REPORT Title:
Employees' Retirement System
Description:
Allows payment of interest to noncontributory members who have ERS deductions erroneously made from their compensation. Excludes a "foster child" from being eligible for ERS death benefits if the member dies in service. Allows the ERS Board to set the Chief Investment Officer's salary. Requires excess contributions to be refunded upon retirement, termination or death for judges, legislative officers and elected officials if their retirement allowance exceeds the statutory cap of 75%. Clarifies that Hybrid Plan member contributions that are picked up by the employer are subject to the annual federal income tax limits. Allows post retirement allowances to be paid to beneficiaries who select a monthly annuity instead of the lump sum balance or other clarifying or conforming revisions. (SD2)
HOUSE OF REPRESENTATIVES |
H.B. NO. |
1291 |
TWENTY-FOURTH LEGISLATURE, 2007 |
H.D. 1 |
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STATE OF HAWAII |
S.D. 2 |
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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:
SECTION 1. Chapter 88, Hawaii Revised Statutes, is amended by adding to part II a new section to be appropriately designated and to read as follows:
"§88- Erroneous contributions from compensation of class C members; contributions from overpaid compensation. Regular interest shall be credited to a class C member on any deductions erroneously made from the compensation of the member and paid into the annuity savings fund. The interest shall continue until the earlier of:
(1) Refund of the deductions to the member; or
(2) Return of the deductions to the member's employer.
The foregoing shall not require the payment of interest on deductions made from any amounts that exceed the compensation to which a member is entitled."
SECTION 2. Section 88-21, Hawaii Revised Statutes, is amended by amending the definition of "child or children" to read as follows:
""Child or children":
(1) A natural child of a member;
(2) A legally adopted child of a member; or
(3) A [foster child
or] stepchild of a member:
(A) Who lives with a member in a regular parent-child relationship; and
(B) For whom the member has become the child's legal guardian or has been awarded legal and physical custody of the child pursuant to a valid court order."
SECTION 3. Section 88-29, Hawaii Revised Statutes, is amended to read as follows:
"§88-29
Officers, employees, legal adviser. The board [of trustees] shall
elect from its membership a chairperson, and by a majority vote of all its
members, shall appoint an administrator and a chief investment officer who
shall be exempt from chapter 76 and serve under and at the pleasure of the
board. [Effective July 1, 1992, the salary] Effective July 1, 2007,
the salaries of the administrator and chief investment officer shall
be set by the board[; provided that the salary shall be set at not more
than the salary of the governor as established under section 26-51]. The
board shall engage actuarial and other services as shall be required to
transact the business of the system. The compensation for all services engaged
by the board, and all other expenses of the board necessary for the operation
of the system, shall be paid at rates and in amounts the board shall approve.
The attorney
general or an appointed representative may serve as legal adviser to the board
[of trustees] or the board [of trustees] may select its own legal
counsel."
SECTION 4. Section 88-51, Hawaii Revised Statutes, is amended to read as follows:
"§88-51 Membership service generally. Membership service includes:
(1) Service by an employee rendered since becoming a member;
(2) Service rendered
prior to becoming a member but[:] subsequent to:
(A) [subsequent
to] January 1, 1926, by an employee of the State; or
(B) [subsequent
to] January 1, 1928, by an employee of any county;
(3) Service as an employee of the federal government where the function carried on by the federal government has been transferred to the State or any county, or where the employee has been transferred to the federal government and subsequently retransferred to the State or any county;
(4) Service rendered by an employee in the office of the delegate to Congress from Hawaii, or service rendered by an employee in the office of a representative or a senator to Congress from the State; provided that:
(A) [the]
The employee was a member of the system immediately preceding the time
the employee renders [such] the service;
(B) [the]
The employee reenters the service of the State or county within one year
after termination of [such] the service; and
(C) [the]
The employee has, to the satisfaction of the board [of trustees],
waived the employee's right to any credit under the Civil Service Retirement
Act (5 U.S.C.A. [2251)] Sections 8301 to 8351), as amended, or the
Federal Employees Retirement System Act (5 U.S.C.A. Sections 8401 to 8479), as
amended, based upon [such] the service;
provided further
that credit for [such] this service shall not exceed eight years;
(5) Service as an employee of the Hawaii territorial guard;
(6) Service while
engaged in professional improvement pursuant to an approved leave of absence
for [such] that purpose, with or without pay;
(7) Service between
the years 1941 and 1947 with federal defense agencies, where the employee was
employed by the government before the wartime service, went into defense work
at the direction of the employee's employer, and returned to government service
at the end of the wartime service; provided that these circumstances shall be
verified by evidence satisfactory to the board [of trustees];
(8) Service, not exceeding four years, in the military service of the United States during the period 1941-1949 rendered by an employee who was employed by the Territory or county prior to the employee's induction into the military and who subsequently returned to employment of the Territory or county following the employee's discharge;
(9) Service rendered
prior to becoming a member as a full-time employee at the Leahi Hospital or
Pahala Hospital, now known as Ka'u [General] Hospital, Puunene Hospital,
Waimea Hospital, Waimea, Kauai, Haliimaile Dispensary, and Paia Hospital and
Pioneer Mill Hospital;
(10) Service rendered prior to becoming a member as a full-time sheriff or deputy sheriff in the office of the sheriff;
(11) The period of time when a member was absent from work because of injuries incurred within the scope of the member's employment and who has received workers' compensation benefits prior to July 1, 1967;
(12) Service rendered as an employee of the legislature during any legislative session;
(13) Service as a
school cafeteria manager or worker if paid by the State regardless of the
source of funds from which paid; provided that twelve months' service shall be
credited for the time [such a person] the cafeteria manager or worker
was working on a [nine-month] nine-month, ten-month, or eleven-month
schedule during a school year; and
(14) Service rendered as a trustee of the office of Hawaiian affairs during the period of July 1, 1993, through June 30, 2002.
Membership
service shall only be credited for any period for which the member makes the [required]
contributions to the system[.] if required by parts II, VII, and VIII
of this chapter."
SECTION 5. Section 88-59.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) Any
member who on July 1, 1991, was serving or previously served as an assistant
clerk or assistant sergeant at arms of either house of the legislature and
becomes eligible for retirement benefits as a class A member as provided under
sections 88-73(a), [88-74(4),] 88-74(a)(3), and 88-76 shall be
entitled to full service credit as a class A member for any eligible service
prior to July 1, 1991; provided that:
(1) The member claims those years as membership service credit and purchases that membership service credit in accordance with section 88-59; and
(2) Notwithstanding any other law to the contrary:
(A) If the member was a class A member of the system and elected to become a class C member pursuant to section 88-271, the member repurchases all the years of service as a class C member in accordance with the procedures under section 88-59 to regain standing as a contributory member; and
(B) A class C member shall be credited for service as an assistant clerk or assistant sergeant at arms under section 88-59 in a lump sum nonrefundable payment and receive retirement benefits as provided in this section."
