REPORT TITLE:
ERS


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.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        3003
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 2000                                
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.  Section 88-47, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (a) to read as follows:
 
 3      "(a)  There shall be three classes of members in the system
 
 4 to be known as class A, class B, and class C, defined as follows:
 
 5      (1)  Class A shall consist of members covered by [section
 
 6           88-74(3), those members whose salaries are set forth in
 
 7           sections 26-52 and 26-53, and their county
 
 8           counterparts, managing directors or administrative
 
 9           assistant to the mayor, and other department heads,
 
10           including agency heads appointed by the mayor, first
 
11           deputies appointed by the county attorney and
 
12           prosecuting attorney, the county clerk and deputy
 
13           county clerk of each county, the administrative
 
14           director of the courts, the deputy administrative
 
15           director of the courts, the executive director of the
 
16           labor and industrial relations appeals board, the
 
17           executive director of the Hawaii labor relations board,
 
18           investigators of the department of the attorney
 
19           general, narcotics enforcement investigators, water
 

 
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 1           safety officers not making the election under section
 
 2           88-271, public safety investigations staff
 
 3           investigators, and those members in service prior to
 
 4           July 1, 1984, including those who are on approved leave
 
 5           of absence, who are covered by Title II of the Social
 
 6           Security Act on account of service creditable under
 
 7           this part.  This class shall consist of:
 
 8           (A)  All employees who enter membership after June 30,
 
 9                1957, except employees in positions to which
 
10                coverage under Title II of the Social Security Act
 
11                is not extended;
 
12           (B)  All employees who were members on July 1, 1957,
 
13                who elected to be covered by the Social Security
 
14                Act; and] Title II of the Social Security Act and
 
15                shall include:
 
16           (A)  Members as specified in section 88-74(4); members
 
17                whose salaries are set forth in sections 26-52 and
 
18                26-53, and their county counterparts; managing
 
19                directors or administrative assistant to the
 
20                mayor, and other department heads, including
 
21                agency heads appointed by the mayor, first
 
22                deputies appointed by the county attorney and
 
23                prosecuting attorney, the county clerk and deputy
 

 
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 1                county clerk of each county, the administrative
 
 2                director of the courts, the deputy administrative
 
 3                director of the courts, the executive director of
 
 4                the labor and industrial relations appeals board,
 
 5                the executive director of the Hawaii labor
 
 6                relations board, investigators of the department
 
 7                of the attorney general, narcotics enforcement
 
 8                investigators, water safety officers not making
 
 9                the election under section 88-271, public safety
 
10                investigations staff investigators;
 
11           (B)  Members not described in subparagraph (A), who
 
12                were in service prior to July 1, 1984, including
 
13                those who are on approved leave of absence; class
 
14                C members in service on December 31, 2000, who
 
15                elect to become class A members prior to
 
16                January 1, 2001, as provided in section 88-271(d);
 
17                and members entering or re-entering service after
 
18                December 31, 2000; and
 
19           (C)  All former class A retirants who return to
 
20                employment after June 30, 1984, requiring the
 
21                retirant's active membership;
 
22      (2)  Class B shall consist of all members who are not class
 
23           A or class C members; and shall include:
 

 
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 1           (A)  Employees who enter membership after June 30,
 
 2                1957, who are in positions to which coverage under
 
 3                Title II of the Social Security Act is not
 
 4                extended;
 
 5           (B)  Employees who were members on July 1, 1957, who
 
 6                elected not to be covered by the Social Security
 
 7                Act; and
 
 8      (3)  Except for members described in section 88-47(a)(1),
 
 9           class C shall consist of [all employees] members in
 
10           positions covered by Title II of the Social Security
 
11           Act who:
 
12           (A)  First enter service after June 30, 1984[;], but
 
13                prior to January 1, 2001, who are in service on
 
14                December 31, 2000, and who do not elect to become
 
15                class A members;
 
16           (B)  Reenter service after June 30, 1984, but prior to
 
17                January 1, 2001, without vested benefit status as
 
18                provided in section 88-96(b)[;], who are in
 
19                service on December 31, 2000, and who do not elect
 
20                to become class A members;
 
21           (C)  [Make the election to become a class C member as
 
22                provided in part VII;] Were in service prior to
 
23                July 1, 1984, who made the election to become
 

 
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 1                class C as provided in part VII, who are in
 
 2                service on December 31, 2000, and who do not elect
 
 3                to become class A members; or
 
 4           (D)  Are former class C retirants who return to service
 
 5                requiring the retirant's active membership."
 
