REPORT TITLE:
Public Employees' Retirement


DESCRIPTION:
Establishes a defined contribution retirement plan for public
employees.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
HOUSE OF REPRESENTATIVES                H.B. NO.146        
TWENTIETH LEGISLATURE, 1999                                
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:

 1      SECTION 1.  Findings and purpose.  The legislature finds
 
 2 that public employees of the State and counties should be given
 
 3 the opportunity to have a flexible retirement plan that has a
 
 4 shorter vesting period and more portability than is currently
 
 5 available in the retirement system.  Instead of a defined benefit
 
 6 plan, a defined contribution plan would provide this option.
 
 7 Hawaii's public employees are now participating in a defined
 
 8 benefit pension plan which pays workers a certain monthly amount
 
 9 of money based on a formula.  In a defined contribution plan, the
 
10 employer deposits a fixed amount into a personal investment
 
11 account for each participating employee and later, the retirement
 
12 benefit is based on these funds plus all returns from employee-
 
13 managed investments.  The employee has the power to invest his
 
14 own funds and make transfers to other plans or reinvest them into
 
15 another retirement account even though the funds remain with the
 
16 employer until the employee retires or leaves employment.
 
17 Furthermore, the legislature finds that Hawaii has a population
 
18 that is longer-lived, on average, than in other states.  In
 
19 anticipation of the increasing number of elderly in the
 

 
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 1 population, and the need to provide better retirement benefits to
 
 2 these people, it behooves the State to provide a defined
 
 3 contribution plan to public employees so that they can look
 
 4 forward to a retirement that is adequately financed in their
 
 5 later years.  A defined contribution plan will allow the employer
 
 6 to better plan for employee retirement benefits, something that
 
 7 it cannot adequately predict and plan for under the current
 
 8 defined benefit pension system.  Salary increases, employee
 
 9 turnover, mortality rates, and the like all can impact the
 
10 employer's future obligations in ways that are often not
 
11 predictable.  The purpose of this Act is to establish a defined
 
12 contribution retirement plan for all new incoming public
 
13 employees.
 
14      SECTION 2.  Chapter 88, Hawaii Revised Statutes, is amended
 
15 as follows:
 
16      1.  By amending section 88-23 to read:
 
17      "§88-23  General administration of system vested in board.
 
18 The general administration and the responsibility for the proper
 
19 operation of the retirement system and for making effective the
 
20 provisions of this part [and], part VII, and part VIII of this
 
21 chapter are vested in a board of trustees; subject, however, to
 
22 the area of administrative control vested in the department of
 

 
 
 
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 1 budget and finance by sections 26-8 and 26-35."
 
 2      2.  By amending section 88-31 to read:
 
 3      "§88-31  Medical board.  The board of trustees shall
 
 4 designate a medical board to be composed of three physicians not
 
 5 eligible to participate in the system.  If required, other
 
 6 physicians may be employed to report on special cases.  The
 
 7 medical board shall arrange for and pass upon all medical
 
 8 examinations required under this part [and], part VII, and part
 
 9 VIII of this chapter, shall investigate all essential statements
 
10 and certificates by or on behalf of a member in connection with
 
11 application for disability retirement, and shall report in
 
12 writing to the board its conclusions and recommendations upon all
 
13 the matters referred to it."
 
14      3.  By amending section 88-41 to read:
 
15      "§88-41  Limitation of other statutes.  No other provision
 
16 in any other statute which provides wholly or partly at the
 
17 expense of the State or any county for pensions or retirement
 
18 benefits for employees of the State or of any county, their
 
19 surviving spouses or other dependents shall apply to members,
 
20 retirants, or beneficiaries of the system established by this
 
21 part [and], part VII, and part VIII of this chapter, their
 
22 surviving spouses or other dependents, except such benefits as
 

 
 
 
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 1 may be provided under Title II of the Social Security Act."
 
