Hawaii Revised Statutes
88. Pension and Retirement Systems
88-81 Average final compensation.

§88-81 Average final compensation. (a) Average final compensation is the average annual compensation, pay, or salary upon which a member has made contributions as required by parts II, VII, and VIII of this chapter.
(b) The average final compensation of members shall be calculated as follows:
(1) For employees who become members before January 1, 1971:
(A) During the member's five highest paid years of credited service, including vacation pay, or the three highest paid years of credited service excluding vacation pay, whichever is greater; or
(B) If the member has fewer than three years of credited service, during the member's actual years of credited service;
(2) For employees who become members after December 31, 1970, but before July 1, 2012:
(A) During the member's three highest paid years of credited service, excluding vacation pay; or
(B) If the member has fewer than three years of credited service, during the member's actual years of credited service; and
(3) For employees who become members after June 30, 2012:
(A) During the member's five highest paid years of credited service, excluding vacation pay; or
(B) If the member has fewer than five years of credited service, during the member's actual years of credited service.
(c) In computing the compensation of a judge, the compensation paid to the judge by the United States as well as by the Territory shall be included.
(d) For service rendered as a member of the legislature from and after November 5, 1968, the actual annual salary of a member shall be the only amount used for determining the member's average final compensation. For service rendered as a member of the legislature prior to November 5, 1968, and after admission of this State into the Union, the annual compensation of a member shall be computed, for the purpose of determining the member's average final compensation, as follows:
(1) During a year in which a general session was held, it shall be deemed to have been an amount equal to four times the salary of a member of the legislature for a general session; and
(2) During a year in which a budget session was held, it shall be deemed to have been an amount equal to six times the salary of a member of the legislature for a budget session.
For service rendered as a member of the legislature prior to the admission of this State into the Union, the annual compensation of a member shall be deemed to have been four times the salary of a member of the legislature for a regular session for each year during the member's term of office.
(e) If a member, who became a member before July 1, 2012, has credited service rendered as an elective officer or as a legislative officer, the member's average final compensation shall be computed separately for each category of service as follows:
(1) For the three highest paid years of credited service as an elective officer, or if the member has fewer than three years of credited service in that capacity, then the member's actual years of credited service;
(2) For the three highest paid years of credited service as a legislative officer, or if the member has fewer than three years of credited service in that capacity, then the member's actual years of credited service;
(3) For the three highest paid years of credited service as a judge, or if the member has fewer than three years of credited service in that capacity, then the member's actual years of credited service; and
(4) For the three highest paid years of credited service not included in paragraph (1), (2), or (3), or if the member has fewer than three years of credited service in that capacity, then the member's actual years of credited service.
(f) If a member, who becomes a member after June 30, 2012, has credited service rendered as an elective officer or as a legislative officer, the member's average final compensation shall be computed separately for each category of service as follows:
(1) For the five highest paid years of credited service as an elective officer, or if the member has fewer than five years of credited service in that capacity, then the member's actual years of credited service;
(2) For the five highest paid years of credited service as a legislative officer, or if the member has fewer than five years of credited service in that capacity, then the member's actual years of credited service;
(3) For the five highest paid years of credited service as a judge, or if the member has fewer than five years of credited service in that capacity, then the member's actual years of credited service; and
(4) For the five highest paid years of credited service not included in paragraph (1), (2), or (3), or if the member has fewer than five years of credited service in that capacity, then the member's actual years of credited service. [L 1963, c 127, pt of §2; Supp, pt of §6-38; pt of HRS § §88-21 and 88-53; am L 1969, c 32, §1 and c 110, pt of §1; am L 1970, c 91, §1; am L 1997, c 374, §4; am L 2002, c 128, §7; am L 2003, c 118, §5; am L 2007, c 215, §11; am L 2011, c 163, §8; am L 2012, c 153, §2]
Attorney General Opinions
Average final compensation does not include pay for temporary summer work where no retirement contributions deducted. Att. Gen. Op. 85-10.
In general, the calculation of retirement benefits of elective officers who were elective officers on July 1, 1997, pursuant to Act 374, Session Laws of Hawaii 1997, should be made thus: the law as it existed before the effective date of Act 374 (July 1, 1997) is applied to service accrued before the effective date of the Act (i.e., elective officers can apply a high average final compensation to years of possibly multiple types of services, including elective service) and the amount derived from that calculation is added to the amount arrived at by applying the Act to service accrued after the effective date of the Act (which is segregated by service category). This results in using different average final compensations for pre- and post-Act service. Att. Gen. Op. 2000-1.

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