The Hawaii Public Employees Retirement System (PERS) provides retirement, disability, and survivor benefits to eligible public employees in Hawaii. Under Hawaii Revised Statutes (HRS) Chapter 88, PERS members accrue service credit for periods of qualified employment. The determination of creditable service is crucial for calculating retirement allowances. For employees who have made contributions to a qualified retirement plan in another U.S. state or territory and subsequently become members of PERS, the process for transferring or receiving credit for that prior service is governed by specific statutory provisions and administrative rules. Generally, a member may receive credit for prior service in another public retirement system if they have at least five years of credited service in the Hawaii PERS and they elect to purchase the prior service. The cost of purchasing such service is typically actuarially determined, reflecting the contributions that would have been made and the associated interest. This purchase allows the prior service to be combined with service earned in Hawaii for the purpose of calculating the retirement allowance, subject to the limitations and conditions set forth in HRS §88-74. This statute outlines the conditions under which service in other public systems may be credited and the procedures for making such elections and payments. The core principle is to allow public servants to benefit from their total public service across different jurisdictions, provided statutory requirements are met.

The question pertains to the fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) as applied to pension plans. Specifically, it probes the understanding of the prudence requirement, which mandates that a fiduciary must act with the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. This includes the duty to diversify investments unless it is prudent not to do so. When a fiduciary invests plan assets in a manner that concentrates risk, such as investing a significant portion of the plan’s assets in the stock of a single employer sponsoring the plan, this action is subject to strict scrutiny. The rationale behind the diversification requirement is to mitigate risk. Failure to diversify, without a prudent basis for doing so, constitutes a breach of fiduciary duty. In the context of the Hawaii Pension and Employee Benefits Law Exam, understanding these core ERISA principles is crucial, as Hawaii law often aligns with or supplements federal ERISA standards for private sector employee benefit plans. The scenario presented describes a concentration of assets in the sponsoring employer’s stock, which is a classic example of a failure to diversify, absent a compelling prudent justification. This concentration exposes the plan to significant risk if the employer’s stock performs poorly, directly contravening the prudence and diversification mandates of ERISA Section 404(a)(1)(B) and (C).

The Hawaii Public Employees Retirement System (HI-PERS) is governed by Hawaii Revised Statutes Chapter 88. Specifically, concerning the disposition of benefits upon the death of a member who has not elected a retirement option providing for a survivor benefit, the statute outlines a specific order of precedence for payment. HRS § 88-84(b) details that if a member dies before retirement or before the payment of any retirement allowance, and has not elected a retirement option providing for a survivor benefit, the accumulated contributions shall be paid to the member’s designated beneficiary. If no beneficiary is designated, or if the beneficiary is deceased, payment is made to the member’s estate. In this scenario, the member, Kiana, is a vested employee of the State of Hawaii who passed away before commencing her retirement benefits. She had not elected a retirement option that included a survivor benefit. Her designated beneficiary, her brother, was deceased. Therefore, according to the statutory framework, the accumulated contributions are to be paid to her estate. This ensures that the funds are distributed according to the laws of intestacy or through her will, as opposed to a direct payment to a non-designated or deceased beneficiary. The concept of “accumulated contributions” refers to the total amount of contributions made by the employee, plus any accumulated interest, which forms the basis of the benefit payable in such circumstances. The order of precedence is a critical aspect of public pension administration to ensure proper and lawful disbursement of funds.

The Employees’ Retirement System (ERS) of the State of Hawaii operates under Hawaii Revised Statutes Chapter 88. This chapter outlines the rules for membership, contributions, service credit, and retirement benefits for public employees. Specifically, HRS §88-74 addresses the calculation of retirement allowances for members who are not eligible for early retirement. The formula generally involves multiplying the member’s average monthly compensation by the number of years of credited service and a service retirement factor. For members retiring at or after age 60 with at least 5 years of service, the retirement allowance is calculated using a specific percentage of their average final compensation multiplied by their years of credited service. The average final compensation is typically the highest average monthly compensation earned during any period of 36 consecutive months of service. The service retirement factor is a percentage that increases with years of service. For example, for service rendered prior to July 1, 1965, the factor is 1.75% per year. For service rendered from July 1, 1965, to June 30, 1971, the factor is 2.0% per year. For service rendered from July 1, 1971, to June 30, 1987, the factor is 2.25% per year. For service rendered from July 1, 1987, to June 30, 1997, the factor is 2.5% per year. For service rendered from July 1, 1997, to June 30, 2001, the factor is 2.75% per year. For service rendered from July 1, 2001, onwards, the factor is 3.0% per year. To illustrate, if a member retires at age 62 with 30 years of credited service, and their average final compensation is \$6,000 per month, and all their service was rendered after July 1, 2001, their monthly retirement allowance would be calculated as: \(30 \text{ years} \times 3.0\% \times \$6,000 = 30 \times 0.03 \times \$6,000 = \$5,400\). This calculation demonstrates the direct application of the statutory formula for determining a member’s retirement benefit based on their service and compensation history within the ERS framework. The question tests the understanding of how different periods of service are weighted with specific retirement factors as defined by Hawaii law.