 2      4.  By amending subsection (a) of section 88-46 to read:
 
 3      "(a)  The head of each state department and the finance
 
 4 director of each county shall deduct from the compensation of
 
 5 each class A or class B member on each and every payroll under
 
 6 their respective jurisdiction, the percentage of compensation of
 
 7 each member as provided under section 88-45[.] and section 88-H.
 
 8 The total amount of deductions made from the salaries of
 
 9 employees and a record of the amount deducted from each member's
 
10 compensation shall be transmitted to the system monthly or at
 
11 such other times as may be agreed upon by the board of trustees.
 
12 The amounts deducted shall be paid into the annuity savings fund
 
13 and shall be credited to the individual account of the member
 
14 from whose compensation the deductions were made.  Regular
 
15 interest shall also be credited to the individual account of the
 
16 member in the annuity savings fund."
 
17      5.  By amending section 88-47 to read:
 
18      "§88-47  Membership.(a)  There shall be [three] four
 
19 classes of members in the system to be known as class A, class B,
 
20 [and] class C, and class D, defined as follows:
 
21      (1)  Class A shall consist of members covered by section
 
22           88-74(3), those members whose salaries are set forth in
 

 
 
 
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 1           sections 26-52 and 26-53, and their county
 
 2           counterparts, managing directors or administrative
 
 3           assistant to the mayor, and other department heads,
 
 4           including agency heads appointed by the mayor, first
 
 5           deputies appointed by the county attorney and
 
 6           prosecuting attorney, the county clerk and deputy
 
 7           county clerk of each county, the administrative
 
 8           director of the courts, the deputy administrative
 
 9           director of the courts, the executive director of the
 
10           labor and industrial relations appeals board, the
 
11           executive director of the Hawaii labor relations board,
 
12           investigators of the department of the attorney
 
13           general, narcotics enforcement investigators, water
 
14           safety officers not making the election under section
 
15           88-271, public safety investigations staff
 
16           investigators, and those members in service prior to
 
17           July 1, 1984, including those who are on approved leave
 
18           of absence, who are covered by Title II of the Social
 
19           Security Act on account of service creditable under
 
20           this part.  This class shall consist of:
 
21           (A)  All employees who enter membership after June 30,
 
22                1957, except employees in positions to which
 

 
 
 
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 1                coverage under Title II of the Social Security Act
 
 2                is not extended;
 
 3           (B)  All employees who were members on July 1, 1957,
 
 4                who elected to be covered by the Social Security
 
 5                Act; and
 
 6           (C)  All former class A retirants who return to
 
 7                employment after June 30, 1984, requiring the
 
 8                retirant's active membership;
 
 9      (2)  Class B shall consist of all members who are not class
 
10           A [or], class C, or class D members; and
 
11      (3)  Except for members described in section 88-47(a)(1),
 
12           class C shall consist of all employees in positions
 
13           covered by Title II of the Social Security Act who:
 
14           (A)  First enter service after June 30, 1984;
 
15           (B)  Reenter service after June 30, 1984, without
 
16                vested benefit status as provided in section
 
17                88-96(b);
 
18           (C)  Make the election to become a class C member as
 
19                provided in part VII; or
 
20           (D)  Are former class C retirants who return to service
 
21                requiring the retirant's active membership.
 
22      (4)  Except for members described in section 88-47(a)(1),
 

 
 
 
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 1           class D shall consist of all employees in positions
 
 2           covered by Title II of the Social Security Act who:
 
 3           (A)  First enter service after June 30, 2000;
 
 4           (B)  Reenter service after June 30, 2000, without
 
 5                vested benefit status as provided in section
 
 6                88-96(b);
 
 7           (C)  Make the election to become a class D member as
 
 8                provided in part VIII; or
 
 9           (D)  Are former class D retirants who return to service
 
10                requiring the retirant's active membership.
 
