§88-83 - Election of retirement allowance option.

§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 retirant's death, there shall be paid to the retirant's designated
beneficiary, or otherwise to the retirant's estate the difference between:

(1) The balance of the
member's accumulated contributions at the time of the member's retirement; and

(2) The retirement
allowance and, if the retirant retired after November 30, 2004, the post
retirement allowances paid or payable to the 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. 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 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 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
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.

(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

(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 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 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 benefit
that would have been paid under section 88-84 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
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. [L 1925, c 55, §6(11); RL 1935, pt of
§7925; RL 1945, §708, subs 11; am L 1951, c 127, §2; am L 1955, c 270, §3; RL
1955, §6-50; am L 1959, c 157, §1; am L 1963, c 127, §11; am L 1964, c 62, §§6,
8; am L 1965, c 222, §§6, 9; Supp, §6-42.5; HRS §§88-74, 75; am L 1969, c 110,
pt of §1; am L 1972, c 22, §1; am L 1977, c 82, §1; am L 1982, c 115, §3; gen
ch 1985; am L 1988, c 8, §1; am L 1998, c 151, §9; am L 2003, c 182, §1; am L
2004, c 179, §12; am L 2006, c 169, §13; am L 2007, c 215, §13]

Attorney General Opinions

Change to "unisex" option factor tables valid.
Att. Gen. Op. 82-3.