SECTION 6. Section 88-62, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:
"(a) If a former member who has less than five years of credited service and who has been out of service for a period of four full calendar years or more after the year in which the former member left service, or if a former member who withdrew the former member's accumulated contributions returns to service, the former member shall become a member in the same manner and under the same conditions as anyone first entering service; however, the former member may obtain membership service credit in the manner provided by applicable law for credited service that was forfeited by the member upon termination of the member's previous membership. If the member did not withdraw the former member's accumulated contributions prior to the former member's return to service, the accumulated contributions shall be returned to the member as part of the process of enrolling the member in the system if the member's accumulated contributions are $1,000 or less at the time of distribution. If the accumulated contributions for the service the member had when the member previously terminated employment are greater than $1,000 and the member does not make written application, prior to or contemporaneously with the member's return to service, for return of the accumulated contributions, the member may not withdraw the member's accumulated contributions, except as provided by section 88-96 or 88-341, until the member retires or attains age sixty-two. The member shall not be entitled to service credit by reason of the system's retention of the member's accumulated contributions for the service the member had when the member previously terminated employment.
To
be eligible for any benefit, the member shall fulfill the membership service
requirements for the benefit through membership service after again becoming a
member, in addition to meeting any other eligibility requirement established
for the benefit; provided that the membership service requirement shall be
exclusive of any former service acquired in accordance with section 88-59 or
any other section in [this] part[.] II, VII, or VIII.
(b)
If a former member with less than five years of credited service and who
did not withdraw [his] the former member's accumulated
contributions returns to service within four full calendar years after the year
in which [he] the former member left service, [he] the
former member shall again become a member in the same manner and under the
same conditions as anyone first entering service, except that [he] the
member shall be credited with service credit for the service [he] the
member had when [he] the member terminated employment and [his]:
(1) If the
member returns to service as a class A or class B member, the member's new
and previous accumulated contributions shall be combined[.]; or
(2) If the member returns to service after June 30, 2006, as a class H member, section 88-321(b) shall apply."
SECTION 7. Section 88-74, Hawaii Revised Statutes, is amended to read as follows:
"§88-74 Allowance on service retirement. (a) Upon retirement from service, a member shall receive a maximum retirement allowance as follows:
(1) If the member has attained age fifty-five, a retirement allowance of two per cent of the member's average final compensation multiplied by the total number of years of the member's credited service as a class A and B member, excluding any credited service as a judge, elective officer, or legislative officer, plus a retirement allowance of one and one-fourth per cent of the member's average final compensation multiplied by the total number of years of prior credited service as a class C member, plus a retirement allowance of two per cent of the member's average final compensation multiplied by the total number of years of prior credited service as a class H member; provided that:
(A) After June 30, 1968, if the member has at least ten years of credited service of which the last five or more years prior to retirement is credited service as a firefighter, police officer, or an investigator of the department of the prosecuting attorney;
(B) After June 30, 1977, if the member has at least ten years of credited service of which the last five or more years prior to retirement is credited service as a corrections officer;
(C) After June 16, 1981, if the member has at least ten years of credited service of which the last five or more years prior to retirement is credited service as an investigator of the department of the attorney general;
(D) After June 30, 1989, if the member has at least ten years of credited service of which the last five or more years prior to retirement is credited service as a narcotics enforcement investigator;
(E) After December 31, 1993, if the member has at least ten years of credited service of which the last five or more years prior to retirement is credited service as a water safety officer;
(F) After June 30, 1994, if the member has at least ten years of credited service, of which the last five or more years prior to retirement are credited service as a public safety investigations staff investigator;
(G) After June 30, 2002, if the member:
(i) Has at least ten years of credited service as a firefighter;
(ii) Is deemed permanently medically disqualified due to a service related disability to be a firefighter by the employer's physician; and
(iii) Continues employment in a class A or B position other than a firefighter; and
(H) After June 30, 2004, if the member:
(i) Has at least ten years of credited service as a police officer;
(ii) Is deemed permanently medically disqualified due to a service related disability to be a police officer by the employer's physician; and
(iii) Continues employment in a class A or B position other than a police officer;
then for each year of service as a
firefighter, police officer, corrections officer, investigator of the
department of the prosecuting attorney, investigator of the department of the
attorney general, narcotics enforcement investigator, water safety officer, or
public safety investigations staff investigator, the retirement allowance shall
be two and one-half per cent of the member's average final compensation. The
maximum retirement allowance for those members shall not exceed eighty per cent
of the member's average final compensation. If the member has not attained age
fifty-five, the member's retirement allowance shall be computed as though the
member had attained age fifty-five, reduced [in accordance with factors of
actuarial equivalence adopted by the board upon the advice of the actuary;
provided that no reduction shall be made if the member has at least twenty-five
years of credited service as a firefighter, police officer, corrections
officer, investigator of the department of the prosecuting attorney,
investigator of the department of the attorney general, narcotics enforcement
investigator, public safety investigations staff investigator, sewer worker, or
water safety officer, of which the last five or more years prior to retirement
is credited service in such capacities;
(2) If the member has made voluntary
additional contributions for the purchase of an additional annuity and has not
applied for a refund as permitted by section 88-72, the member may accept the
refund at the time of retirement or, in lieu thereof, receive in addition to
the retirement allowance provided in paragraph (1), an annuity that is the
actuarial equivalent of the additional contributions with regular interest;]
for age as provided in subsection (b);
[(3)] (2)
If the member has credited service as a judge, the member's retirement
allowance shall be computed on the following basis:
(A) For a
member who has credited service as a judge before July 1, 1999, irrespective of
age, for each year of credited service as a judge, three and one-half per cent
of the member's average final compensation in addition to an annuity that is
the actuarial equivalent of the member's accumulated contributions allocable to
the period of [such] service; and
(B) For a
member who first earned credited service as a judge after June 30, 1999, for
each year of credited service as a judge, three and one-half per cent of the
member's average final compensation in addition to an annuity that is the
actuarial equivalent of the member's accumulated contributions allocable to the
period of [such] service. If the member has not attained age
fifty-five, the member's retirement allowance shall be computed as though the
member had attained age fifty-five, reduced [in accordance with factors of
actuarial equivalence adopted by the board upon the advice of the actuary;]
for age as provided in subsection (b); or
(C) For a judge
with other credited service, as provided in [paragraphs] paragraph
(1) [and (2)]. If the member has not attained age fifty-five, the
member's retirement allowance shall be computed as though the member had
attained age fifty-five, reduced [in accordance with factors of actuarial
equivalence adopted by the board upon the advice of the actuary;] for
age as provided in subsection (b); or
(D) For a judge
with credited service as an elective officer or as a legislative officer, as
provided in paragraph [(4).] (3).