11      (b)  None of the provisions of this part shall apply to
 
12 class C members except as specifically provided in part VII.
 
13      (c)  None of the provisions of this part shall apply to
 
14 class D members except as specifically provided in part VIII."
 
15      6.  By amending section 88-103 to read:
 
16      "§88-103  Records.(a)  The board of trustees shall keep a
 
17 record of all its proceedings which record shall be open to
 
18 public inspection.  It shall publish annually a report showing in
 
19 detail:  (1) the fiscal transactions of the system for the year
 
20 ending the preceding June 30, (2) the amount of the accumulated
 
21 cash and securities of the system, and (3) an actuarial valuation
 
22 of the assets and liabilities of the system.  The board shall
 

 
 
 
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 1 submit the report to the governor and shall furnish copies
 
 2 thereof to the heads of the various departments of the State and
 
 3 county for their use and the use of the members employed therein.
 
 4      (b)  The board shall include in its annual report submitted
 
 5 prior to January 1 of each odd-numbered year:  (1) a comparison
 
 6 of the investment performance of the system with the investment
 
 7 performances of the public employees' retirement systems of other
 
 8 jurisdictions which have authority to make investments
 
 9 substantially similar to the investment authorized under section
 
10 88-119, and (2) a comparison of the funded ratio on June 30 of
 
11 the preceding year with the funded ratios of the public
 
12 employees' retirement systems of other jurisdictions.
 
13      (c)  The board shall include in its annual report submitted
 
14 prior to January 1 of each odd-numbered year:  a statement of the
 
15 investment performance of the defined contribution plan and other
 
16 comparative information as needed by the members of class D."
 
17      SECTION 3.  Chapter 88, Hawaii Revised Statutes, is amended
 
18 by adding a new part VIII to be appropriately designated and to
 
19 read as follows:
 
20                "PART VIII.  RETIREMENT FOR CLASS D
 
21                   PUBLIC OFFICERS AND EMPLOYEES
 

 
 
 
 
 
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 1                   A.  Applicability of Part II
 
 2      §88-A Applicability.  The following provisions of part II
 
 3 of this chapter shall apply to this part:
 
 4      (1)  Subpart A, except the definitions provided in section
 
 5           88-21, unless expressly adopted in section 88-B;
 
 6      (2)  Subpart B, except sections 88-45, 88-46, 88-48, and
 
 7           88-52 to 88-62;
 
 8      (3)  Subpart C, except sections 88-71 to 88-76, 88-80,
 
 9           88-81, 88-83 to 88-85, 88-87 to 88-89, and 88-96 to
 
10           88-98;
 
11      (4)  Subpart D, except sections 88-112 and 88-113; and
 
12      (5)  Subpart E, except sections 88-134 to 88-139. 
 
13                          B.  Definitions
 
14      §88-B  Definitions.(a)  The following words and phrases as
 
15 used in this part shall have the same meanings as defined in
 
16 section 88-21, unless a different meaning is plainly required by
 
17 the context:  "accumulated contributions"; "actuarial
 
18 equivalent"; "beneficiary"; "county"; "employee"; "medical
 
19 board"; "retirant"; "retirement allowance"; "service"; and
 
20 "system".
 
21      (b)  The following words and phrases as used in this part
 
22 shall have the following meanings, unless a different meaning is
 

 
 
 
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 1 plainly required by the context:
 
 2      "Accidental death":  death which is the natural and
 
 3 proximate result of an accident occurring at some definite time
 
 4 and place while the member was in the actual performance of duty,
 
 5 or due to the result of some occupational hazard, and not caused
 
 6 by recklessness on the part of the member.
 
 7      "Board":  the board of trustees of the employees' retirement
 
 8 system established by section 88-24.
 
 9      "Plan":  a defined contribution plan established pursuant to
 
10 section 457 of the Internal Revenue Code that is available to
 
11 qualified participants under this chapter.
 
12      "Member:  a class D member as described in section 88-47.
 
