REPORT TITLE:
Retirement benefits


DESCRIPTION:
Eliminates overtime compensation, differentials, and
supplementary pay from the calculation of retirement benefits for
all employees after 6/30/00.  Clarifies that for purposes of
determining the amount of a member's contribution to the annuity
savings fund, a member's compensation does not include payments
for overtime, differentials, and supplementary pay. 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2756
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO RETIREMENT BENEFITS. 


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

 1      SECTION 1.  The legislature finds that in these difficult
 
 2 economic times, it is critical that the legislature explore every
 
 3 possible way to promote fiscal responsibility for the state
 
 4 budget.  One of the most important methods of promoting this
 
 5 responsibility is reevaluating various government payments to
 
 6 ensure that they meet their original goals and purposes.  For
 
 7 example, retirement benefits are based on the number of years of
 
 8 service a person has worked as reflected in their wages.
 
 9 Therefore, calculating retirement benefits on wages seems the
 
10 most direct method.
 
11      However, wage payments often include additional allowances
 
12 such as overtime pay.  In most cases, the practice of including
 
13 overtime pay when determining retirement allowances does not have
 
14 a significant impact on state fiscal policies.  But occasionally,
 
15 in other cases, overtime pay can increase retirement benefits to
 
16 prodigious amounts.
 
17      It was not the intent of the legislature that certain
 
18 individuals, who worked more overtime hours than their
 
19 counterparts, receive more generous retirement allowances.  Based
 
20 on the instances of individuals who receive significant
 

 
Page 2                                                     2756
                                     H.B. NO.           
                                                        
                                                        

 
 1 retirement allowances because of overtime pay, it has become
 
 2 apparent that the fairest policy is to remove overtime pay from
 
 3 the calculation of retirement benefits across-the-board.
 
 4      The purpose of this Act is to exclude overtime compensation
 
 5 earned or received after the date of this Act from the
 
 6 calculation of retirement benefits.
 
 7      SECTION 2.  Section 88-45, Hawaii Revised Statutes, is
 
 8 amended to read as follows:
 
 9     "�88-45  Employee contributions.  After June 30, 1988, each
 
10 class A and class B member shall contribute seven and eight-
 
11 tenths per cent of the member's compensation to the annuity
 
12 savings fund; provided that after June 30, 1989, all
 
13 firefighters, police officers, corrections officers,
 
14 investigators of the departments of the prosecuting attorney and
 
15 of the attorney general, narcotics enforcement investigators,
 
16 water safety officers not making the election under section
 
17 88-271, and public safety investigations staff investigators
 
18 shall contribute twelve and two-tenths per cent of their
 
19 compensation to the annuity savings fund for service in that
 
20 capacity[.]; provided that the payment of overtime compensation,
 
21 differentials, and supplementary pay to the member shall not be
 
22 included in the computation of the member's contribution to the
 
23 annuity savings fund."
 

 
Page 3                                                     2756
                                     H.B. NO.           
                                                        
                                                        

 
 1      SECTION 3.  Section 88-81, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (a) to read as follows:
 
 3      "(a)  Average final compensation is [(1) for]:
 
 4      (1)  For employees who have become members prior to January
 
 5           1, 1971, the average annual compensation pay or salary
 
 6           upon which a member has made contributions as required
 
 7           by sections 88-45 and 88-46[, (A) during]:
 
 8           (A)  During the member's five highest paid years of
 
 9                credited service[, (B) at];
 
10           (B)  At the option of the member, during the member's
 
11                three highest paid years of credited service;
 
12                provided that no payment of salary in lieu of
 
13                vacation shall be included in the computation[, or
 
14                (C) if];
 
15           (C)  If the member has [less] fewer than three years of
 
16                credited service, then during the member's actual
 
17                years of credited service; [or (2) for]
 
18      (2)  For employees who become [[]members[]] on or after
 
19           January 1, 1971, the average annual compensation pay or
 
20           salary upon which a member has made contributions as
 
21           required by sections 88-45 and 88-46[, (A) during]:
 
22           (A)  During the member's three highest paid years of
 
23                credited service; provided that no payment of
 

 
Page 4                                                     2756
                                     H.B. NO.           
                                                        
                                                        

 
 1                salary in lieu of vacation shall be included in
 
 2                the computation[, or (B) if]; or
 
 3           (B)  If the member has [less] fewer than three years of
 
 4                credited service, then during the member's actual
 
 5                years of credited service[.];
 
 6           provided that the payment of any overtime compensation,
 
 7           differentials, and supplementary pay to the member
 
 8           shall not be included in the computation of the
 
 9           member's average final compensation."
 
10      SECTION 4.  Statutory material to be repealed is bracketed.
 
11 New statutory material is underscored.
 
12      SECTION 5.  This Act shall take effect on June 30, 2000.
 
13 
 
14                         INTRODUCED BY:___________________________