 6      SECTION 2.  Section 88-74, Hawaii Revised Statutes, is
 
 7 amended to read as follows:
 
 8      "§88-74  Allowance on service retirement.  Upon retirement
 
 9 from service, a member shall receive a retirement allowance as
 
10 follows:
 
11      (1)  If the member has attained age fifty-five, a retirement
 
12           allowance of two per cent of the member's average final
 
13           compensation multiplied by the total number of years of
 
14           the member's credited service as a class A and B
 
15           member, excluding any credited service as a judge,
 
16           elective officer, or legislative officer, plus a
 
17           retirement allowance of one and one-fourth per cent of
 
18           the member's average final compensation multiplied by
 
19           the total number of years of prior credited service as
 
20           a class C member; provided that:
 
21           (A)  After June 30, 1968, if the member has at least
 
22                ten years of credited service of which the last
 
23                five or more years prior to retirement is credited
 

 
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 1                service as a firefighter, police officer, or an
 
 2                investigator of the department of the prosecuting
 
 3                attorney;
 
 4           (B)  After June 30, 1977, if the member has at least
 
 5                ten years of credited service of which the last
 
 6                five or more years prior to retirement is credited
 
 7                service as a corrections officer;
 
 8           (C)  After June 16, 1981, if the member has at least
 
 9                ten years of credited service of which the last
 
10                five or more years prior to retirement is credited
 
11                service as an investigator of the department of
 
12                the attorney general;
 
13           (D)  After June 30, 1989, if the member has at least
 
14                ten years of credited service of which the last
 
15                five or more years prior to retirement is credited
 
16                service as a narcotics enforcement investigator; 
 
17           (E)  After December 31, 1993, if the member has at
 
18                least ten years of credited service of which the
 
19                last five or more years prior to retirement is
 
20                credited service as a water safety officer; and
 
21           (F)  After June 30, 1994, if the member has at least
 
22                ten years of credited service, of which the last
 
23                five or more years prior to retirement are
 

 
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 1                credited service as a public safety investigations
 
 2                staff investigator;
 
 3           then for each year of service as a firefighter, police
 
 4           officer, corrections officer, investigator of the
 
 5           department of the prosecuting attorney, investigator of
 
 6           the department of the attorney general, narcotics
 
 7           enforcement investigator, water safety officer, or
 
 8           public safety investigations staff investigator, the
 
 9           retirement allowance shall be two and one-half per cent
 
10           of the member's average final compensation.  The
 
11           maximum retirement allowance for those members shall
 
12           not exceed eighty per cent of the member's average
 
13           final compensation.  If the member has not attained age
 
14           fifty-five, the member's retirement allowance shall be
 
15           computed as though the member had attained age fifty-
 
16           five, reduced in accordance with factors of actuarial
 
17           equivalence adopted by the board upon the advice of the
 
18           actuary; provided that no reduction shall be made if
 
19           the member has at least twenty-five years of credited
 
20           service as a firefighter, police officer, corrections
 
21           officer, investigator of the department of the
 
22           prosecuting attorney, investigator of the department of
 
23           the attorney general, narcotics enforcement
 

 
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 1           investigator, public safety investigations staff
 
 2           investigator, sewer worker, or water safety officer, of
 
 3           which the last five or more years prior to retirement
 
 4           is credited service in such capacities;
 
 5      (2)  If a member who has class C service becomes a class A
 
 6           or class B member after December 31, 2000, the member's
 
 7           retirement allowance shall be computed in accordance
 
 8           with paragraph (1), except that the allowance for the
 
 9           member's class C service shall be reduced by one-half
 
10           per cent for each month the member is less than age
 
11           sixty-two at retirement, unless the member retires
 
12           after attaining age fifty-five but before age sixty-two
 
13           and has at least thirty years of total credited
 
14           service;
 
15     [(2)] (3)  If the member has made voluntary additional
 
16           contributions for the purchase of an additional annuity
 
17           and has not applied for a refund as permitted by
 
18           section 88-72, the member may accept the refund at the
 
19           time of retirement or, in lieu thereof, receive in
 
20           addition to the retirement allowance provided in
 
21           [paragraph] paragraphs (1)[,] and (2), an annuity that
 
22           is the actuarial equivalent of the additional
 
23           contributions with regular interest;
 

 
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 1     [(3)] (4)  If the member has credited service as a judge, the
 
 2           member's retirement allowance shall be computed on the
 
 3           following basis:
 