13      "Ordinary death":  death which is not accidental and which
 
14 occurs during service.
 
15                 C.  Membership, Credited Service
 
16      §88-C  Election.(a)  Any class A, class B, or class C
 
17 member who:
 
18      (1)  Is in service on June 30, 1999, or who returns to
 
19           service after the effective date of this Act, and has
 
20           vested benefit status as provided in section 88-96(b);
 
21           and
 
22      (2)  Is in a position covered by Title II of the Social
 

 
 
 
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 1           Security Act, may elect to become a class D member
 
 2           effective June 30, 2000, or upon return to service, by
 
 3           filing an election form with the board.
 
 4      The election shall be made prior to June 30, 2000, or within
 
 5 thirty days of return to service, whichever is later, and shall
 
 6 be irrevocable.  A class A, class B, or class C member who makes
 
 7 such an election shall be refunded all accumulated and post-
 
 8 retirement contributions, if any, upon becoming a class D member.
 
 9 The refund shall be made by December 31, 2000.  For a member who
 
10 elects to become a class D member, upon the effective date of the
 
11 election, all rights as a class A, class B, or class C member
 
12 shall be extinguished.  
 
13      (b)  A member who makes and files a written election under
 
14 this section elects to do all of the following:
 
15      (1)  Cease to be a member of class A, class B, or class C,
 
16           effective 12:00 midnight June 30, 2000, which election
 
17           shall be irrevocable;
 
18      (2)  Become a qualified participant in the defined
 
19           contribution plan effective 12:01 a.m., July 1, 2000;
 
20           and
 
21      (3)  Waive all rights to a pension, an annuity, a retirement
 
22           allowance, an insurance benefit, or any other benefit
 

 
 
 
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 1           under this Act effective 12:00 midnight June 30, 2000.
 
 2 This part does not affect a person's right to health benefits
 
 3 provided under chapter 87, or to participate in a deferred
 
 4 compensation plan under chapter 88E.
 
 5      (c)  If married at the time of the election, the election to
 
 6 become a class D member is not effective unless the election is
 
 7 signed by the individual's spouse. 
 
 8      (d)  The board shall provide information explaining the
 
 9 effects of the election described in this section.
 
10      §88-D Credited service.  Credited service includes:
 
11      (1)  Service by an employee rendered since becoming a
 
12           member;
 
13      (2)  Service credited under part II as a class A, class B,
 
14           or class C member for members who make the election
 
15           described in section 88-C;
 
16      (3)  Service for members who return to service in the manner
 
17           described in section 88-E;
 
18      (4)  Service in the armed forces as provided by subpart E of
 
19           part II;
 
20      (5)  Mandatory maternity leave as provided in part II;
 
21      (6)  Service rendered prior to becoming a class D member as
 
22           described in section 88-51 that is not included in
 

 
 
 
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 1           paragraphs (1) to (5).  Upon certification by the
 
 2           system, that service shall be credited at the rate of
 
 3           one month of service credit for each month of service
 
 4           rendered following the return to membership; and
 
 5      (7)  Unused sick leave as provided in section 88-63;
 
 6           provided that any additional service credit shall not
 
 7           be used in determining eligibility for retirement or
 
 8           for any other purpose as a class D member.
 
 9      §88-E Break in service; reemployment.(a)  Any class D
 
10 member who terminates service prior to accumulating four years of
 
11 credited service, excluding unused sick leave, shall cease to be
 
12 a member and shall forfeit all credited service; provided that:
 
13      (1)  If the former class D member becomes a member again
 
14           within one calendar year from the date of termination,
 
15           all service credit for previous service shall be
 
16           restored upon repayment of all employer and employee
 
17           contributions previously distributed.  If the former
 
18           class D member becomes a member again more than one
 
19           calendar year after the date of termination, one month
 
20           of service credit for previous service shall be
 
21           restored for each month of service rendered following
 
22           the return to membership, and upon repayment of all
 

 
 
 
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 1           employer and employee contributions previously
 
 2           distributed.
 
