REPORT TITLE:
Employees' Retirement System

DESCRIPTION:
Clarifies the calculation of excess investment earnings under Act
100/1999.


 
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                                                        2788
THE SENATE                              S.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   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 88-107, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (b) to read as follows:
 
 3      "(b)  Beginning with actual investment earnings in fiscal
 
 4 year 1995 in excess of the investment yield rate, to address
 
 5 outstanding unfunded pension obligations, ten per cent of such
 
 6 excess earnings shall be deposited in the pension accumulation
 
 7 fund; remaining excess earnings shall be applied to the amounts
 
 8 to be contributed under section 88-123.  In fiscal year 1996,
 
 9 twenty per cent of the actual investment earnings in excess of
 
10 the investment yield rate shall be deposited in the pension
 
11 accumulation fund; remaining excess earnings shall be applied to
 
12 the [amount] amounts contributed under section 88-123.  In fiscal
 
13 years 1997 and 1998, actuarial investment earnings in excess of a
 
14 ten per cent actuarial investment yield rate shall be applied to
 
15 the [amount] amounts contributed under section 88-123[.],
 
16 including payments under Act 212, Session Laws of Hawaii 1994.
 
17 The excess earnings shall be applied separately to the two
 
18 membership groups under section 88-122(a) in proportion to the
 
19 actuarial value of assets allocated to each group under section
 

 
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 1 88-122(c) and allocated to the State and counties in the same
 
 2 proportion as the aggregate annual compensation of each group
 
 3 employed by the State and by each county, respectively, as of
 
 4 March 31 of the valuation year.  Beginning in fiscal year 1999,
 
 5 one hundred per cent of the investment earnings shall be
 
 6 deposited in the pension accumulation fund."
 
 7      SECTION 2.  Act 212, Session Laws of Hawaii 1994, is amended
 
 8 by amending section 4 to read as follows:
 
 9      "SECTION 4.  The board of trustees of the employees'
 
10 retirement system shall make payments with respect to all
 
11 eligible employees who retire pursuant to this Act.
 
12      The board shall determine the amount equal to the actuarial
 
13 present value of the difference between the allowances members
 
14 receive after the receipt of service credit under this Act and
 
15 the allowances members would have received without the two years
 
16 of additional service credit.  The board shall also determine the
 
17 portion of the additional actuarial present value of benefits to
 
18 be charged to the State and to each county, based on retirements
 
19 during the early retirement incentive bonus period.  The State
 
20 and counties shall make separate additional payments to the
 
21 employees' retirement system in the amounts required to liquidate
 
22 the additional actuarial present value of benefits over a period
 
23 of five years beginning July 1, 1997.
 

 
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 1      The unfunded actuarial present values of benefits payable
 
 2 under this Act are part of the unfunded accrued liability of the
 
 3 employees' retirement system under sections 88-122 and 88-123,
 
 4 Hawaii Revised Statutes."
 
 5      SECTION 3.  Act 100, Session Laws of Hawaii 1999, is amended
 
 6 by amending section 3 to read as follows:
 
 7      "SECTION 3.  The savings realized by the State and the
 
 8 counties [under this Part] as a result of section 1 which, in
 
 9 effect, reduces the employers' contributions for fiscal years
 
10 2000 and 2001 under section 88-123, Hawaii Revised Statutes,
 
11 shall be utilized for the purpose of funding retroactive cost
 
12 items for HGEA and UPW contracts expiring on or before June 30,
 
13 1999, and which have been approved under section 89-10(b), Hawaii
 
14 Revised Statutes, and other necessary items."
 
15      SECTION 4.  If any provision of this Act, or the application
 
16 thereof to any person or circumstance is held invalid, the
 
17 invalidity does not affect other provisions or applications of
 
18 the Act which can be given effect without the invalid provision
 
19 or application, and to this end the provisions of this Act are
 
20 severable.
 
21      SECTION 5.  Statutory material to be repealed is bracketed.
 
22 New statutory material is underscored.
 
23      SECTION 6.  This Act shall take effect upon its approval;
 

 
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 1 provided that section 1 shall take effect retroactive to July 1,
 
 2 1996, and section 2 shall take effect retroactive to July 1,
 
 3 1994, and section 3 shall take effect retroactive to June 30,
 
 4 1999.
 
 5 
 
 6                           INTRODUCED BY:_________________________
 

 
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