Excessive OT for Ambulance Workers Highlights Strain on Pension System
12/28/2011
Employees' Retirement System
Trustees of Hawaii's public pension system are finalizing proposed legislation aimed at preventing employees from "spiking" their pay to dramatically boost retirement benefits.
"People have clearly learned how to game the system," Hawaii Employees Retirement System Chairman Colbert Matsumoto told Civil Beat.
This will be the system's second attempt at overtime reform. In the 2011 session, a bill initially sought to end any OT credit, but was revised after pushback from labor unions to adopt a phased approach.
Pension officials say a recent city audit of Honolulu's Emergency Medical Services Division highlights why the pension reform is critical.
In the course of examining whether Honolulu's ambulance fleet adequately meets the island's needs, the audit uncovered excessive overtime use by employees. In some cases, workers earned between 200 percent and 350 percent of their regular salaries in overtime.
The upfront overtime costs — $16 million over three years — were sizable. But the pension costs for these employees could cost taxpayers much more.
That's because retirement benefits are based in part on an employee's highest three years of pay, which covers all compensation including overtime.
Retirement contributions are based on a percentage of payroll; employees contribute a percentage of their pay, while employers (the state and counties) also chip in a percentage.
But if an employee's pension is funded based on a salary lower than their "highest three years," their pension will not have been adequately funded, and the employer will have to make up the difference.