 3      (2)  If the former class D member becomes a class A, class
 
 4           B, or class C member within one calendar year from the
 
 5           date of termination, all class D service credit for
 
 6           previous service shall be restored upon repayment of
 
 7           all employer and employee contributions previously
 
 8           distributed.  If the former class D member becomes a
 
 9           class A, class B, or class D member more than one
 
10           calendar year after the date of termination, one month
 
11           of class D service credit for previous service shall be
 
12           restored for each month of service rendered following
 
13           the return to membership, and upon repayment of all
 
14           employer and employee contributions previously
 
15           distributed.
 
16      (b)  Any class D member who terminates service with a vested
 
17 right and who subsequently becomes a class A, class B, class C,
 
18 or class D member shall retain all service credit for previous
 
19 service upon repayment of all employer and employee contributions
 
20 previously distributed and shall be credited with additional
 
21 service credit for service rendered following the return to
 
22 membership.
 

 
 
 
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 1      (c)  Any retirant who retired under the provisions of part
 
 2 VIII and returns to service requiring membership in the system as
 
 3 a class D member shall be reenrolled as an active member, and the
 
 4 retirant's retirement allowance or distribution, if any, shall be
 
 5 suspended.  At such time as the member again retires, the
 
 6 retirement allowance or distribution shall be the allowance or
 
 7 distribution to which the member was entitled under the mode of
 
 8 retirement selected when the member previously retired and which
 
 9 was suspended; plus, for the period of service during the
 
10 member's reemployment as a class D member, the distribution to
 
11 which the member is entitled for that service at the time of the
 
12 member's final retirement.
 
13      (d)  Any retirant who retired under part VIII and returns to
 
14 service requiring membership in the system as a class A, class B,
 
15 or class C member shall be reenrolled as an active member, and
 
16 the retirant's distribution, if any, shall be suspended.  At such
 
17 time as the member again retires, the retirement allowance shall
 
18 consist of the distribution to which the member was entitled
 
19 under this part when the member previously retired and which was
 
20 suspended; plus, for the period of service during the member's
 
21 reemployment, the allowance to which the member is entitled for
 
22 that service based on the mode of retirement initially selected
 

 
 
 
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 1 and computed for the member's age, average final compensation,
 
 2 and other factors in accordance with the benefit formula of a
 
 3 class A, class B, or class C member in existence at the time of
 
 4 the member's final retirement.
 
 5      §88-F  Crediting and charging member's account.(a)  The
 
 6 board shall promptly credit the account of a member who makes an
 
 7 election under section 88-C to terminate membership in class A,
 
 8 class B, or class C with any amount transferred from class A,
 
 9 class B, or class C pursuant to section 88-C.
 
10      (b)  For a member who elects to terminate membership in
 
11 class A, class B, or class C, the board shall transfer a lump sum
 
12 amount from the member's former account to the member's account
 
13 in class D, an amount using the following factors:
 
14      (1)  The member's accumulated contributions, if any, from
 
15           the member's respective fund as of the effective date
 
16           of this Act;
 
17      (2)  For a vested member, the excess, if any, of the
 
18           actuarial present value of the member's accumulated
 
19           benefit obligation over the member's accumulated
 
20           contributions; and
 
21      (3)  The actuarial present value shall be computed as of
 
22           12:00 midnight on the effective date of this Act and
 

 
 
 
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 1           shall be based on the following:
 
 2           (A)  Eight per cent effective annual interest,
 
 3                compounded annually;
 
 4           (B)  A fifty per cent male and fifty per cent female
 
 5                gender neutral blend of the mortality tables used
 
 6                to project retirant longevity in the most recent
 
 7                actuarial valuation report; and
 
 8           (C)  A benefit commencement age, based upon the
 
 9                member's estimated credited service as of 12:00
 
10                midnight of the effective date of this Act.  The
 
11                benefit commencement age shall be the younger of
 
12                the following, but shall not be younger than the
 
13                member's age as of 12:00 midnight of the effective
 
14                date of this Act:
 
15                (i)  Age sixty; or
 
16               (ii)  Age fifty-five, if the member's estimated
 
17                     credited service equals or exceeds thirty
 
18                     years.
 
