SB273

SECTION 1. The legislature finds that the recruitment and retention of police officers has been difficult for counties and their respective police departments. The implementation of a deferred retirement option program would incentivize qualified police officers to continue working beyond the requisite twenty‑five years of service and to carry on protecting and serving the community. A deferred retirement option program has been increasingly utilized in many other states and municipalities as an incentive for quality workers to delay retirement.

The purpose of this Act is to establish a deferred retirement option program for police and to provide a retention tool for county police departments to incentivize qualified officers who are eligible for retirement to continue working.

SECTION 2. Section 88-9, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) [A] Except for police officers enrolled in the deferred retirement option program, a retirant may not be employed by the State or by any county unless the retirant is reenrolled in the system pursuant to this chapter, or unless the employment, without reenrollment, is authorized by this section. A retirant whose employment without reenrollment in the system is authorized by this section shall acquire no service credit or retirement rights under this chapter with respect to the employment and shall not be considered to be in service for purposes of this chapter."

2. By amending subsection (d) to read:

"(d) A retirant may be employed without reenrollment in the system and suffer no loss or interruption of benefits provided by the system or under chapter 87A if the retirant is employed:

(1) As an elective officer pursuant to section 88-42.6(c) or as a member of the legislature pursuant to section 88-73(d);

(2) As a juror or precinct official;

(3) As a part-time or temporary employee excluded from membership in the system pursuant to section 88-43, as a session employee excluded from membership in the system pursuant to section 88-54.2, as the president and chief executive officer of the Hawaii tourism authority excluded from membership in the system pursuant to section 201B-2, or as any other employee expressly excluded by law from membership in the system; provided that:

(A) The retirant was not employed by the State or a county during the six calendar months prior to the first day of reemployment; and

(B) No agreement was entered into between the State or a county and the retirant, prior to the retirement of the retirant, for the return to work by the retirant after retirement;

(4) In a position identified by the appropriate jurisdiction as a labor shortage or difficult-to-fill position; provided that:

(A) The retirant was not employed by the State or a county during the twelve calendar months prior to the first day of reemployment;

(B) No agreement was entered into between the State or a county and the retirant, prior to the retirement of the retirant, for the return to work by the retirant after retirement; and

(C) Each employer shall contribute to the pension accumulation fund the required percentage of the rehired retirant's compensation to amortize the system's unfunded actuarial accrued liability; [or]

(5) As a teacher or an administrator in a teacher shortage area identified by the department of education or in a charter school or as a mentor for new classroom teachers; provided that:

(A) The retirant was not employed by the State or a county during the twelve calendar months prior to the first day of reemployment;

(B) No agreement was entered into between the State or a county and the retirant prior to the retirement of the retirant, for the return to work by the retirant after retirement; and

(C) The department of education or charter school shall contribute to the pension accumulation fund the required percentage of the rehired retirant's compensation to amortize the system's unfunded actuarial accrued liability[.]; or

(6) As a police officer and enrolled in the deferred retirement option program."

SECTION 3. Section 88-98, Hawaii Revised Statutes, is amended to read as follows:

"§88-98 Return to service of a retirant. (a) Any retirant, except a police officer retirant enrolled in the deferred retirement option program, who returns to employment requiring active membership in the system shall be reenrolled as an active member of the system in the same class from which the retirant originally retired and the retirant's retirement allowance shall be suspended.

(1) If the retirant returns to service before July 1, 1998, and again retires, the retirant's retirement allowance shall consist of:

(A) For members with fewer than three years of credited service during the member's period of reemployment, the allowance to which the member was entitled under the retirement allowance option selected when the member previously retired and which was suspended; plus, for the period of service during the member's reemployment, the allowance to which the member is entitled for that service based on the retirement allowance option initially selected and computed for the member's age, average final compensation, and other factors in accordance with the benefit formula under section 88-74 in existence at the time of the member's latest retirement; or

(B) For members with three or more years of credited service during the member's period of reemployment, the allowance computed as if the member were retiring for the first time; provided that in no event shall the allowance be less than the amount determined in accordance with subparagraph (A); and

(2) If the retirant returns to service after June 30, 1998, and again retires, the retirant's retirement allowance shall be computed in accordance with paragraph (1)(A), regardless of the number of years of service in the reemployment period.