 4           (A)  For a member who has credited service as a judge
 
 5                before July 1, 1999, irrespective of age, for each
 
 6                year of credited service as a judge, three and
 
 7                one-half per cent of the member's average final
 
 8                compensation in addition to an annuity that is the
 
 9                actuarial equivalent of the member's accumulated
 
10                contributions allocable to the period of such
 
11                service; and
 
12           (B)  For a member who first earned credited service as
 
13                a judge after June 30, 1999, for each year of
 
14                credited service as a judge, three and one-half
 
15                per cent of the member's average final
 
16                compensation in addition to an annuity that is the
 
17                actuarial equivalent of the member's accumulated
 
18                contributions allocable to the period of such
 
19                service.  If the member has not attained age
 
20                fifty-five, the member's retirement allowance
 
21                shall be computed as though the member had
 
22                attained age fifty-five, reduced in accordance
 
23                with factors of actuarial equivalence adopted by
 

 
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 1                the board upon the advice of the actuary; or
 
 2           (C)  For a judge with other credited service, as
 
 3                provided in paragraphs (1) [and], (2)[.], and (3).
 
 4                If the member has not attained age fifty-five, the
 
 5                member's retirement allowance shall be computed as
 
 6                though the member had attained age fifty-five,
 
 7                reduced in accordance with factors of actuarial
 
 8                equivalence adopted by the board upon the advice
 
 9                of the actuary; or
 
10           (D)  For a judge with credited service as an elective
 
11                officer or as a legislative officer, as provided
 
12                in paragraph [(4).] (5).
 
13           No allowance shall exceed seventy-five per cent of the
 
14           member's average final compensation.  If the allowance
 
15           exceeds this limit, it shall be adjusted by reducing
 
16           the annuity included in subparagraphs (A) and (B) and
 
17           the portion of the accumulated contributions specified
 
18           in the subparagraphs in excess of the requirements of
 
19           the reduced annuity shall be returned to the member.
 
20           The allowance for judges under this paragraph, together
 
21           with the retirement allowance provided by the federal
 
22           government for similar service, shall in no case exceed
 
23           seventy-five per cent of the member's average final
 

 
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 1           compensation; or
 
 2     [(4)] (5)  If the member has credited service as an elective
 
 3           officer or as a legislative officer, the member's
 
 4           retirement allowance shall be derived by adding the
 
 5           allowances computed separately under subparagraphs (A),
 
 6           (B), (C), and (D) as follows:
 
 7           (A)  Irrespective of age, for each year of credited
 
 8                service as an elective officer, three and one-half
 
 9                per cent of the member's average final
 
10                compensation as computed under section
 
11                88-81(d)(1), in addition to an annuity that is the
 
12                actuarial equivalent of the member's accumulated
 
13                contributions allocable to the period of service;
 
14                and
 
15           (B)  Irrespective of age, for each year of credited
 
16                service as a legislative officer, three and one-
 
17                half per cent of the member's average final
 
18                compensation as computed under section
 
19                88-81(d)(2), in addition to an annuity that is the
 
20                actuarial equivalent of the member's accumulated
 
21                contributions allocable to the period of service;
 
22           (C)  If the member has credited service as a judge, the
 
23                member's retirement allowance shall be computed on
 

 
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 1                the following basis:
 
 2                (i)  For a member who has credited service as a
 
 3                     judge before July 1, 1999, irrespective of
 
 4                     age, for each year of credited service as a
 
 5                     judge, three and one-half per cent of the
 
 6                     member's average final compensation as
 
 7                     computed under section 88-81(d)(3), in
 
 8                     addition to an annuity that is the actuarial
 
 9                     equivalent of the member's accumulated
 
10                     contributions allocable to the period of such
 
11                     service; and
 
12               (ii)  For a member who first earned credited
 
13                     service as a judge after June 30, 1999, and
 
14                     has attained the age of fifty-five, for each
 
15                     year of credited service as a judge, three
 
16                     and one-half per cent of the member's average
 
17                     final compensation as computed under section
 
18                     88-81(d)(3), in addition to an annuity that
 
19                     is the actuarial equivalent of the member's
 
20                     accumulated contributions allocable to the
 
21                     period of such service. If the member has not
 
22                     attained age fifty-five, the member's
 
23                     retirement allowance shall be computed as
 

 
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 1                     though the member had attained age fifty-
 
 2                     five, reduced in accordance with factors of
 
 3                     actuarial equivalence adopted by the board
 
 4                     upon the advice of the actuary; and
 
 5           (D)  For each year of credited service not included in
 
 6                subparagraph (A), (B), or (C), the average final
 
 7                compensation as computed under section 88-81(d)(4)
 
 8                shall be multiplied by two per cent, two and one-
 
 9                half per cent, or one and one-quarter per cent, as
 
10                applicable to the credited service earned as a
 
11                class A, B, or C member, respectively.  If the
 
12                member has not attained age fifty-five, the
 
13                member's retirement allowance shall be computed as
 
14                though the member had attained age fifty-five,
 
15                reduced in accordance with factors of actuarial
 
16                equivalence adopted by the board upon the advice
 
17                of the actuary.
 