The Public Employee Retirement System of Hawaii (PERS) is governed by Hawaii Revised Statutes (HRS) Chapter 386, specifically focusing on retirement benefits for state and county employees. When a member of PERS separates from service before meeting the age and service requirements for retirement, they are typically entitled to a refund of their accumulated contributions, provided they have vested. However, the disposition of employer contributions, if any, and the impact on future benefits are governed by specific statutory provisions. HRS §88-104 outlines the conditions under which a member may receive a refund of contributions upon separation from service. This section generally permits a refund of the member’s own contributions plus any accumulated interest. Crucially, if the member later rejoins PERS, they may have the option to “buy back” their prior service by repaying the withdrawn contributions with interest, thereby restoring their service credit. The concept of “vesting” is paramount; a member must typically complete a certain period of service to be entitled to a retirement benefit, even if they leave before normal retirement age. Separation from service before vesting means the member is generally only entitled to a refund of their own contributions. The specific refund amount is the sum of the member’s contributions and the interest credited to their account as per PERS regulations. For instance, if a member contributed $50,000 and accrued $10,000 in interest, their refund would be $60,000. The question tests the understanding that upon separation before retirement eligibility, a PERS member is primarily entitled to their own contributions plus accrued interest, and that the employer contributions are not typically refunded to the employee in such a scenario. The law distinguishes between a refund of contributions and a deferred retirement allowance, which is available only upon meeting vesting requirements.

The Hawaii Revised Statutes (HRS) Chapter 88, specifically the Public Employees Retirement System (PERS), outlines the framework for retirement benefits for state and county employees. HRS §88-84 addresses service retirement. For a member to be eligible for service retirement, they must have attained at least age 62 and have accumulated at least five years of credited service. Alternatively, if the member is a police officer or firefighter, they must have attained at least age 55 and have accumulated at least five years of credited service. The question presents a scenario where a PERS member, who is not a police officer or firefighter, has accumulated 28 years of credited service but is only 59 years old. Since the member has not reached the age of 62, they do not meet the age requirement for standard service retirement under HRS §88-84. Therefore, they are not eligible for service retirement at this time. The calculation involves checking the two primary conditions for service retirement: age and credited service. Both must be met. In this case, the age condition (at least 62) is not satisfied.

The Employees’ Retirement System (ERS) of the State of Hawaii, governed by Hawaii Revised Statutes (HRS) Chapter 88, outlines specific rules for service credit accrual and purchase. For service rendered as a temporary employee, an employee may purchase service credit if they meet certain criteria. HRS §88-44.5 specifically addresses the purchase of temporary service. This statute generally requires that the temporary service must have been rendered for at least 100 days in a fiscal year, and the employee must be a current member of the ERS. Furthermore, the purchase of such service credit is typically subject to the employee paying both the employee and employer contributions for that period, plus interest, as determined by the system’s actuary. The purpose of allowing the purchase of temporary service is to recognize and credit periods of public service that might not have otherwise qualified for automatic service credit, thereby enhancing retirement benefits for long-serving state employees. The calculation for the cost involves determining the contributions based on the salary during the temporary service period and applying the applicable interest rate, which is periodically set by the ERS Board of Trustees. The question tests the understanding of the statutory requirements for purchasing temporary service credit under the Hawaii Pension system, specifically focusing on the conditions and the basis for the cost of such credit.

The question tests the understanding of the permissible methods for a Hawaii public employee to receive their pension benefits upon separation from service, specifically focusing on the rules governing the disbursement of accumulated contributions versus a deferred pension. Hawaii Revised Statutes (HRS) Chapter 88, specifically sections related to retirement benefits and disbursement options, outlines these procedures. Upon separation from service, a member of the Employees’ Retirement System (ERS) of the State of Hawaii has specific choices. One option is to withdraw their accumulated contributions. However, if the member has met the eligibility criteria for a pension benefit (e.g., attained a certain age and years of service), they may elect to receive a deferred pension. The key distinction is that withdrawing accumulated contributions typically means forfeiting the right to a future pension benefit based on employer contributions and service credit, unless specific re-deposit provisions are met. Conversely, electing a deferred pension means the pension benefit will commence at a later date, usually upon reaching the normal retirement age, and the accumulated contributions might be handled differently depending on the specific ERS plan rules, but the core concept is the continuation of the pension entitlement. Receiving both a full withdrawal of accumulated contributions and a deferred pension simultaneously for the same period of service is generally not permitted under ERS rules, as these represent distinct benefit pathways. The scenario presented involves a public employee who has separated from service and is eligible for a deferred pension. The question asks about the permissible action regarding their accumulated contributions. The correct approach is to either withdraw the accumulated contributions (which would likely mean forfeiting the deferred pension unless specific conditions are met, such as redepositing the withdrawn amount with interest if they later return to service and qualify for a pension) or to defer the pension benefit, which typically means leaving the accumulated contributions with the system to accrue interest until the pension commences. Therefore, the option that aligns with the rules is to receive the deferred pension and have their accumulated contributions remain in the system, potentially to be paid out at the commencement of the pension or handled according to specific ERS provisions for deferred members.

The Hawaii Public Employees Retirement System (HI-PERS) operates under specific legal frameworks that govern its administration and the benefits provided to its members. A key aspect of this system is the treatment of service credit for individuals who have previously worked for governmental entities outside of Hawaii. Hawaii Revised Statutes (HRS) §88-43 addresses the purchase of service credit for prior service with other public employers. This statute outlines the conditions under which such service can be recognized and purchased, typically requiring the member to be an active contributing member of HI-PERS and to pay the full actuarial cost of the service. The actuarial cost is determined by the system’s actuary and reflects the present value of the future benefit attributable to that service. This cost is usually calculated based on the member’s age, salary, and the benefit formula applicable at the time of purchase, as well as actuarial assumptions regarding mortality and investment returns. The purpose of this provision is to allow members to consolidate their public service history for retirement purposes, thereby enhancing the fairness and comprehensiveness of the retirement benefit. It is crucial for members to understand that this purchase is voluntary and requires a significant financial contribution to reflect the actuarial liability created. The statute also typically specifies a timeframe within which such purchases must be completed.

The Hawaii Revised Statutes (HRS) Chapter 88, specifically concerning the Employees’ Retirement System (ERS), outlines the provisions for retirement benefits. Section 88-74 addresses the calculation of retirement allowances for members who are not classified as police officers or firefighters. For members who commenced service prior to July 1, 2001, and have completed at least ten years of credited service, the retirement allowance is calculated based on a formula that considers their average final compensation and a multiplier. The multiplier is typically 1.75% for each year of credited service for general employees. Average final compensation is generally the average of the highest compensation earned during any period of 36 consecutive months. Assuming a hypothetical member, Mr. Kenji Tanaka, who commenced service on January 1, 1995, and retired on January 1, 2025, with 30 years of credited service and an average final compensation of \$80,000, his annual retirement allowance would be calculated as follows: \(30 \text{ years} \times 1.75\% \times \$80,000 = 30 \times 0.0175 \times \$80,000 = 0.525 \times \$80,000 = \$42,000\). This calculation adheres to the general principles for non-specialist members under HRS §88-74, reflecting the service years, the applicable percentage, and the average final compensation to determine the annual retirement benefit. The question tests the understanding of how these core components interact to determine a retirement allowance for a member under the Hawaii Employees’ Retirement System, emphasizing the statutory framework for calculating benefits for general employees.

The scenario involves the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) and its interaction with state pension laws, specifically in Hawaii. USERRA provides protections for individuals who leave civilian employment to perform military service and then seek reemployment. A key aspect of USERRA is the requirement that reemployed service members be treated as if they had been continuously employed. This includes entitlement to benefits that accrue during the absence, such as pension contributions. Hawaii Revised Statutes (HRS) Chapter 392, concerning the Hawaii Public Employees Health Fund, and HRS Chapter 88, the Hawaii Employees’ Retirement System (ERS), govern the pension and benefit rights of public employees in Hawaii. USERRA preempts state laws that would deny benefits to service members that they would have received if they had remained continuously employed. Therefore, when a Hawaii state employee enlists in the military, their service in the military must be treated as creditable service for the Hawaii Employees’ Retirement System, provided they meet USERRA’s reemployment obligations. The state pension law, in this case, HRS Chapter 88, must be interpreted and applied in a manner consistent with USERRA’s mandate to ensure no loss of benefits. This means that the employee’s contributions and the employer’s contributions to the ERS must continue as if the employee were still actively employed, or the employee must be allowed to make up any contributions to receive the full benefit accrual. The specific mechanism for “making up” contributions is typically detailed in the ERS’s own administrative rules, which are designed to comply with federal law like USERRA. The question focuses on the employer’s obligation to facilitate the accrual of pension benefits for a reemployed service member under both federal and state law.

The Hawaii Public Employees Retirement System (PERS) is governed by specific statutes and administrative rules that dictate how service credit is earned and recognized. HRS §88-43 outlines the general provisions for service credit, including the requirement for employees to be in paid status for at least 100 hours per month to earn a full month of service credit. For part-time employees, the system prorates service credit based on the hours worked relative to a full-time employee’s hours. HRS §88-43(b) specifically addresses the crediting of service for employees working less than full-time. It states that service credit is granted on a prorated basis for periods of employment where the employee works less than full-time hours but is otherwise eligible. This means that if an employee works a certain percentage of full-time hours, they will earn that same percentage of a full month’s service credit. Therefore, an employee working 50% of the standard full-time hours in a given month would earn 0.5 months of service credit for that month, assuming all other eligibility criteria are met. This prorated system ensures fairness in service credit accrual for all members, regardless of their employment status relative to full-time work. The fundamental principle is that service credit reflects the proportion of full-time employment rendered.

The Hawaii Public Employees Retirement System (PERS) is governed by Hawaii Revised Statutes (HRS) Chapter 386, which outlines the framework for its administration and the rights and responsibilities of its members. Specifically, HRS §386-53 addresses the conditions under which a member may receive a retirement allowance. This statute details the service retirement requirements, including the minimum age and years of credited service. For a member to be eligible for a service retirement allowance, they must have attained a specified age and completed a minimum period of creditable service, as defined within the PERS statutes. The statute also outlines provisions for early retirement, disability retirement, and survivor benefits, each with its own set of eligibility criteria. Understanding these statutory provisions is crucial for determining an individual’s entitlement to retirement benefits within the Hawaii PERS. The question tests the understanding of the core statutory basis for service retirement eligibility in Hawaii’s public pension system, emphasizing the interplay between age and service credit as stipulated by state law. This foundational knowledge is essential for anyone involved in administering or receiving benefits from the system.

The question revolves around the statutory requirements for timely remittance of contributions to the Hawaii Employees’ Retirement System (ERS). Hawaii Revised Statutes (HRS) §88-104 mandates that employer contributions and employee salary deductions for retirement purposes must be remitted to the ERS by the last day of the month following the month in which the contributions were earned. Therefore, for contributions earned in January, the remittance deadline is the last day of February. The question asks for the latest possible date for remittance of January’s contributions. Assuming a non-leap year for simplicity, the last day of February is February 28th. This ensures timely funding of the pension system, crucial for its actuarial soundness and the ability to meet future benefit obligations. Understanding these remittance deadlines is fundamental for public employers in Hawaii to maintain compliance and avoid potential penalties or interest accruals as stipulated by ERS regulations and relevant statutes. The principle behind these deadlines is to ensure consistent cash flow into the system, supporting investment strategies and the payment of benefits to retirees.

The scenario involves the Hawaii Public Employees Retirement System (PERS) and the application of its rules regarding service credit for a former employee of the State of Hawaii who also has service with another U.S. state. Under Hawaii Revised Statutes (HRS) Chapter 88, specifically concerning reciprocity and service credit, members may be able to purchase service credit from other public retirement systems in the United States if a reciprocal agreement exists. The key statute governing this is HRS §88-73, which outlines the conditions for receiving credit for service rendered in another public system. For a member to be eligible to purchase service credit from another state’s system for their prior service with the State of Hawaii, they must be an active member of the Hawaii PERS and have at least five years of credited service in Hawaii. The question then focuses on the specific conditions for transferring service credit *to* Hawaii PERS from another state. HRS §88-73(b) details that a member who has rendered service to another political subdivision or government entity of the United States, and has not retired under such system, may receive credit for such service upon the transfer of contributions and accumulated interest from the other system to the Hawaii PERS. The amount of service credit granted is typically based on the laws of the system from which the service is transferred, but the core requirement is the establishment of a reciprocal agreement or the direct transfer of funds and the member’s active status. The crucial aspect for the question is the ability to “purchase” this service, which implies a process of transferring funds and meeting eligibility criteria. The most direct and legally sound method for a Hawaii PERS member to gain credit for prior service with another U.S. state’s public retirement system is through the formal process of transferring their accumulated contributions and interest, provided reciprocity is established and they meet the eligibility requirements of both systems. This is often referred to as a service credit purchase or transfer. The statute allows for such transfers, ensuring that individuals who have served in public service across different jurisdictions are not penalized. The question tests the understanding of the mechanism for inter-system service credit acquisition within the Hawaii PERS framework. The amount of service credit purchased is determined by the rules of the system from which the service is transferred, but the act of purchasing is facilitated by the transfer of contributions.

The Hawaii Public Employees Retirement System (PERS) is governed by Chapter 88 of the Hawaii Revised Statutes. This chapter outlines the rules for member contributions, employer contributions, benefit calculations, and fiduciary responsibilities. When a PERS member separates from service before meeting the age and service requirements for retirement, they are typically entitled to a refund of their contributions. However, the law specifies that if a member is terminated for cause, such as gross misconduct or dishonesty, the PERS board has the discretion to deny or reduce the refund. HRS § 88-95 addresses the refund of contributions. Specifically, it states that a member who withdraws from service may be paid the accumulated contributions, but it also grants the board the power to withhold refunds in cases of fraud or dishonesty. The specific determination of “cause” and the subsequent decision on refund eligibility rests with the PERS Board of Trustees, based on the evidence presented and the provisions of HRS § 88-95. This decision is an administrative one, subject to due process for the member.

The scenario involves a retiree, Ms. Kaimana, who is receiving benefits from the Hawaii Employees’ Retirement System (ERS). She has been offered a lump-sum distribution from a private sector 401(k) plan she participated in prior to her state employment. The question probes the taxability of this private 401(k) distribution when received by an ERS retiree. Under both federal and Hawaii state tax law, distributions from qualified retirement plans, such as a 401(k), are generally taxable as ordinary income in the year received, unless rolled over into another qualified retirement plan or IRA. Hawaii’s tax laws largely conform to federal tax laws concerning retirement income, meaning that income that is taxable at the federal level is also taxable in Hawaii. The fact that Ms. Kaimana is already receiving ERS benefits does not alter the tax treatment of a separate private retirement plan distribution. Therefore, the lump-sum distribution from her private 401(k) is subject to both federal and Hawaii state income tax. The question tests the understanding that different retirement plans, even when received by the same individual, are subject to their own specific tax rules, and that Hawaii’s tax system generally follows federal guidelines for such distributions. The taxability is determined by the nature of the distribution itself and the source plan, not by the recipient’s status as an ERS retiree receiving separate pension benefits.

The scenario presented involves the Hawaii Employees Retirement System (ERS) and the application of its rules regarding service credit for a former public employee who also has service in another state’s public retirement system. Specifically, the question pertains to the reciprocity of service credit under Hawaii Revised Statutes (HRS) Chapter 88, Part III, which governs the ERS. For a member to receive credit for service rendered in another public retirement system of a state or territory of the United States, certain conditions must be met. Generally, the member must be a current member of the ERS, have at least five years of credited service in the ERS, and elect to purchase the service credit. The cost of purchasing this service credit is typically calculated based on the member’s age at the time of purchase and the member’s current compensation, reflecting the actuarial cost to the system. HRS §88-57 outlines the conditions and procedures for purchasing service credit from other public systems. The critical element for this question is the requirement for the member to have completed a minimum period of service within the ERS itself before being eligible to “buy back” or transfer service from another system. This ensures that the reciprocity provisions benefit active, contributing members who have established a substantial connection to the Hawaii ERS. Without this prerequisite, the system could be burdened by individuals with minimal ERS membership purchasing significant out-of-state service, potentially undermining the actuarial soundness of the system. Therefore, the prerequisite of having five years of credited service within the ERS is a fundamental requirement for purchasing service credit from another state’s public retirement system under Hawaii law.

The scenario involves a public employee in Hawaii who transitioned from a position covered by the Employees’ Retirement System (ERS) to a position covered by the Hawaii Employer-Administrative Retirement System (HEARS). Upon retirement, the employee elected to receive a lump-sum payout of their accumulated contributions from the ERS, which included both their own contributions and the employer’s contributions made on their behalf. The question pertains to the taxability of this lump-sum distribution under federal and state income tax laws, specifically considering the implications of Hawaii Revised Statutes (HRS) Chapter 88, which governs the ERS. Under the Internal Revenue Code (IRC) and Hawaii income tax law, distributions from qualified retirement plans that are rolled over into another qualified retirement plan are generally tax-deferred. However, when a distribution is taken as a lump sum and not rolled over, it is typically considered taxable income in the year received. The crucial element here is that the ERS is a qualified retirement plan established by the State of Hawaii. The employer contributions made to the ERS on behalf of the employee are considered a form of deferred compensation that accrues tax-deferred growth. When these employer contributions, along with the employee’s own contributions and any earnings thereon, are distributed as a lump sum and not rolled over into another eligible retirement plan, they become subject to ordinary income tax. Hawaii’s tax treatment generally follows federal tax principles for qualified retirement plans, meaning such distributions are taxable. The fact that the employee later became a member of HEARS is relevant to their ongoing retirement benefits but does not alter the tax treatment of the prior distribution from ERS. The distribution is not considered a return of non-deductible contributions because employer contributions are not made with after-tax dollars. Therefore, the entire lump-sum distribution, representing both employee and employer contributions plus earnings, is taxable as ordinary income in the year of receipt, both federally and by the State of Hawaii.