19      (c)  For a nonvested member who elects to terminate
 
20 membership in class A, class B, or class C and who has
 
21 accumulated contributions standing to the member's credit the
 
22 board shall direct the transfer of a lump sum amount to the
 

 
 
 
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 1 member's class D account from the nonvested member's accumulated
 
 2 contributions, if any, as of 12:00 midnight on the last day of
 
 3 the payroll period that includes the date of the election and
 
 4 using calculations based on eight per cent effective annual
 
 5 interest, compounded annually, from the first day of the payroll
 
 6 period immediately following the date of election to the date of
 
 7 the transfer.
 
 8                D.  Eligibility; Vesting; Benefits
 
 9      §88-G  Vesting requirements.  A member is immediately one
 
10 hundred per cent vested in the member's contributions in the
 
11 plan.  A member shall vest in the employer contributions made on
 
12 the member's behalf according to the following schedule:
 
13      (1)  Upon completion of two years of service, fifty per
 
14           cent;
 
15      (2)  Upon completion of three years of service, seventy-five
 
16           per cent; and
 
17      (3)  Upon completion of four years of service, one hundred
 
18           per cent.
 
19 For purposes of vesting requirements under this section, a class
 
20 A, class B, or class C member who made an election to participate
 
21 in the plan shall be credited with the years of service accrued
 
22 under the plan on the effective date of participation in the
 

 
 
 
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 1 plan.
 
 2      §88-H  Contribution by employer and member.(a)  This
 
 3 section is subject to the vesting requirement of section 88-G.
 
 4      (b)  A member's employer shall contribute to the member's
 
 5 account an amount equal to four per cent of the member's
 
 6 compensation.
 
 7      (c)  A member may periodically elect to contribute up to
 
 8 three per cent of the member's compensation to the member's
 
 9 account.  The employer shall make an additional matching
 
10 contribution to the member's account, in an amount equal to the
 
11 contribution made by the member under this section.
 
12      (d)  A member may make contributions in addition to
 
13 contributions made under subsection (c) to the member's account
 
14 as permitted by the board rules and the Internal Revenue Code.
 
15 The employer shall not match contribution by the member under
 
16 this section.
 
17      §88-I  Hearing.  A member may request a hearing on a claim
 
18 involving the member's rights under the defined contribution
 
19 plan.  Upon written request, the board shall provide for a
 
20 hearing pursuant to chapter 91.  A member may be represented by
 
21 counsel or other dully authorized agent the the hearing.
 
22      §88-J Eligibility for distribution of accumulated balance
 

 


 

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                                     H.B. NO.           
                                                        
                                                        

 
 1 from the defined contribution plan.(a)  A member who retires or
 
 2 terminates service is eligible to receive distribution of the
 
 3 accumulated balance in any of the following methods of
 
 4 distribution of the accumulated balance:
 
 5      (1)  A lump sum distribution to the member;
 
 6      (2)  A lump sum direct rollover to another qualified plan,
 
 7           to the extent allowed by law;
 
 8      (3)  Periodic distributions as authorized by the board; and
 
 9      (4)  No current distribution, in which case the accumulated
 
10           balance shall remain in the member's account until a
 
11           method of distribution is elected to the extent allowed
 
12           by law.
 