18           The total retirement allowance shall not exceed
 
19           seventy-five per cent of the member's highest average
 
20           final compensation calculated under section
 
21           88-81(d)(1), (2), (3), or (4).  If the allowance
 
22           exceeds this limit, it shall be adjusted by reducing
 
23           any annuity accrued under subparagraphs (A), (B), and
 

 
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 1           (C) and the portion of the accumulated contributions
 
 2           specified in these subparagraphs in excess of the
 
 3           requirements of the reduced annuity shall be returned
 
 4           to the member.  If a member has service credit as an
 
 5           elective officer or as a legislative officer in
 
 6           addition to service credit as a judge, then the
 
 7           retirement benefit calculation contained in this
 
 8           paragraph shall supersede the formula contained in
 
 9           paragraph [(3).] (4)."
 
10      SECTION 3.  Section 88-76, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "§88-76  Allowance on ordinary disability retirement.  Upon
 
13 retirement for ordinary disability, a member shall receive a
 
14 retirement allowance of one and three-fourths per cent of the
 
15 member's average final compensation for each [full] year of
 
16 credited service; except that for each year of credited service
 
17 as a judge, an elective officer, or a legislative officer, the
 
18 member shall receive a retirement allowance computed as provided
 
19 in section [88-74(3) or (4),] 88-74(4) or (5), as applicable[.]
 
20 and except for each year of credited service as a class C member,
 
21 the member shall receive a retirement allowance computed as
 
22 provided in section 88-284(c).  The minimum retirement allowance
 
23 payable under this section shall be thirty per cent of the
 

 
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 1 member's average final compensation."
 
 2      SECTION 4.  Section 88-271, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "§88-271  Election.(a)  Any class A or class B member who:
 
 5      (1)  Is in service on June 30, 1984, or who returns to
 
 6           service after June 30, 1984, and has vested benefit
 
 7           status as provided in section 88-96(b); and
 
 8      (2)  Is in a position covered by Title II of the Social
 
 9           Security Act, may elect to become a class C member
 
10           effective January 1, 1985; or upon return to service,
 
11           by filing an election form with the board.
 
12 The election shall be made prior to December 1, 1984, or within
 
13 thirty days of return to service and shall be irrevocable.  A
 
14 class A or class B member who makes such an election shall be
 
15 refunded all accumulated contributions and shall not be required
 
16 to make further contributions upon becoming a class C member.
 
17 The refund shall be made by March 31, 1985, or within ninety days
 
18 after return to service.  Upon the effective date of the
 
19 election, all rights as a class A or class B member shall be
 
20 extinguished.
 
21      (b)  After June 30, 1984, a class A or class B member, who
 
22 returns to service prior to January 1, 2001, but does not have
 
23 vested benefit status as provided in section 88-96(b), shall
 

 
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 1 become a class C member upon return to service and shall be
 
 2 refunded all accumulated contributions.
 
 3      [(c)  The board shall provide information explaining the
 
 4 effects of the election described in subsection (a).
 
 5      (d)] (c)  Any water safety officer who is in service on
 
 6 July 1, 1994, may elect to become a class C member by filing an
 
 7 election form with the board.  The election shall be made prior
 
 8 to September 1, 1994, and shall be irrevocable.  The accumulated
 
 9 contributions of a water safety officer who makes this election
 
10 shall be returned to the water safety officer through payroll
 
11 adjustments or another procedure as determined by the board.
 
12 Upon the effective date of the election, all rights as a class A
 
13 member shall be extinguished.  All persons first employed as a
 
14 water safety officer after July 1, 1994, but prior to January 1,
 
15 2001, shall be class C members.
 
16      (d)  Any class C member in service on December 31, 2000, may
 
17 elect to become a class A member effective January 1, 2001, by
 
18 filing an election form with the board prior to January 1, 2001.
 
19      (e)  The board shall provide information explaining the
 
20 effects of the election in subsections (a), (c), and (d)."
 
21      SECTION 5.  Statutory material to be repealed is bracketed.
 
22 New statutory material is underscored.
 
23      SECTION 6.  This Act shall take effect on July 1, 2010.