THE SENATE

S.B. NO.

1324

TWENTY-EIGHTH LEGISLATURE, 2015

S.D. 2

STATE OF HAWAII

H.D. 1

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO DIVORCE.

 

 

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

 


SECTION 1. The legislature finds that section 88-91, Hawaii Revised Statutes, as currently written and as interpreted by Attorney General Opinion 79-3, prohibits the direct payment of a former spouse's share of an employees' retirement system member's retirement benefits by the employees' retirement system administrator. In many cases, this leads to a former spouse not receiving a court ordered portion of the member's retirement benefits as part of a property division in a finalized divorce. This situation can also create a burden on the member having to comply with a court order as the member is required to write monthly checks to the former spouse. Moreover, the inability of a former spouse to receive direct payment from the employees' retirement system administrator may result in the member retiree bearing all of the tax liability on the taxable benefits, even if the member retiree is obligated to pay a portion of the benefits to the former spouse.

The purpose of this Act is to create statutory authority for the employees' retirement system administrator to make direct payment to the former spouse of a member who has been awarded a portion of the member's retirement benefits as part of a property division adjudicated, ordered, or decreed by a family court in a divorce proceeding.

SECTION 2. Section 88-91, Hawaii Revised Statutes, is amended to read as follows:

"88-91 Exemption from taxation and execution. (a) The right of a person to a pension, an annuity or a retirement allowance, to the return of contributions, the pension, annuity or retirement allowance itself, any optional benefit or death benefit, any other right accrued or accruing to any person under this part and the moneys in the various funds created under this part are exempted from any tax of the State and, except as in section 88-92 provided, shall not be subject to execution, garnishment or any other process and shall be unassignable except as in this part specifically provided.

(b) Notwithstanding subsection (a), if a final judgment, order, or decree in a divorce action awards the former spouse a portion of the member's pension, annuity, or retirement allowance, that portion shall be paid directly to the former spouse; provided that the judgment, order, or decree:

(1) Identifies the member and former spouse by name and address;

(2) Directs the administrator to make payment of the former spouse's share directly to the former spouse;

(3) Clearly identifies the portion awarded to the former spouse;

(4) Requires that each party shall be taxed on the share of the retirement benefit received; and

(5) States that the assignment of benefits does not:

(A) Require the administrator to provide any type or form of benefit, or any option, not otherwise provided under the judgment, order, or decree;

(B) Require the administrator to provide increased benefits, determined on the basis of actuarial value;

(C) Require the administrator to provide benefits to the former spouse that are required to be paid to another former spouse pursuant to a valid judgment, order, or decree; or

(D) Require the administrator to provide benefits to a former spouse upon the death of the member or a deceased former spouse of a member."

SECTION 3. Section 88-93, Hawaii Revised Statutes, is amended to read as follows:

"88-93 Named beneficiaries by members and by former employees; effect of marriage, entry into reciprocal beneficiary relationship, divorce, termination of reciprocal beneficiary relationship, or death[.]; award in divorce. (a) All written designations of beneficiaries for members and for former employees shall become [null and] void when:

(1) The beneficiary predeceases the member or former employee;

(2) The member or former employee is divorced from the beneficiary;

(3) The member or former employee is unmarried, and subsequently marries; or

(4) The member or former employee enters into or terminates a reciprocal beneficiary relationship.

Any of the above events shall operate as a complete revocation of the designation and, except as provided in sections 88-84(b) and 88-338(b) all benefits payable by reason of the death of the member or former employee shall be payable to the member's or former employee's estate unless, after the death, divorce or marriage, or entry into or termination of reciprocal beneficiary relationship, the member or former employee makes other provision in a written designation duly executed and filed with the board.

(b) Notwithstanding subsection (a), when a final judgment, order, or decree in a divorce action awards a former spouse a portion of a member or former employee's pension, annuity, or retirement allowance, that portion shall be paid directly to the former spouse, in accordance with section 88-91; provided that the administrator may assess a ten per cent administrative fee to be shared equally among the member and the former spouse.

[(b)] (c) Subsection (a) shall not apply to active members who are former retirants who have returned to service. The beneficiaries of retirants who return to service may not be changed except to the extent provided under the retirement allowance option selected by the former retirant when the former retirant first retired."

SECTION 4. The board of trustees of the employees' retirement system shall adopt rules in accordance with chapter 91, Hawaii Revised Statutes, and produce forms as necessary to effectuate this Act.

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

SECTION 6. This Act shall take effect on July 1, 2115.


 


 

Report Title:

Employees' Retirement System Benefits; Direct Payment to Former Spouse; Divorce

 

Description:

Provides statutory authority for the ERS Administrator to make direct payment of benefits to a former spouse of a member pursuant to valid court judgment, order, or decree for divorce. Allows for the ERS Administrator to assess a ten per cent administrative fee. (SB1324 HD1)

 

 

 

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