No allowance shall exceed seventy-five per
cent of the member's average final compensation. If the allowance exceeds this
limit, it shall be adjusted by reducing the annuity included in subparagraphs
(A) and (B) and the portion of the accumulated contributions specified in the
subparagraphs in excess of the requirements of the reduced annuity shall be
returned to the member[.] upon the member's retirement or paid to the
member's designated beneficiary upon the member's death while in service or
while on authorized leave without pay. The allowance for judges under this
paragraph, together with the retirement allowance provided by the federal
government for similar service, shall in no case exceed seventy-five per cent
of the member's average final compensation; or
[(4)] (3)
If the member has credited service as an elective officer or as a legislative
officer, the member's retirement allowance shall be derived by adding the
allowances computed separately under subparagraphs (A), (B), (C), and (D) as
follows:
(A) Irrespective of age, for each year of credited service as an elective officer, three and one-half per cent of the member's average final compensation as computed under section 88-81(e)(1), in addition to an annuity that is the actuarial equivalent of the member's accumulated contributions allocable to the period of service; and
(B) Irrespective of age, for each year of credited service as a legislative officer, three and one-half per cent of the member's average final compensation as computed under section 88-81(e)(2), in addition to an annuity that is the actuarial equivalent of the member's accumulated contributions allocable to the period of service;
(C) If the member has credited service as a judge, the member's retirement allowance shall be computed on the following basis:
(i) For a member
who has credited service as a judge before July 1, 1999, irrespective of age,
for each year of credited service as a judge, three and one-half per cent of
the member's average final compensation as computed under section 88-81(e)(3),
in addition to an annuity that is the actuarial equivalent of the member's
accumulated contributions allocable to the period of [such] service; and
(ii) For a member
who first earned credited service as a judge after June 30, 1999, and has
attained the age of fifty-five, for each year of credited service as a judge,
three and one-half per cent of the member's average final compensation as
computed under section 88-81(e)(3), in addition to an annuity that is the
actuarial equivalent of the member's accumulated contributions allocable to the
period of [such] service. If the member has not attained age
fifty-five, the member's retirement allowance shall be computed as though the
member had attained age fifty-five, reduced [in accordance with factors of
actuarial equivalence adopted by the board upon the advice of the actuary;]
for age as provided in subsection (b); and
(D) For each
year of credited service not included in subparagraph (A), (B), or (C), the
average final compensation as computed under section 88-81(e)(4) shall be
multiplied by two per cent for credited service earned as a class A or class H
member, two and one-half per cent for credited service earned as a class B
member, and one and one-quarter per cent for credited service earned as a class
C member. If the member has not attained age fifty-five, the member's
retirement allowance shall be computed as though the member had attained age
fifty-five, reduced [in accordance with factors of actuarial equivalence
adopted by the board upon the advice of the actuary.] for age as
provided in subsection (b).
The total retirement allowance shall not
exceed seventy-five per cent of the member's highest average final compensation
calculated under section 88-81(e)(1), (2), (3), or (4). If the allowance
exceeds this limit, it shall be adjusted by reducing any annuity accrued under
subparagraphs (A), (B), and (C) and the portion of the accumulated
contributions specified in these subparagraphs in excess of the requirements of
the reduced annuity shall be returned to the member[.] upon the
member's retirement or paid to the member's designated beneficiary upon the
member's death while in service or while on authorized leave without pay.
If a member has service credit as an elective officer or as a legislative
officer in addition to service credit as a judge, then the retirement benefit
calculation contained in this paragraph shall supersede the formula contained
in paragraph [(3).] (2).
(b) Except as provided in subsection (a), if a member has not attained age fifty-five at the date of retirement, the member's retirement allowance shall be reduced, for each month the member's age at the date of retirement is below age fifty-five, as follows:
(1) 0.4166 per cent for each month below age fifty-five and above age forty-nine and eleven months; plus
(2) 0.3333 per cent for each month below age fifty and above age forty-four and eleven months; plus
(3) 0.2500 per cent for each month below age forty-five and above age thirty-nine and eleven months; plus
(4) 0.1666 per cent for each month below age forty;
provided that no reduction shall be made if the member has at least twenty-five years of credited service as a firefighter, police officer, corrections officer, investigator of the department of the prosecuting attorney, investigator of the department of the attorney general, narcotics enforcement investigator, public safety investigations staff investigator, sewer worker, or water safety officer, of which the last five or more years prior to retirement is credited service in these capacities."
SECTION 8. Section 88-74.6, Hawaii Revised Statutes, is amended to read as follows:
"[[]§88-74.6[]] Unreduced allowance on service
retirement; when applicable. In
addition to those positions identified in section [88-74(1),] 88-74(b)
and notwithstanding any law in this part that requires a member to attain age
fifty-five to qualify for an unreduced service retirement allowance, if the
member has at least thirty years of credited service through June 30, 2003;
twenty-nine years of credited service on or after July 1, 2004; twenty-eight
years of credited service on or after July 1, 2005; twenty-seven years of
credited service on or after July 1, 2006; twenty-six years of credited service
on or after July 1, 2007; and twenty-five years of credited service on or after
July 1, 2008, as an emergency medical technician, of which the last five or
more years prior to retirement is credited service in that capacity, then upon
retirement and irrespective of age, that member's service retirement allowance
shall not be reduced for actuarial purposes."
SECTION 9. Section 88-76, Hawaii Revised Statutes, is amended to read as follows:
"§88-76
Allowance on ordinary disability retirement. Upon retirement for ordinary
disability, a member shall receive a maximum retirement allowance of one and
three-fourths per cent of the member's average final compensation for each year
of credited service; except that for each year of credited service as a judge,
an elective officer, or a legislative officer, the member shall receive a
maximum retirement allowance computed as provided in section [88-74(3) or
(4),] 88-74(a)(2) or (3), as applicable. The minimum retirement
allowance payable under this section shall be thirty per cent of the member's
average final compensation."
SECTION 10. Section 88-79, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a)
Upon application of a member, or the person appointed by the family court as
guardian of an incapacitated member, any member who has been permanently
incapacitated for duty as the natural and proximate result of an accident
occurring while in the actual performance of duty at some definite time and
place, or as the cumulative result of some occupational hazard, through no
wilful negligence on the member's part, may be retired by the board [of
trustees] for service-connected disability; provided that:
(1) In the case of an
accident occurring after July 1, 1963, the employer shall file with the [board]
system a copy of the employer's report of the accident submitted to the
director of labor and industrial relations;
(2) An application for
retirement is filed with the [board] system within two years of
the date of the accident, or the date upon which workers' compensation benefits
cease, whichever is later;
(3) Certification is made by the head of the agency in which the member is employed, stating the time, place, and conditions of the service performed by the member resulting in the member's disability and that the disability was not the result of wilful negligence on the part of the member; and
(4) The medical board certifies that the member is incapacitated for the further performance of duty at the time of application and that the member's incapacity is likely to be permanent."
SECTION 11. Section 88-81, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a)
Average final compensation is the average annual compensation pay or salary
upon which a member has made contributions as required by [sections 88-45
and 88-46.] parts II, VII, and VIII of this chapter."
SECTION 12. Section 88-81.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a)
Effective July 1, 1996, compensation used to determine "average final
compensation" under section 88-81 and employee contributions picked up by
the employer under section 88-46[,] or 88-326, shall be subject
to the annual limit set forth in section 401(a)(17) of the Internal Revenue
Code of 1986, as amended."
SECTION 13. Section 88-83, Hawaii Revised Statutes, is amended to read as follows:
"§88-83
Election of retirement allowance option. (a) Upon retirement, any member
may elect to receive the maximum retirement allowance to which the member is
entitled computed in accordance with section 88-74, 88-76, or 88-80, and in the
event of the [member's] retirant's death, there shall be paid to
the [member's] retirant's designated beneficiary, or
otherwise to the [member's] retirant's estate[,] the
difference between [the]:
(1) The
balance of the member's accumulated contributions at the time of the member's
retirement; and [the]
(2) The
retirement allowance and, if the retirant retired after November 30, 2004,
the post retirement allowances paid or payable to the [member] retirant
prior to death.