13      (b)  A member may retire upon the written application to the
 
14 board specifying the desired date of retirement which shall be
 
15 not less than thirty days nor more than ninety days subsequent to
 
16 the date of filing.  If the member dies after the date of filing
 
17 the application to retire but prior to the effective date of
 
18 retirement, the member's designated beneficiary may receive the
 
19 member's accumulated balance which shall be computed as though
 
20 the member had died on the effective date of retirement under the
 
21 mode of retirement selected.
 
22      (c)  Any election of a mode of retirement shall be
 

 
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 1 irrevocable.
 
 2      §88-K  Ordinary disability retirement.(a)  Upon
 
 3 application of a member in service or on leave without pay, or
 
 4 the person appointed by the family court as guardian of an
 
 5 incapacitated member, any member who has ten or more years of
 
 6 credited service shall be retired by the board of trustees on an
 
 7 ordinary disability retirement allowance if the medical board,
 
 8 after a medical examination of the member, certifies that:
 
 9      (1)  The member is mentally or physically incapacitated for
 
10           the further performance of duty at the time of
 
11           application;
 
12      (2)  The incapacity is likely to be permanent; and
 
13      (3)  The member should be retired.
 
14      (b)  Retirement shall become effective upon the date
 
15 specified by the board, which shall be no earlier than thirty
 
16 days after the date the application is filed.
 
17      (c)  A member who is determined to be permanently
 
18 incapacitated for the further performance of duty pursuant to
 
19 subsection (a) shall receive an ordinary disability retirement
 
20 allowance as if the member had been a class C member equal to the
 
21 member's accrued normal retirement allowance unreduced for age.
 
22      §88-L Service connected disability.  A member who would be
 

 
 
 
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 1 eligible to receive a service connected disability retirement
 
 2 allowance pursuant to section 88-79 shall receive a retirement
 
 3 allowance as if the member had been a class C member equal to the
 
 4 member's accrued normal retirement allowance unreduced for age,
 
 5 but not less than fifteen per cent of average final compensation.
 
 6      §88-M  Death benefit.(a)  The surviving spouse or
 
 7 reciprocal beneficiary and dependent child or children of a
 
 8 member at the time of the member's death shall be eligible for a
 
 9 death benefit if the member suffers either an ordinary death
 
10 while in service or on authorized leave without pay after
 
11 accumulating ten years of credited service or an accidental
 
12 death.
 
13      (b)  In the case of ordinary death, the death benefit shall
 
14 be determined as if the member had been a class C member, as
 
15 follows:
 
16      (1)  For the surviving spouse or reciprocal beneficiary, an
 
17           allowance equal to one-half of the member's accrued
 
18           normal retirement allowance unreduced for age, payable
 
19           until remarriage, marriage, or entry into a new
 
20           reciprocal beneficiary relationship[,] as if the member
 
21           had retired the day prior to death; and for each
 
22           dependent child an allowance equal to ten per cent of
 

 
 
 
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 1           the member's accrued normal retirement allowance
 
 2           unreduced for age, payable until the dependent child
 
 3           attains age eighteen; provided that the aggregate death
 
 4           benefits for all the dependent children shall not
 
 5           exceed twenty per cent of the member's accrued normal
 
 6           retirement allowance unreduced for age; or
 
 7      (2)  For the surviving spouse or reciprocal beneficiary, if
 
 8           the member was eligible for retirement at the time of
 
 9           death in service, and death occurred after June 30,
 
10           2000, an allowance that would have been payable as if
 
11           the member had retired the day prior to death and had
 
12           elected to receive a retirement allowance under option
 
13           B of section 88-283; and
 
14      (3)  If there is no surviving spouse or reciprocal
 
15           beneficiary, each dependent child shall receive an
 
16           allowance equal to twenty per cent of the member's
 
17           accrued normal retirement allowance unreduced for age,
 
18           payable until the dependent child attains age eighteen;
 
19           provided that the aggregate death benefits for all the
 
20           dependent children shall not exceed forty per cent of
 
21           the member's accrued normal retirement allowance
 
22           unreduced for age.
 