(b) Any retirant who received the special retirement incentive benefit under Act 253, Session Laws of Hawaii 2000, as amended by Act 131, Session Laws of Hawaii 2002, and is reemployed by the State or a county in any capacity shall:

(1) Have the retirant's retirement allowance suspended;

(2) Forfeit the special retirement incentive benefit and any related benefit provided by this chapter; and

(3) Be subject to the age and service requirements under section 88-73 when the member again retires.

(c) If a retirant's maximum retirement allowance upon the retirant's initial retirement was subject to the limits on maximum retirement allowance under section 88-74:

(1) The limit shall apply to the computation of the retirant's maximum retirement allowance for the retirant's period of service during the retirant's reemployment, so that the sum of:

(A) The per cent by which the retirant's average final compensation for the retirant's years of service prior to the retirant's initial retirement is multiplied to determine the retirant's maximum retirement allowance upon the retirant's initial retirement; and

(B) The per cent by which the retirant's average final compensation for any period of reemployment after the retirant's initial retirement is multiplied to determine the retirant's maximum retirement allowance for the period of reemployment,

shall not exceed the limit, under section 88-74, on the per cent by which the retirant's average final compensation may be multiplied for the purpose of determining the retirant's maximum retirement allowance. For example, if a retirant's maximum retirement allowance upon the retirant's initial retirement was limited by section 88-74 to eighty per cent of the retirant's average final compensation, and the retirant retired with a maximum allowance equal to seventy per cent of the retirant's average final compensation, the retirant's maximum allowance for the retirant's period of reemployment may not exceed ten per cent of the retirant's average final compensation for the retirant's period of reemployment; and

(2) If the retirant's maximum retirement allowance upon the retirant's initial retirement was equal to or greater than the applicable limit under section 88-74, the retirant shall not earn service credit or earn any additional retirement allowance during the retirant's period of reemployment, and the reemployed retirant shall not make any contributions under section 88-45.

(d) If a retirant's designation of beneficiary was irrevocable upon the retirant's initial retirement, the retirant may not change the retirant's designated beneficiary when the retirant returns to service or when the former retirant again retires.

(e) A retirant who returns to service shall not be considered to be "in service", for the purposes of section 88‑75, 88-79, 88-84, or 88-85, or any other provision of this chapter providing for benefits arising out of the disability or death of a member. A retirant who returns to service and dies during the period of reemployment shall be considered to have retired again effective as of the first day of the month following the month in which the death occurs, except for death during the month of December when the effective date of retirement may be the last day of the month.

(f) There is established a deferred retirement option program for police officers. A police officer who has reached the service requirements for normal retirement shall be eligible to enter the deferred retirement option program. Once enrolled in the deferred retirement option program, the enrollee's service and benefit levels shall be locked as of the effective date of enrollment. Pension payments for deferred retirement option program enrollees shall be deposited to a deferred retirement option program account each month with investment earnings or losses at a rate equal to the pension plan's actual investment return, net of investment expenses, and shall be paid upon termination from the program in accordance with rules adopted by the board. Police officers enrolled in the deferred retirement option program shall enroll within twelve months of eligibility for normal retirement. Enrollees may participate for a maximum of one hundred twenty months; provided that their tenure shall not exceed thirty-five total years. Enrollment in the deferred retirement option program shall cease if an enrollee is unable to continue as an active police officer for longer than twenty working days excluding vacation days. Deferred retirement option program enrollees shall not pay into the retirement system. Deferred retirement option program enrollees shall accrue sick and vacation leave credits. Vacation leave credits shall be paid into the enrollee's deferred retirement option program account upon termination from the program. Sick leave credits shall not be paid upon termination and shall not count toward any retirement payments. Deferred retirement option participants shall receive healthcare benefits as retirees. Upon participation in the deferred retirement option program the member shall be deemed a retirant. Deferred retirement option program participants shall not receive a disability benefit from the pension plan. No additional service credit shall accrue to the deferred retirement option program participant. Deferred retirement option program enrollees shall not be eligible for participation in any deferred compensation plan offered by the State or county.

[~~(f)~~] (g) The board shall adopt any rules as may be required to administer this section."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________
	By Request

THE SENATE	S.B. NO.	273
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII