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COUNTY OF HAWAII Notes to the Basic Financial Statements June 30,2007 13. EMPLOYEE BENEFIT PLANS Pension Plan Plan description All full-time employees of the County participate in the Employees' Retirement System of the State of Hawaii(System),a cost-sharing multiple-employer defined benefit pension plan. The System was established by Chapter 88 of the Hawaii Revised Statutes(HRS)and is governed by a Board of Trustees. All contributions,benefits and eligibility requirements are established by Chapter 88,HRS,and can be amended by legislative action. The System regards the County,including its component unit,as one employer. Therefore, separate information for the primary government and its component unit is not available. All information given below on the pension plan is for the reporting entity as a whole,including both the primary government and its component unit. All of the County's full-time employees are eligible to participate in the System. The System consists of a contributory retirement plan and a noncontributory retirement plan. Eligible employees, in service and a member of the existing contributory plan on June 30, 1984,were given an option to remain in the existing plan or join the noncontributory plan,effective January 1, 1985. All new eligible employees hired after June 30, 1984 generally become members of the noncontributory plan. Both plans provide death and disability benefits and a cost of living adjustment. In the contributory plan,employees generally may elect normal retirement at age 55 with 5 or 10 years of credited service or elect early retirement at any age with 25 years of credited service. Such employees are generally entitled to retirement benefits,payable monthly for life,of 2%or 2'/z%of their average final salary,as defined,for each year of credited service with certain limitations. Benefits fully vest on reaching five years of service;retirement benefits are reduced for early retirement. In the noncontributory plan,employees may elect normal retirement at age 62 with 10 years of credited service or at age 55 with 30 years of credited service,or elect early retirement at age 55 with 20 years of credited service. Such employees are entitled to retirement benefits,payable monthly for life, of 1.25%of their average final salary,as defined, for each year of credited service. Benefits fully vest on reaching ten years of service;retirement benefits are reduced for early retirement. On July 1,2006,a new hybrid contributory plan will become effective pursuant to Act 179, Session Laws of Hawaii of 2004. Members in the hybrid plan will contribute 6%of their salary to the plan and will be eligible for retirement at age 62 with 5 years of credited service or age 55 and 30 years of credited service. Members will receive a benefit multiplier of 2% for each year of credited service in the hybrid plan. The benefit payment options are similar to the current contributory plan. Most of the new employees hired from July 1,2006 will be required to join the hybrid plan. -74-