation. (a) Average final compensation is the average annual compensation pay or salary upon which a member has made contributions as required by sections 88-45 and 88-46.

(b) The average final compensation of members [retiring prior to January 1, 2003,] shall be calculated as follows:

(1) For employees who become members prior to January 1, 1971:

(A) During the member's five highest paid years of credited service, including vacation pay, or the three highest paid years of credited service excluding vacation pay, whichever is greater; or

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

(2) For employees who become members on or after January 1, 1971:

(A) During the member's three highest paid years of credited service, excluding vacation pay; or

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

[(c) The average final compensation of members retiring after December 31, 2002, shall be calculated as follows:

(1) For employees who become members prior to January 1, 1971:

(A) During the member's five highest paid calendar years of service including vacation pay, or the last sixty months of credited service including vacation pay, whichever is greater; or

(B) During the member's three highest paid calendar years of service excluding vacation pay, or the last thirty-six months of credited service excluding vacation pay, whichever is greater; or

(C) During the member's actual years of credited service, if the member has less than three years of credited service;

(2) For employees who become members on or after January 1, 1971:

(A) During the member's three highest paid calendar years of service excluding vacation pay or the last thirty-six months of credited service excluding vacation pay, whichever is greater; or

(B) During the member's actual years of credited service, if the member has less than three years of credited service; and

(3) If a member has credited service as a nine, ten, or eleven-month employee and is paid over twelve months,

(A) During the member's three highest paid school contract years of service; or

(B) During the member's actual years of credited service, if the member has less than three years of credited service.]

[(d)] (c) In computing the compensation of a judge, the compensation paid to the judge by the United States as well as by the Territory shall be included.

[(e)] (d) For service rendered as a member of the legislature from and after November 5, 1968, the actual annual salary of a member shall be the only amount used for determining the member's average final compensation. For service rendered as a member of the legislature prior to November 5, 1968, and after admission of this State into the Union, the annual compensation of a member shall be computed, for the purpose of determining the member's average final compensation, as follows: during a year in which a general session was held, it shall be deemed to have been an amount equal to four times the salary of a member of the legislature for a general session; and during a year in which a budget session was held, it shall be deemed to have been an amount equal to six times the salary of a member of the legislature for a budget session. For service rendered as a member of the legislature prior to the admission of this State into the Union, the annual compensation of a member shall be deemed to have been four times the salary of a member of the legislature for a regular session for each year during the member's term of office.

[(f)] (e) If a member has credited service rendered as an elective officer or as a legislative officer, the member's average final compensation shall be computed separately for each category of service as follows:

(1) For the three highest paid years of credited service as an elective officer, or if the member has less than three years of credited service in that capacity, then the member's actual years of credited service;

(2) For the three highest paid years of credited service as a legislative officer, or if the member has less than three years of credited service in that capacity, then the member's actual years of credited service;

(3) For the three highest paid years of credited service as a judge, or if the member has less than three years of credited service in that capacity, then the member's actual years of credited service; and

(4) For the three highest paid years of credited service not included in paragraph (1), (2), or (3), or if the member has less than three years of credited service in that capacity, then the member's actual years of credited service."

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval and shall apply retroactively to retirement applications to and pension awards made by the employees' retirement system from January 1, 2003.

INTRODUCED BY:

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