The Hawaii Revised Statutes (HRS) Chapter 88, specifically concerning the Employees’ Retirement System of the State of Hawaii (ERS), outlines the framework for retirement benefits. Section 88-74 details the conditions under which a member may elect to receive a retirement allowance. This section addresses various options, including the life annuity, and provisions for survivor benefits. A key aspect is the ability of a member to elect a retirement allowance payable in a reduced amount during their lifetime, with the provision that upon their death, a specified portion of the reduced allowance continues to be paid to a designated beneficiary. This is commonly referred to as an annuity certain or a joint and survivor option. The statute requires that such an election be made in writing and filed with the board of trustees prior to the effective date of retirement. The calculation of the reduced allowance is actuarially determined to be equivalent in value to the single life annuity that the member would have received. For instance, if a member’s single life annuity is calculated to be \$3,000 per month, and they elect a joint and survivor option where 50% of their allowance continues to their spouse, the actuarially adjusted allowance for the member would be lower than \$3,000 per month. The specific reduction depends on the age of the member and the designated beneficiary, as well as the chosen percentage of continuation. HRS §88-74(b) specifically allows for the election of a retirement allowance payable throughout the life of the member, with a specified portion of the allowance continuing to a beneficiary after the member’s death. The statute does not mandate a specific percentage for survivor benefits but allows the member to elect a portion, typically 50%, 75%, or 100%, which then dictates the actuarial reduction to the member’s own allowance. The core principle is that the total expected value of the payments, considering both the member’s lifespan and the potential survivor payments, remains actuarially equivalent to the single life annuity.

The question concerns the fiduciary duties under the Hawaii Public Employees Health Fund (HPEHF) and how they relate to investment decisions, particularly in light of potential conflicts of interest. Fiduciary duty requires acting solely in the best interest of the beneficiaries, which includes prudence, loyalty, and avoiding self-dealing. When a trustee or a member of a governing board has a personal financial interest in a particular investment or a company from which services are procured, this creates a significant conflict of interest. The Hawaii Revised Statutes, particularly those governing public trust funds and fiduciaries, mandate that such conflicts must be managed to prevent them from influencing decisions. This often involves disclosure, recusal from voting, or abstention from participation in discussions and decisions where a conflict exists. The HPEHF, as a public employee benefit fund, is subject to strict oversight to ensure that investment strategies and administrative decisions prioritize the long-term financial security and well-being of its members, adhering to standards of care and loyalty that are paramount in fiduciary law. The core principle is that the fund’s assets and decisions must be free from any taint of personal gain or undue influence that could compromise the beneficiaries’ interests. Therefore, a trustee with a direct financial stake in a proposed investment manager’s firm would be obligated to recuse themselves from the decision-making process concerning that manager’s selection to uphold their fiduciary responsibilities.

The Hawaii Public Employees Retirement System (HI PERS) operates under specific statutory provisions that govern its investment practices. Hawaii Revised Statutes (HRS) Chapter 88 outlines the framework for the Employees’ Retirement System of the State of Hawaii. Specifically, HRS §88-114 addresses the investment of retirement funds. This statute mandates that the Board of Trustees of HI PERS shall invest the assets of the system in accordance with the prudent investor rule, as defined by HRS §36-43. The prudent investor rule requires that fiduciaries invest prudently, diversify investments, and consider the purposes of the trust and the terms of the governing instruments. This rule is aligned with the Uniform Prudent Investor Act, which many US states have adopted. Therefore, HI PERS investments must adhere to the principles of diversification, risk management, and acting in the sole interest of the participants and beneficiaries. The specific percentage allocation to different asset classes is determined by the Board’s investment policy, which is itself guided by these statutory mandates. The question probes the fundamental legal basis for HI PERS investment decisions, which is rooted in the prudent investor standard and the statutory duty to diversify and act in the best interest of beneficiaries.

The Hawaii Public Employees Retirement System (HPERS) is governed by Hawaii Revised Statutes (HRS) Chapter 303. Specifically, HRS §303-10 details the conditions under which a member can receive a retirement allowance. A member who has attained the age of 55 and has completed at least five years of credited service is eligible for a normal retirement allowance. This foundational rule ensures that individuals have contributed a minimum period to the system and reached a certain age threshold before accessing their full retirement benefits. The question probes the understanding of these basic eligibility criteria for a normal retirement, which is a cornerstone of defined benefit pension plans like HPERS. The scenario presented involves a member who has met the service requirement but not the age requirement, thus making them ineligible for a normal retirement allowance at that specific juncture. The explanation of the eligibility criteria under HRS §303-10 is crucial for understanding why the member cannot yet claim their normal retirement benefit. This statute sets the minimum age and service requirements for accessing retirement benefits without actuarial reduction, distinguishing it from early retirement options which may involve such reductions.

The Hawaii Public Employees Retirement System (PERS) is governed by Hawaii Revised Statutes (HRS) Chapter 386, which outlines the rights and responsibilities of members, employers, and the system itself. When a member of the Employees’ Retirement System of the State of Hawaii (ERS) separates from service and is eligible for a retirement benefit, they have several options regarding the payment of that benefit. These options are designed to provide flexibility based on the member’s individual circumstances and beneficiary designations. The law specifies that a member may elect to receive their retirement allowance as a single life annuity, or they may choose a joint and survivor annuity. A joint and survivor annuity typically involves payments continuing to a designated beneficiary after the member’s death. The amount of the benefit under a joint and survivor option is adjusted actuarially to reflect the longer expected payout period. The critical aspect here is that once a retirement allowance option is elected and payments commence, it generally becomes irrevocable. This irrevocability is a fundamental principle to ensure the actuarial soundness and administrative stability of the pension system. Therefore, any election made at the time of retirement, particularly concerning the form of annuity and beneficiary designations, must be carefully considered by the member, as subsequent changes are typically not permitted under the law. The system relies on these elections to accurately calculate and disburse benefits throughout the member’s and their beneficiary’s lifetimes.

The Hawaii Public Employees Retirement System (HPERS) is governed by Hawaii Revised Statutes (HRS) Chapter 302A, which outlines the rules for retirement, disability, and survivor benefits for eligible public employees. Specifically, HRS §302A-421 addresses the calculation of retirement allowances for members who have elected to receive their retirement benefit as a single life annuity, payable throughout their lifetime. This statute provides the framework for determining the monthly benefit amount based on factors such as credited service, average final compensation, and the member’s age at retirement. The calculation involves a formula that multiplies the member’s credited service by a retirement factor, which is then multiplied by the average final compensation. The average final compensation is typically the highest average of compensation earned over a specified period of consecutive months of service. The retirement factor is determined by the member’s age at retirement, with younger retirees generally receiving a lower monthly benefit for the same amount of credited service and average final compensation because their benefit is expected to be paid over a longer period. For instance, a member retiring at age 60 with 30 years of service and an average final compensation of \$75,000 would have their annual retirement allowance calculated based on the specific retirement factor for age 60 as stipulated in the statute. If, for example, the retirement factor for age 60 is 2.0% per year of service, the annual allowance would be calculated as 30 years * 2.0% * \$75,000. This results in an annual allowance of \$45,000, or \$3,750 per month. The question tests the understanding of how different retirement ages, with identical credited service and average final compensation, would result in varying monthly payouts due to the application of age-dependent retirement factors designed to actuarially equalize the present value of benefits paid over different life expectancies. This aligns with the principle of providing a consistent lifetime income stream.

The question concerns the fiduciary responsibilities under the Hawaii Public Employees Retirement System (PERS) and how they are impacted by a new state statute that retroactively alters benefit calculation methodologies. Specifically, it probes the legal implications for a PERS trustee when a legislative act changes the formula for calculating pension benefits for existing retirees. The core legal principle at play is the protection of vested retirement benefits, which in many jurisdictions, including Hawaii, are considered contractual rights that cannot be unilaterally impaired by subsequent legislation, especially in a way that diminishes the benefit amount. While the state legislature has the authority to establish and amend pension systems, such amendments generally cannot retroactively reduce benefits that have already been earned or vested. A trustee’s fiduciary duty requires them to act in the best interest of the beneficiaries (the retirees and future retirees). Therefore, a trustee would be obligated to challenge or refuse to implement a law that demonstrably reduces vested benefits, as this would violate their duty to protect the assets and promised benefits of the system. The trustee’s actions must align with established legal precedent regarding vested rights in public pensions, which often draws from interpretations of contract law and due process. The trustee’s fiduciary obligation is not to follow legislative directives that infringe upon these established rights but to uphold the integrity of the pension system for its members, even if it means opposing legislative changes.

The Hawaii Public Employees Retirement System (PERS) is governed by Hawaii Revised Statutes (HRS) Chapter 386, which outlines the rights, benefits, and obligations of its members. Specifically, HRS §386-53 addresses the determination of average final compensation (AFC), a critical component in calculating retirement allowances. The AFC is generally based on the highest average earnable compensation of the member over a specified period of consecutive months of credited service. For members of the Employees’ Retirement System of the State of Hawaii, this period is typically the highest 36 consecutive months of credited service. However, the statute allows for certain adjustments or considerations. In the context of a member whose service is interrupted by a period of leave without pay, the determination of AFC must account for these periods. HRS §386-53(b) specifies that if a member has a period of leave without pay, the AFC calculation may exclude such periods, and the compensation for the remaining periods of service may be used to establish the AFC, provided that the periods of service used for the calculation are consecutive and meet the statutory duration requirement. This ensures that periods of unpaid leave do not unfairly depress the calculated average final compensation. The core principle is to base the retirement benefit on actual periods of compensated service that reflect the member’s earning history.

The scenario involves a public employee in Hawaii who is a member of the Employees’ Retirement System (ERS). The question hinges on understanding the specific provisions of Hawaii Revised Statutes (HRS) Chapter 88, particularly regarding the treatment of service credit purchases and their impact on retirement benefits. In this case, the employee purchased service credit for a period of non-contributory service. According to HRS §88-63, the purchase of service credit for periods of non-contributory service typically involves the employee paying the actuarial cost of that service. This cost is determined by actuarial valuations and is designed to ensure the retirement system remains adequately funded. The employee’s election to purchase this service credit means that this period will be counted towards their credited service for retirement eligibility and benefit calculation. The benefit calculation for a member of the ERS is generally based on a formula that multiplies the member’s average final compensation by a retirement allowance factor and then by the total number of years of credited service. The purchase of service credit directly increases the total years of credited service. Therefore, the employee’s retirement allowance will be calculated using the increased credited service, assuming they meet other eligibility requirements such as age and years of service. The key concept here is that purchasing service credit, particularly non-contributory service, is a direct mechanism to enhance future retirement benefits by increasing the credited service years, subject to the payment of the actuarially determined cost. The legal framework in Hawaii, specifically HRS Chapter 88, governs these transactions and their impact on the defined benefit plan.

The question pertains to the fiduciary duties owed by trustees of the Hawaii Employees’ Retirement System (ERS) under Hawaii Revised Statutes (HRS) Chapter 88. Specifically, it tests the understanding of the prudent investor rule as applied to investment decisions. The prudent investor rule, as codified in HRS §88-22, requires a trustee to exercise the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. This includes diversifying investments unless it is prudent not to do so. In the scenario presented, the ERS trustee is considering an investment in a private equity fund that focuses on renewable energy projects in the Pacific Rim. Such an investment, while potentially offering attractive returns, carries inherent risks due to its illiquidity, long-term nature, and concentration in a specific sector and geographic region. A prudent trustee must conduct thorough due diligence, assessing not only the potential returns but also the risks, the fund’s management expertise, its investment strategy, and how this particular investment aligns with the overall diversification and risk tolerance of the ERS portfolio. The trustee must also consider the liquidity needs of the system and the impact of such an illiquid investment on the ERS’s ability to meet its ongoing obligations. Therefore, the most prudent course of action involves a comprehensive evaluation of the investment’s risk-return profile in the context of the entire portfolio, rather than solely focusing on the potential for high returns or the specific sector’s growth prospects. The trustee’s fiduciary duty is to act in the best interest of the beneficiaries, which necessitates a balanced approach to risk and return, supported by rigorous analysis and diversification.

The scenario involves a governmental employee in Hawaii who was a member of the Employees’ Retirement System (ERS) of the State of Hawaii. The question pertains to the crediting of service for a period of leave without pay. Under Hawaii Revised Statutes (HRS) Chapter 88, specifically concerning service credits for members of the ERS, there are provisions for crediting periods of leave without pay. Generally, to receive service credit for a period of leave without pay, an employee must make a contribution to the retirement system for that period. The amount of the contribution is typically calculated based on the employee’s salary at the time of the leave and the applicable contribution rate for that membership class. For a member who was a regular member in 1971, the contribution rate would be 7.5% of their salary during the leave. If the employee’s salary during the leave was \$5,000 per month, the total salary for the 12-month period would be \$5,000/month * 12 months = \$60,000. The required contribution would then be 7.5% of \$60,000, which is \(0.075 \times \$60,000 = \$4,500\). This contribution, along with any employer contribution if applicable and specified by statute for such periods, is necessary to obtain service credit for the leave without pay. The ability to purchase this service credit is a benefit provided by the ERS to members, allowing them to enhance their retirement benefits by covering periods when they were not actively contributing through payroll deductions. The specific rules for purchasing service credit for leave without pay are detailed in HRS §88-55 and related administrative rules. This process ensures that periods of approved absence are recognized for retirement purposes, subject to the member’s financial participation.