In lieu of this maximum allowance, the member may elect to receive the member's retirement allowance under any one of the optional plans described below, which shall be actuarially equivalent to the maximum allowance.
Option 1: The
member may elect to receive a lesser retirement allowance during the member's
lifetime. At the member's retirement, there shall be established an amount of
initial insurance that shall be computed on the basis of actuarial factors
adopted by the board. Upon the death of the retirant, there shall be paid
to the retirant's designated beneficiary, otherwise to the retirant's estate:
any balance remaining in the initial insurance reserve, after deducting the
retirement allowance and, if the retirant retired after November 30, 2004,
the post retirement allowances paid to the retirant prior to death [,
shall be paid to the retirant's beneficiary, otherwise to the retirant's estate].
In lieu of the lump sum balance, the beneficiary may, if the beneficiary is
a natural person, elect to receive an allowance for life based on the value
of the balance; provided that the allowance is not less than $100 per month. If
the beneficiary of the retirant who:
(1) Retired after November 30, 2004, and
(2) Dies after June 30, 2007,
elects to receive the allowance in lieu of the lump sum balance, there shall also be payable to the beneficiary an additional allowance calculated and payable in the same manner as a post retirement allowance under section 88-90. The additional allowance shall be based on the original amount of the allowance in lieu of the lump sum balance, and shall commence on the first day of July following the calendar year in which payment of the allowance in lieu of the lump sum balance is effective.
Option
2: The member may elect to receive a lesser retirement allowance during the
member's lifetime and have those allowances, including cumulative post
retirement allowances, if applicable, continued after the member's death to the
member's beneficiary designated at the time of the member's retirement, for the
life of the beneficiary. If the beneficiary dies prior to the retirant, all
further payments shall cease upon the death of the retirant; provided that for
members retiring after November 30, 2004, if the retirant's designated
beneficiary dies at any time after the retirant retired, but before the death
of the retirant, the retirant, upon the death of the retirant's designated
beneficiary, shall receive a retirement allowance, including cumulative post
retirement allowances, calculated as if the retirant had selected the maximum
retirement allowance to which the [member] retirant is entitled.
Only one beneficiary shall be designated under this option. The beneficiary
designated under this option shall be a natural person, and benefits under this
option shall only be paid to a natural person.
Option
3: The member may elect to receive a lesser retirement allowance during the
member's lifetime and have one-half of the allowance, including fifty per cent
of all cumulative post retirement allowances, if applicable, continued after
the member's death to the member's beneficiary designated at the time of the
member's retirement, for the life of the beneficiary. If the beneficiary dies
prior to the retirant, all further payments shall cease upon the death of the
retirant; provided that for members retiring after November 30, 2004, if the
retirant's designated beneficiary dies at any time after the retirant
retired, but before the death of the retirant, the retirant, upon the death of
the retirant's designated beneficiary, shall receive a retirement
allowance, including cumulative post retirement allowances, calculated as if
the retirant had selected the maximum retirement allowance to which the [member]
retirant is entitled. Only one beneficiary shall be designated under
this option. The beneficiary designated under this option shall be a natural
person, and benefits under this option shall only be paid to a natural person.
Option 4: The member may elect to receive a lesser retirement allowance during the member's lifetime and provide some other benefit to the member's beneficiary in accordance with the member's own specification; provided that this election shall be certified by the actuary to be the actuarial equivalent of the member's retirement allowance and shall be approved by the board.
Option 5: The member may elect to receive the balance of the member's accumulated contributions at the time of retirement in a lump sum and, during the member's lifetime, a retirement allowance equal to the maximum retirement allowance reduced by the actuarial equivalent of these contributions. Upon the death of the retirant, all further payments shall cease. Only a member retiring from service having at least ten years of credited service or for disability may elect this retirement allowance option.
To receive benefits, the beneficiary must have been designated by the member in the form and manner prescribed by the board.
(b)
In the event of the death of a member after the date of the filing of the
member's written application to retire[,] but prior to the retirement
date designated by the member, and, if the member was eligible to retire on the
date of the member's death, the member's designated beneficiary, or
otherwise the personal representative of the member's estate, may elect to
receive either the death [benefits] benefit under section
88-84 or the allowance under the option selected by the member that would have
been payable had the member retired. The effective date of the member's
retirement shall be the first day of a month, except for the month of December
when the effective date of retirement may be on the first or last day of the
month, and shall be no earlier than the later of thirty days from the date the
member's retirement application was filed or the day following the member's
date of death. The election may not be made if, at the time of the member's
death, there are individuals who are eligible to receive death benefits under
section 88-85 who have made a claim for the benefits; provided that, if the
designated beneficiary is an individual eligible to receive benefits under
section 88-85, the designated beneficiary may receive benefits pursuant to an
election made under this section pending disposition of the claim for benefits
under section 88-85. If death benefits are payable under section 88‑85,
the death benefits shall be in lieu of any benefits payable pursuant to this
section.
(c) No election by a member under this section shall take effect unless:
(1) The spouse or reciprocal beneficiary of the member is furnished written notification that:
(A) Specifies the retirement date, the benefit option selected, and the beneficiary designated by the member;
(B) Provides information indicating the effect of the election; and
(C) Is
determined adequate by rules [established] adopted by the board [pursuant
to] in accordance with chapter 91;
(2) The member selects option 2 or option 3 and designates the spouse or reciprocal beneficiary as the beneficiary; or
(3) It is established to the satisfaction of the board that the notice required under paragraph (1) cannot be provided because:
(A) There is no spouse or reciprocal beneficiary;
(B) The spouse or reciprocal beneficiary cannot be located;
(C) The member has failed to notify the system that the member has a spouse or reciprocal beneficiary, or has failed to provide the system with the name and address of the member's spouse or reciprocal beneficiary; or
(D) Of other
reasons, as established by [rules of the] board [pursuant to] rules
adopted in accordance with chapter 91.
Any notice provided to a spouse or reciprocal beneficiary, or determination that the notification of a spouse or reciprocal beneficiary cannot be provided, shall be effective only with respect to that spouse or reciprocal beneficiary. The system will rely upon the representations made by a member as to whether the member has a spouse or reciprocal beneficiary and the name and address of the member's spouse or reciprocal beneficiary.
(d) Each member, within a reasonable period of time before the member's retirement date, shall be provided a written explanation of:
(1) The terms and conditions of the various benefit options;
(2) The rights of the member's spouse or reciprocal beneficiary under subsection (c) to be notified of the member's election of a benefit option; and
(3) The member's right to make, and the effect of, a revocation of an election of a benefit option.
(e) The system shall not be liable for any false statements made to the system by the member or by the member's employer.
(f)
In the event of the death of the retirant within one year after the date of
retirement, the retirant's designated beneficiary may elect to receive either
the death benefit under the retirement allowance option selected by the
retirant, or the [benefits as] benefit that would have been paid
under section 88-84 had the retirant died immediately prior to retirement, less
any payments [which the retirant] received[.] by the retirant;
provided that the designated beneficiary may not elect to receive benefits
under option 2 of this section if the retirant would not have been permitted by
applicable law or by the rules of the board to name the designated beneficiary
as beneficiary under option 2.
(g) The increase in the retirant's benefit under options 2, 3, and, if applicable, 4 upon the death of the retirant's designated beneficiary shall be effective the first day of the month following the date of death of the designated beneficiary. The retirant shall notify the system in writing and provide a certified copy of the beneficiary's death certificate. The system shall make retroactive benefit payments to the retirant, not to exceed six months from the date the written notification and the certified copy of the death certificate are received by the system. The retroactive payments shall be without interest.
(h) Upon a member's retirement:
(1) The member's election of a retirement allowance option shall be irrevocable; and
(2) The member's designation of a beneficiary shall be irrevocable if the retirement allowance option elected by the member is:
(A) Option 2 or 3;
(B) An option that includes option 2 or 3 in combination with some other form of benefit payment; or
(C) Any other option for which the actuarial equivalent of the option to the maximum retirement allowance is determined at the time of the member's retirement based in whole or in part on the age of the member's designated beneficiary.
(i) A claim under this section by a retirant's or member's beneficiary for benefits upon the death of a retirant or member shall be filed no later than three years from the date of the retirant's or member's death."
SECTION 14. Section 88-84, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) Upon receipt by the system of proper proof of a member's death occurring in service or while on authorized leave without pay, there shall be paid to the member's designated beneficiary an ordinary death benefit consisting of:
(1) The member's accumulated contributions and, if no pension is payable under section 88-85, an amount equal to fifty per cent of the compensation earned by the member during the year immediately preceding the member's death if the member had at least one year but not more than ten full years of credited service, which amount shall increase by five per cent for each full year of service in excess of ten years, to a maximum of one hundred per cent of the compensation; provided that if the member had at least one year of credited service, the amount, together with the member's accumulated contributions shall not be less than one hundred per cent of the compensation;
(2) If the member had
ten or more years of credited service at the time of death in service, and the
death occurred after June 30, 1988, the member's designated beneficiary may
elect to receive in lieu of any other payment provided in this section, the
allowance that would have been payable as if the member had retired on the
first day of a month following the member's death, except for the month of
December when retirement on the first or last day of the month shall be
allowed. Benefits payable under this paragraph shall be calculated under
option 3 of section 88-83 and computed on the basis of section [88-76;] 88-74,
unreduced for age; or
(3) If the member was
eligible for service retirement at the time of death in service, the member's
designated beneficiary may elect to receive in lieu of any other payment
provided in this section, the allowance that would have been payable as if the member
had retired on the first day of a month following the member's death, except
for the month of December when retirement on the first or last day of the month
shall be allowed. Benefits payable under this paragraph shall be calculated
under option 2 of section 88-83[.] and computed on the basis of
section 88-74."
SECTION 15. Section 88-90.5, Hawaii Revised Statutes, is amended to read as follows:
"[[]§88-90.5[]] Actuarial
assumptions. (a) Notwithstanding any provision in [chapter 88]
this chapter to the contrary, the board [of trustees] may approve
the effect of the post retirement allowance under section 88-90, or of any
other mandatory fixed scheduled increase in the benefits payable under part II,
VII, or VIII, as an actuarial assumption for the purpose of determining the
value of the options available under sections 88-83, 88-283, and 88-333.
(b) Subject to the recommendation of the actuary appointed under section 88-29, the board may adopt, by motion at any duly noticed meeting of the board, actuarial tables, factors, and assumptions for the purposes of parts II, VII, and VIII. The tables, factors, and assumptions that are used to compute benefits shall be in writing and certified by the administrator."
SECTION 16. Section 88-93, Hawaii Revised Statutes, is amended to read as follows:
"§88‑93
Named beneficiaries by members and by former employees; [with vested
benefit status;] effect of marriage, entry into reciprocal beneficiary
relationship, divorce, termination of reciprocal beneficiary relationship, or
death. (a) All written designations of beneficiaries for members and for
former employees [with vested benefit status] shall become null and void
when:
(1) The beneficiary predeceases the member or former employee;
(2) The member or former employee is divorced from the beneficiary;
(3) The member or former employee is unmarried, and subsequently marries; or
(4) The member or former employee enters into or terminates a reciprocal beneficiary relationship.
Any of the above
events shall operate as a complete revocation of the designation and, except as
provided in sections 88‑84(b) and [88‑333(b),] 88-338(b)
all benefits payable by reason of the death of the member or former employee
shall be payable to the member's or former employee's estate unless, after the
death, divorce or marriage, or entry into or termination of reciprocal
beneficiary relationship, the member or former employee makes other provision
in a written designation duly executed and filed with the board.
(b) Subsection (a) shall not apply to active members who are former retirants who have returned to service. The beneficiaries of retirants who return to service may not be changed except to the extent provided under the retirement allowance option selected by the former retirant when the former retirant first retired."
SECTION 17. Section 88-98, Hawaii Revised Statutes, is amended to read as follows:
"§88-98 Return to service of a retirant. (a) Any retirant 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 [chapter
88;] 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 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.
(d) 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.
[(d)]
(e) The board shall adopt any rules as may be required to administer [the
purposes of] this section."
SECTION 18. Section 88-251, Hawaii Revised Statutes, is amended to read as follows:
"§88-251 Applicability. The following provisions of part II shall apply to this part:
(1) Subpart A, except the definitions provided in section 88-21, unless expressly adopted in section 88-261;
(2) Subpart B, except sections 88-45, 88-45.5, 88-46, 88-48, 88-52, 88-59, 88-59.5, 88-59.6, 88-61, and 88-62;
(3) Subpart C, except
sections 88-71, 88-72, 88-73, 88-74, 88-74.6, 88-75, 88-76, [88-79,]
88-80, 88-83, 88-84, 88-85, 88-87, 88-88, [88-89,] 88-96, 88-97, and
88-98;
(4) Subpart D, except sections 88-112 and 88-113; and
(5) Subpart E."
SECTION 19. Section 88-273, Hawaii Revised Statutes, is amended to read as follows:
"§88-273 Break in service; reemployment. (a) Any class C member who terminates service prior to accumulating ten years of credited service, excluding unused sick leave, shall cease to be a member and shall forfeit all credited service; provided that:
(1) If the former class C member becomes a member again within one calendar year from the date of termination, all service credit for previous service shall be restored. If the former class C member becomes a member again more than one calendar year after the date of termination, one month of service credit for previous service shall be restored for each month of service rendered following the return to membership.
(2) If the former class C member becomes a class A, class B, or class H member within one calendar year from the date of termination, all class C service credit for previous service shall be restored. If the former class C member becomes a class A, class B, or class H member more than one calendar year after the date of termination, one month of class C service credit for previous service shall be restored for each month of service rendered following the return to membership.
Subject to the provisions of sections 88-322 and 88-324, the service credit restored pursuant to this subsection shall be class C service credit.
(b) Any class C member who terminates service with a vested right and who subsequently becomes a class A, class B, class C, or class H member shall retain all service credit for previous service and shall be credited with additional service credit for service rendered following the return to membership.
(c)
Any retirant who retired under the provisions of [part VII of this chapter]
this part and returns to service requiring active membership in
the system as a class C member shall be reenrolled as an active member, and the
retirant's retirement allowance shall be suspended. When the member again
retires, the retirement allowance shall be 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 of a class C member under
section 88-282 in existence at the time of the member's final retirement.
[If the member's designation of beneficiary was irrevocable upon the
member's initial retirement, the member may not change the member's designated
beneficiary when the member returns to service or when the member again
retires.]
(d)
Any retirant who retired under the provisions of [part VII] this
part and returns to service requiring active membership in the
system as a class A or class B member shall be reenrolled as an active member,
and the retirant's retirement allowance shall be suspended. When the member
again retires, the retirement allowance shall be 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 of a class A or class B
member under section 88-74 in existence at the time of the member's
final retirement. [If the member's designation of beneficiary was irrevocable
upon the member's initial retirement, the member may not change the member
designated beneficiary when the member returns to service or when the member
again retires.]
(e) 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 other related benefit provided by
[chapter 88;] this chapter; and
(3) Be subject to the age and service requirements under section 88-281 when the member again retires.
(f) 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.
(g) A retirant who returns to service shall not be considered to be "in service", for the purposes of section 88‑284, 88-285, or 88-286, 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.
(h) The board shall adopt any rules as may be required to administer this section."
SECTION 20. Section 88-283, Hawaii Revised Statutes, is amended to read as follows:
"§88-283 Election of retirement allowance option. (a) Upon retirement, any member may elect to receive the maximum retirement allowance to which the member is entitled, computed in accordance with section 88-282, 88-284, or 88-285, and, if the member elects to receive the maximum retirement allowance, the member's beneficiary shall not be entitled to any benefit upon the member's death, except as provided in subsection (g). In lieu of the maximum retirement allowance, a member may elect to receive the member's retirement allowance under one of the options described below, which shall be actuarially equivalent to the maximum retirement allowance:
(1) Option A: A
reduced allowance payable to the member, then upon the member's death, one-half
of the allowance, including fifty per cent of all cumulative post retirement
allowances, to the member's beneficiary designated by the member at the time of
retirement, for the life of the beneficiary[;]. If the beneficiary
dies prior to the retirant, all further payments shall cease upon the death of
the retirant; provided that for members retiring after November 30, 2004,
if the retirant's designated beneficiary dies at any time after the retirant
retired, but before the death of the retirant, the retirant, upon the death of
the retirant's designated beneficiary, shall receive a retirement allowance,
including cumulative post retirement allowances, calculated as if the retirant
had selected the maximum retirement allowance to which the retirant is
entitled;
(2) Option B: A
reduced allowance payable to the member, then upon the member's death, the same
allowance, including cumulative post retirement allowances, paid to the
member's beneficiary designated by the member at the time of retirement, for
the life of the beneficiary[;]. If the beneficiary dies prior to the
retirant, all further payments shall cease upon the death of the retirant;
provided that for members retiring after November 30, 2004, if the retirant's
designated beneficiary dies at any time after the retirant retired, but before
the death of the retirant, the retirant, upon the death of the retirant's
designated beneficiary, shall receive a retirement allowance, including
cumulative post retirement allowances, calculated as if the retirant had
selected the maximum retirement allowance to which the retirant is entitled; or
(3) Option C: A
reduced allowance payable to the member, and [if the member dies] upon
the death of the retirant within ten years of retirement, the same
allowance, including cumulative post retirement allowances, paid to the [member's]
retirant's designated beneficiary, or otherwise to the
retirant's estate for the balance of the ten-year period. If the
retirant returns to service requiring active membership in the system and the
retirant is reenrolled as an active member, running of the ten-year period will
be suspended until the member again retires.
Only
one beneficiary shall be designated under options A [and], B[.],
and C. The beneficiary designated under option A or B shall be a natural
person, and benefits under option A or B shall only be paid to a natural person.
To receive benefits, the beneficiary shall have been designated by the member
in the form and manner prescribed by the board.
(b) Upon a member's retirement:
(1) The member's election of a retirement allowance option shall be irrevocable; and
(2) The member's designation of a beneficiary shall be irrevocable if the retirement allowance option elected by the member is option A or B.
(c) No election by a member under this section shall take effect unless:
(1) The spouse or reciprocal beneficiary of the member is furnished written notification that:
(A) Specifies the retirement date, the benefit option selected, and the beneficiary designated by the member;
(B) Provides information indicating the effect of the election; and
(C) Is determined adequate by
rules [established] adopted by the board [pursuant to] in
accordance with chapter 91; [or]
(2) The member selects option A or option B and designates the spouse or reciprocal beneficiary as the beneficiary; or
(3) It is established to the satisfaction of the board that the notice required under paragraph (1) cannot be provided because:
(A) There is no spouse or reciprocal beneficiary;
(B) The spouse or reciprocal beneficiary cannot be located;
(C) The member has failed to notify the system that the member has a spouse or reciprocal beneficiary, or has failed to provide the system with the name and address of the member's spouse or reciprocal beneficiary; or
(D) Of other
reasons, as established by [rules of the] board [pursuant to] rules
adopted in accordance with chapter 91.
Any notice provided to a spouse or reciprocal beneficiary, or determination that the notification of a spouse or reciprocal beneficiary cannot be provided, shall be effective only with respect to that spouse or reciprocal beneficiary. The system shall rely upon the representations made by a member as to whether the member has a spouse or reciprocal beneficiary and the name and address of the member's spouse or reciprocal beneficiary.
(d) Each member, within a reasonable period of time before the member's retirement date, shall be provided a written explanation of:
(1) The terms and conditions of the various benefit options;
(2) The rights of the member's spouse or reciprocal beneficiary under subsection (c) to be notified of the member's election of a benefit option; and
(3) The member's right to make, and the effect of, a revocation of an election of a benefit option.
(e) The system shall not be liable for any false statements made to the system by the member or by the member's employer.
(f) If a member dies after the date of the filing of the member's written application to retire, but prior to the retirement date designated by the member, and, if the member was eligible to retire on the date of the member's death, the member's designated beneficiary may elect to receive either:
(1) An allowance that would have been payable if the member had retired and had elected to receive a retirement allowance under option B; or
(2) The allowance under the option selected by the member which would have been payable had the member retired.
The
effective date of the member's retirement shall be the first day of a month,
except for the month of December when the effective date of retirement may be
on the first or last day of the month, and shall be no earlier than the later
of thirty days from the date the member's retirement application was filed or
the day following the member's date of death. The election may not be made if,
at the time of the member's death, there are individuals who are eligible to
receive death benefits under section 88-286(c) who have made a claim for the
benefits; provided that, if the designated beneficiary is an individual
eligible to receive benefits under section 88-286(c), the designated beneficiary
may receive benefits pursuant to an election made under this section
pending disposition of the claim for benefits under section 88-286(c). [No
death benefits will be payable under section 88-286(c) while benefits are paid
pursuant to an election made under this section.] If death benefits are
payable under section 88‑286(c), the death benefits shall be in lieu of
any benefits payable pursuant to this section.
(g) If the retirant dies within one year after the date of retirement, the retirant's designated beneficiary may elect to receive either:
(1) The death benefit under the retirement allowance option selected by the retirant; or
(2) The death benefit
under option B[; provided that the difference between the benefit that the
retirant received and the benefit that would have been payable to the retirant
had the retirant elected to receive a retirement allowance under option B shall
be returned to the system.], less the difference between the benefit
that the retirant received and the benefit that would have been payable to the
retirant had the retirant elected to receive a retirement allowance under
option B; provided that if the retirant would not have been permitted by
applicable law or the rules of the board to name the designated beneficiary as
beneficiary under option B, the designated beneficiary may elect to receive the
death benefit under option A, less the difference between the benefit that the
retirant received and the benefit that would have been payable to the retirant
had the retirant elected to receive a retirement allowance under option A.
(h) The increase in the retirant's benefit under options A and B upon the death of the retirant's designated beneficiary shall be effective the first day of the month following the date of death of the designated beneficiary. The retirant shall notify the system in writing and provide a certified copy of the beneficiary's death certificate. The system shall make retroactive benefit payments to the retirant, not to exceed six months from the date the written notification and the certified copy of the death certificate are received by the system. The retroactive payments shall be without interest.
(i) A claim under this section by a retirant's or member's beneficiary for benefits upon the death of a retirant or member shall be filed no later than three years from the date of the retirant's or member's death."
SECTION 21. Section 88-301, Hawaii Revised Statutes, is amended to read as follows:
"§88-301 Applicability. The following provisions of part II of this chapter shall apply to this part:
(1) Subpart A;
(2) Subpart B, except sections 88-45, 88-46, 88-48, 88-52, 88-59, 88-59.5, 88-59.6, 88-61, and 88-62;
(3) Subpart C, except
sections 88-71, 88-72, 88-73, 88-74, 88-74.6, 88-75, 88-76, 88-79, 88-80,
88-83, 88-84, 88-85, 88-88, [88-89,] 88-96, 88-97, and 88-98;
(4) Subpart D; and
(5) Subpart E."
SECTION 22. Section 88-322, Hawaii Revised Statutes, is amended as follows:
(1) By amending subsection (b) to read as follows:
"(b)
All class A and class B credited service of class A or class B members who make
the election to become class H members pursuant to section 88-321(a) shall be
converted to class H credited service. The cost of the conversion of class A
or class B credited service shall be the member's accumulated contributions as
of the date of conversion. Verified membership service credit paid for
pursuant to section 88-59 under an irrevocable payroll authorization entered
into prior to July 1, 2006, shall be credited as class H credited service.
Class A and class B members who are in service on June 30, 2006, and make the
election to become class H members pursuant to section 88-321(a) shall have the
option to convert some or all of their class C credited service, as of June 30,
2006, to class H credited service by paying, in the manner provided in
subsection (d), the full actuarial cost of the conversion as of [June 30,
2006.] the last day of the sixth calendar month preceding the date of
the notice described in subsection (e). The option to convert class C
credited service to class H credited service shall also apply:
(1) To forfeited credit for previous service that a member is eligible to have restored as of June 30, 2006; and
(2) To membership service credit that a member is eligible to claim under section 88-272(4) to (6) as of June 30, 2006;
provided that the member shall claim the forfeited service credit and the membership service credit by the date established by the board at a meeting held pursuant to chapter 92."
(2) By amending subsection (f) to read as follows:
"(f)
The actuarial cost of converting a member's class C credited service to class H
credited service under subsections (a) and (b) shall be based on the member's
actual age in full years as of [June 30, 2006,] the last day of the
sixth calendar month preceding the date of the notice described in subsection
(e), and on the member's monthly base salary or monthly basic rate of pay
as of [June 30, 2006,] the last day of the sixth calendar month
preceding the date of the notice described in subsection (e), exclusive of
overtime, differentials, supplementary payments, bonuses, and salary
supplements, but including elective salary reduction contributions under
sections 125, 403(b), and 457(b) of the Internal Revenue Code of 1986, as
amended."
SECTION 23. Section 88-333, Hawaii Revised Statutes, is amended to read as follows:
"§88-333 Election of retirement allowance option. (a) Upon retirement:
(1) Any class H member
may elect to receive the maximum retirement allowance to which the member is
entitled, computed in accordance with the provisions described under section
88-332, 88-335, or 88-337, and if the member elects to receive the maximum
retirement allowance, in the event of the [member's] retirant's
death, there shall be paid to the [member's] retirant's designated
beneficiary, or otherwise to the [member's] the retirant's
estate, the difference between [the]:
(A) The
balance of the member's accumulated contributions at the time of the member's
retirement; and [the]
(B) The
retirement allowance and the post retirement allowances paid or payable
to the [member] retirant prior to death; or
(2) In lieu of the maximum allowance to which the member is entitled, computed in accordance with the provisions described under section 88-332, 88-335, or 88-337, the member may elect to receive the member's retirement allowance under any one of the options described in section 88-83, which shall be actuarially equivalent to the maximum allowance.
To receive benefits, the beneficiary shall have been designated by the member in the form and manner prescribed by the board.
(b)
If a class H member dies after the date of the filing of the member's written
application to retire but prior to the retirement date designated by the
member, and[,] if the member was eligible to retire on the date of the
member's death, the member's designated beneficiary, or otherwise the personal
representative of the member's estate, may elect to receive either the death
benefit under section 88-338 or the allowance under the option selected by the
member that would have been payable had the member retired. The effective date
of the member's retirement shall be the first day of a month, except for the
month of December when the effective date of retirement may be on the first or
last day of the month, and shall be no earlier than the later of thirty days
from the date the member's retirement application was filed or the day
following the member's date of death. The election may not be made if, at
the time of the member's death, there are individuals who are eligible to
receive death benefits under section 88-339 who have made a claim for the
benefits; provided that, if the designated beneficiary is an individual
eligible to receive benefits under section 88-339, the designated beneficiary
may receive benefits pursuant to an election made under this section pending
disposition of the claim for benefits under section 88-339. If death benefits
are payable under section 88‑339, the death benefits shall be in lieu of
any benefits payable pursuant to this section.
(c)
If a retirant dies within one year after the date of retirement, the retirant's
designated beneficiary may elect to receive either the death benefit under the
retirement allowance option selected by the [member,] retirant or
the benefits that would have been paid under section 88-338 had the retirant
died immediately prior to retirement, less any payments received by the
retirant[.]; provided that the designated beneficiary may not elect
to receive benefits under option 2 of section 88-83 if the retirant would not
have been permitted by applicable law or by the rules of the board to name the
designated beneficiary as beneficiary under option 2.
(d) Upon a member's retirement:
(1) The member's election of a retirement allowance option shall be irrevocable; and
(2) The member's designation of a beneficiary shall be irrevocable if the retirement allowance option elected by the member is:
(A) Option 2 or 3 described in section 88-83;
(B) An option that includes option 2 or 3 in combination with some other form of benefit payment; or
(C) Any other option for which the actuarial equivalent of the option to the maximum retirement allowance is determined at the time of the member's retirement based in whole or in part on the age of the member's designated beneficiary.