 
 
 
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 1      For the purpose of determining eligibility for the ordinary
 
 2 death benefit, a year round school employee shall be considered
 
 3 in service during the July and August preceding a transfer to a
 
 4 traditional school schedule if the employee was in service for
 
 5 the entire prior school year and has a contract for the upcoming
 
 6 traditional school year.
 
 7      (c)  In the case of accidental death, the death benefit
 
 8 shall be determined as if the member had been a class C member,
 
 9 as follows:
 
10      (1)  For the surviving spouse or reciprocal beneficiary, an
 
11           allowance equal to thirty per cent of the member's
 
12           average final compensation, payable until remarriage;
 
13      (2)  If there is a surviving spouse or reciprocal
 
14           beneficiary, each dependent child under eighteen shall
 
15           receive an allowance equal to the greater of:
 
16           (A)  Ten per cent of the member's accrued normal
 
17                retirement allowance, unreduced for age; provided
 
18                that the aggregate death benefits for all the
 
19                dependent children shall not exceed twenty per
 
20                cent of the member's accrued normal retirement
 
21                allowance unreduced for age; or
 
22           (B)  Three per cent of the member's average final
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1                compensation; provided that the aggregate death
 
 2                benefits for all the dependent children shall not
 
 3                exceed six per cent of the member's average final
 
 4                compensation.
 
 5           The death benefit under this paragraph shall be payable
 
 6           to each dependent child until the dependent child
 
 7           attains age eighteen; and
 
 8      (3)  If there is no surviving spouse or reciprocal
 
 9           beneficiary, each dependent child under eighteen shall
 
10           receive an allowance equal to the greater of:
 
11           (A)  Twenty per cent of the member's accrued normal
 
12                retirement allowance, unreduced for age; provided
 
13                that the aggregate death benefits for all the
 
14                dependent children shall not exceed forty per cent
 
15                of the member's accrued normal retirement
 
16                allowance unreduced for age; or
 
17           (B)  Six per cent of the member's average final
 
18                compensation; provided that the aggregate death
 
19                benefits for all the dependent children shall not
 
20                exceed twelve per cent of the member's average
 
21                final compensation.
 
22           The death benefit under this paragraph shall be payable
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           to each dependent child until the dependent child
 
 2           attains age eighteen.
 
 3                       E.  Other Provisions
 
 4      §88-N  Payment of administrative expenses.  The
 
 5 administrative expenses of the defined contribution plan shall be
 
 6 paid by the members, retirants, and beneficiaries who have not
 
 7 closed their accounts in a manner determined by the board.
 
 8      §88-O  Other public sector retirement benefits plan.  A
 
 9 member shall not participate in any other public sector
 
10 retirement benefits plan for simultaneous service rendered to the
 
11 same public sector employer.  Except as otherwise provided in
 
12 this part, this part does not prohibit a member from
 
13 participating in a retirement plan established by this State or
 
14 other public sector employer under the Internal Revenue Code."
 
15      SECTION 4.  There is appropriated out of the general
 
16 revenues of the State of Hawaii the sum of $          , or so
 
17 much thereof as may be necessary for fiscal year 1999-2000, for
 
18 the purposes of this Act.  The sum appropriated shall be expended
 
19 by the employees retirement system for the purposes of this Act.
 
20      SECTION 5.  In codifying the new part added to chapter 88,
 
21 Hawaii Revised Statutes, by section 3 of this Act, the revisor of
 
22 statutes shall substitute appropriate section numbers for the
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 letters used in the new sections' designations in this Act.
 
 2      SECTION 6.  Statutory material to be repealed is bracketed.
 
 3 New statutory material is underscored.
 
 4      SECTION 7.  This Act shall take effect on July 1, 2000,
 
 5 except section 4 which shall take effect on July 1, 1999.
 
 6 
 
 7                              INTRODUCED BY:______________________