Hawaii Pension System Proposes New OT Rules

Nanea Kalani/Civil Beat

A proposal to reform overtime rules for Hawaii public pensions didn't get any blowback Tuesday.

The Hawaii Employees' Retirement System wants a cap on how much overtime can count toward pensions and wants the state and counties be on the hook for costs tied to employees who spike their retirement benefits.

The proposed changes are aimed at preventing employees from "spiking" their pay to dramatically boost retirement benefits. The reforms will help cut down the massive unfunded liability facing the Hawaii Employees' Retirement System, according to its administrator Wes Machida.

"We're looking at ways in which we can help to make the system more sustainable in the future," Machida told legislative labor committee members Tuesday. "We need to ensure that there's monies in the fund to pay those promised benefits."

The reforms are expected to be included in a bill that will be part of the Abercrombie administration's package of bills.

It's unclear how much the state and counties would be liable for, but in 2010, pension spiking accounted for $12.3 million in unfunded liabilities statewide, according to Machida. The state's share of retirement costs are about 74 percent, while the counties share the remaining 25 percent. Of the counties' share, Honolulu makes up 62 percent.

Last year, unions fought a proposal by the governor to eliminate overtime credit for pensions. A revised bill that called for a phased approach stalled and has been carried over to this session, but the pension system is backing the new measure.

Labor unions testified last session that the previous measure would negatively impact recruitment and could trigger an exodus of employees who are already eligible to retire. The new proposals could prove more palatable since overtime — in a limited capacity — would still be counted toward pension calculations.

Randy Perreira, executive director of the Hawaii Government Employees Association, the state's largest public union, said the union doesn't oppose this year's effort to curb spiking.

"We want to make sure that steps are taken as necessary to ensure the long-term viability of the retirement system," he told Civil Beat. "Generally speaking, we don't oppose changes to the law that would impact spiking."

Perreira said it's too early to tell how HGEA members would be affected by the proposed changes, but said that the HGEA represents "very few people who get to put in a lot of overtime."

"We have not supported the suggestion to eliminate all premium pay from retirement calculations," he said. "Those of our members who contribute to their retirement plans, they're actually contributing a percentage of their pay, including overtime, toward their retirement, so they should be able to receive a benefit that would include their overtime."

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