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.  (SB3003 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        3003
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 2000                                H.D. 1
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
 
20           safety officers not making the election under section
 

 
Page 2                                                     3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

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

 
Page 3                                                     3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

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

 
 
 
Page 4                                                     3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

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

 
Page 5                                                     3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

 
 1                July 1, 1984, who made the election to become a
 
 2                class C as provided in part VII, who are in
 
 3                service on December 31, 2000, and who do not elect
 
 4                to become class A members; or
 
 5           (D)  Are former class C retirants who return to service
 
 6                requiring the retirant's active membership."
 
 7      SECTION 2.  Section 88-74, Hawaii Revised Statutes, is
 
 8 amended to read as follows:
 
 9      "88-74  Allowance on service retirement.  Upon retirement
 
10 from service, a member shall receive a retirement allowance as
 
11 follows:
 
12      (1)  If the member has attained age fifty-five, a retirement
 
13           allowance of two per cent of the member's average final
 
14           compensation multiplied by the total number of years of
 
15           the member's credited service as a class A and B
 
16           member, excluding any credited service as a judge,
 
17           elective officer, or legislative officer, plus a
 
18           retirement allowance of one and one-fourth per cent of
 
19           the member's average final compensation multiplied by
 
20           the total number of years of prior credited service as
 
21           a class C member; provided that:
 
22           (A)  After June 30, 1968, if the member has at least
 
23                ten years of credited service of which the last
 

 
Page 6                                                     3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

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

 
Page 7                                                     3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

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

 
Page 8                                                     3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

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

 
 
 
Page 9                                                     3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

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

 
Page 10                                                    3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

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

 
Page 11                                                    3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

 
 1           government for similar service, shall in no case exceed
 
 2           seventy-five per cent of the member's average final
 
 3           compensation; or
 
 4     [(4)] (5)  If the member has credited service as an elective
 
 5           officer or as a legislative officer, the member's
 
 6           retirement allowance shall be derived by adding the
 
 7           allowances computed separately under subparagraphs (A),
 
 8           (B), (C), and (D) as follows:
 
 9           (A)  Irrespective of age, for each year of credited
 
10                service as an elective officer, three and one-half
 
11                per cent of the member's average final
 
12                compensation as computed under section
 
13                88-81(d)(1), in addition to an annuity that is the
 
14                actuarial equivalent of the member's accumulated
 
15                contributions allocable to the period of service;
 
16                and
 
17           (B)  Irrespective of age, for each year of credited
 
18                service as a legislative officer, three and one-
 
19                half per cent of the member's average final
 
20                compensation as computed under section
 
21                88-81(d)(2), in addition to an annuity that is the
 
22                actuarial equivalent of the member's accumulated
 
23                contributions allocable to the period of service;
 

 
Page 12                                                    3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

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

 
Page 13                                                    3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

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

 
Page 14                                                    3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

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

 
Page 15                                                    3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

 
 1 provided in section 88-284(c).  The minimum retirement allowance
 
 2 payable under this section shall be thirty per cent of the
 
 3 member's average final compensation."
 
 4      SECTION 4.  Section 88-271, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "88-271  Election.(a)  Any class A or class B member who:
 
 7      (1)  Is in service on June 30, 1984, or who returns to
 
 8           service after June 30, 1984, and has vested benefit
 
 9           status as provided in section 88-96(b); and
 
10      (2)  Is in a position covered by Title II of the Social
 
11           Security Act, may elect to become a class C member
 
12           effective January 1, 1985; or upon return to service,
 
13           by filing an election form with the board.
 
14 The election shall be made prior to December 1, 1984, or within
 
15 thirty days of return to service and shall be irrevocable.  A
 
16 class A or class B member who makes such an election shall be
 
17 refunded all accumulated contributions and shall not be required
 
18 to make further contributions upon becoming a class C member.
 
19 The refund shall be made by March 31, 1985, or within ninety days
 
20 after return to service.  Upon the effective date of the
 
21 election, all rights as a class A or class B member shall be
 
22 extinguished.
 

 
 
 
Page 16                                                    3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

 
 1      (b)  After June 30, 1984, a class A or class B member, who
 
 2 returns to service prior to January 1, 2001, but does not have
 
 3 vested benefit status as provided in section 88-96(b), shall
 
 4 become a class C member upon return to service and shall be
 
 5 refunded all accumulated contributions.
 
 6      [(c)  The board shall provide information explaining the
 
 7 effects of the election described in subsection (a).
 
 8      (d)] (c)  Any water safety officer who is in service on
 
 9 July 1, 1994, may elect to become a class C member by filing an
 
10 election form with the board.  The election shall be made prior
 
11 to September 1, 1994, and shall be irrevocable.  The accumulated
 
12 contributions of a water safety officer who makes this election
 
13 shall be returned to the water safety officer through payroll
 
14 adjustments or another procedure as determined by the board.
 
15 Upon the effective date of the election, all rights as a class A
 
16 member shall be extinguished.  All persons first employed as a
 
17 water safety officer after July 1, 1994, but prior to January 1,
 
18 2001, shall be class C members.
 
19      (d)  Any class C member in service on December 31, 2000, may
 
20 elect to become a class A member effective January 1, 2001, by
 
21 filing an election form with the board prior to January 1, 2001.
 
22      (e)  The board shall provide information explaining the
 
23 effects of the election in subsections (a), (c), and (d)."
 

 
Page 17                                                    3003
                                     S.B. NO.           S.D. 1
                                                        H.D. 1
                                                        

 
 1      SECTION 5.  Statutory material to be repealed is bracketed.
 
 2 New statutory material is underscored.
 
 3      SECTION 6.  This Act shall take effect on ____________.
 
 4