(e) No election by a member under this section shall take effect unless:
(1) The spouse or reciprocal beneficiary of the member is furnished written notification that:
(A) Specifies the retirement date, the benefit option selected, and the beneficiary designated by the member;
(B) Provides information indicating the effect of the election; and
(C) Is determined adequate by rules adopted by the board in accordance with chapter 91;
(2) The member selects option 2 or option 3 under section 88-83 and designates the spouse or reciprocal beneficiary as the beneficiary; or
(3) It is established to the satisfaction of the board that the notice required under paragraph (1) cannot be provided because:
(A) There is no spouse or reciprocal beneficiary;
(B) The spouse or reciprocal beneficiary cannot be located;
(C) The member has failed to notify the system that the member has a spouse or reciprocal beneficiary, or has failed to provide the system with the name and address of the member's spouse or reciprocal beneficiary; or
(D) Of other reasons, as established by board rules adopted in accordance with chapter 91.
Any
notice provided to a spouse or reciprocal beneficiary, or determination that
the notification of a spouse or reciprocal beneficiary cannot be provided shall
be effective only with respect to that spouse or reciprocal beneficiary. The
system shall rely upon the representations made by a member as to whether the
member has a spouse or reciprocal beneficiary and the name and address of the
member's spouse or reciprocal beneficiary. [The system shall not be liable
for any false statements made by the member.]
(f) Each member, within a reasonable period of time before the member's retirement date, shall be provided a written explanation of:
(1) The terms and conditions of the various benefit options;
(2) The rights of the member's spouse or reciprocal beneficiary under subsection (e) to be notified of the member's election of a benefit option; and
(3) The member's right to make, and the effect of, a revocation of an election of a benefit option.
(g) The system shall not be liable for any false statements made to the system by the member or by the member's employer.
(h) The increase in the retirant's benefit under options 2, 3, and, if applicable, 4, described in section 88-83, upon the death of the retirant's designated beneficiary shall be effective the first day of the month following the date of death of the designated beneficiary. The retirant shall notify the system in writing and provide a certified copy of the beneficiary's death certificate. The system shall make retroactive benefit payments to the retirant, not to exceed six months from the date the written notification and the certified copy of the death certificate are received by the system. The retroactive payments shall be without interest.
(i) A claim under this section by a retirant's or member's beneficiary for benefits upon the death of a retirant or member shall be filed no later than three years from the date of the retirant's or member's death."
SECTION 24. Section 88-334, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b)
Upon approval by the board, the member shall receive an ordinary disability
retirement benefit no earlier than thirty days from the date the application
was filed or the date the member terminated service, whichever is later. [Retirement]
A member whose application for an ordinary disability retirement allowance
is approved by the board while the member is still in service may terminate
service and retire at any time following the approval; provided that retirement
shall become effective on the first day of [a] the month[,]
following the month the applicant terminates employment or goes off the
payroll, except for the month of December when retirement on the first or
last day of the month shall be allowed."
SECTION 25. Section 88-336, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) Upon application of a class H member, or the person appointed by the family court as guardian of an incapacitated member, any class H member who has been permanently incapacitated for duty as the natural and proximate result of an accident occurring while in the actual performance of duty at some definite time and place, or as the cumulative result of some occupational hazard, through no wilful negligence on the member's part, may be retired by the board for service-connected disability; provided that:
(1) In the case of an accident occurring after July 1, 1963, the employer shall file with the system a copy of the employer's report of the accident submitted to the director of labor and industrial relations;
(2) An application for retirement is filed with the system within two years of the date of the accident, or the date upon which workers' compensation benefits cease, whichever is later;
(3) Certification is made by the head of the agency in which the member is employed, stating the time, place, and conditions of the service performed by the member resulting in the member's disability and that the disability was not the result of wilful negligence on the part of the member; and
(4) The medical board certifies that the member is incapacitated for the further performance of duty at the time of application and that the member's incapacity is likely to be permanent."
SECTION 26. Section 88-338, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) Upon receipt by the system of proper proof of a class H member's death occurring in service or while on authorized leave without pay and if no pension is payable under section 88‑339, there shall be paid to the member's designated beneficiary an ordinary death benefit as follows:
(1) If the member had less than five years of credited service at the time of death, the member's accumulated contributions shall be paid to the member's designated beneficiary;
(2) If the member had five or more years of credited service at the time of death, an amount equal to the member's hypothetical account balance shall be paid to the member's designated beneficiary;
(3) If the member had
ten or more years of credited service at the time of death, the member's
designated beneficiary may elect to receive in lieu of any other payment
provided in this section, the allowance that would have been payable as if the
member had retired on the first day of a month following the member's death,
except for the month of December when retirement on the first or last day of
the month shall be allowed. Benefits payable under this paragraph shall be
calculated under option 3 of section 88-83 and computed on the basis of section
[88-335;] 88-332, unreduced for age; or
(4) If the member was
eligible for service retirement at the time of death, the member's designated
beneficiary may elect to receive in lieu of any other payment provided in this
section, the allowance that would have been payable as if the member had
retired on the first day of a month following the member's death, except for
the month of December when retirement on the first or last day of the month
shall be allowed. Benefits payable under this paragraph shall be calculated
under option 2 of section 88-83[.] and computed on the basis of
section 88-332."
SECTION 27. Section 88-342, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a)
When a former class H member who does not have vested benefit status returns to
service, the former member shall become a member in the same manner and under
the same conditions as anyone first entering service and, except as provided in
subsection (b), to be eligible for any benefit, the member shall fulfill the
membership service requirements for the benefit through membership service
after again becoming a member in addition to meeting any other eligibility
requirement established for the benefit; provided that the membership service
requirement shall be exclusive of any former service acquired in accordance
with section 88-324 or any other section in [this] part[.] II,
VII, or VIII."
SECTION 28. Section 88-344, Hawaii Revised Statutes, is amended to read as follows:
"§88-344
Return to service of a retirant. (a) Any retirant who retired under the
provisions of [part VIII of this chapter] this part and returns
to service requiring active membership in the system as a class H member
shall be reenrolled as an active member, and the retirant's retirement
allowance shall be suspended. When the member again retires, the retirement
allowance shall be the sum of:
(1) The allowance to which the member was entitled under the retirement allowance option selected when the member previously retired and which was suspended; and
(2) 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 of a class H member under section 88-332 in existence at the time of the member's final retirement.
(b)
Any retirant who retired under [part VIII] the provisions of this
part and returns to service requiring active membership in the
system as a class A or class B member shall be reenrolled as an active member,
and the retirant's retirement allowance shall be suspended. When the member
again retires, the retirement allowance shall be the sum of:
(1) The allowance to which the member was entitled under the retirement allowance option selected when the member previously retired and which was suspended; and
(2) 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 of a class A or class B member under section 88-74 in existence at the time of the member's final retirement.
(c) 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 [chapter
88;] this chapter; and
(3) Be subject to the age and service requirements under section 88-331 when the member again retires.
(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 88‑334, 88-336, 88-338, or 88-339, 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.
[(e)]
(f) The board shall adopt any rules as may be required to administer [the
purposes of] this section."
SECTION 29. Section 88-72, Hawaii Revised Statutes, is repealed.
["§88-72
Refund of additional contributions. A member may withdraw at any time
prior to the member's retirement, all the member's voluntary contributions made
to provide an annuity in addition to the retirement allowance provided under
section 88-74."]
SECTION 30. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 31. This Act shall take effect on July 1, 2007; provided that sections 11, 12, and 24 shall be effective retroactive to July 1, 2006.