STAND. COM. REP. NO. 320

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 39
                                        




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred S.B. No. 39 entitled: 

     "A BILL FOR AN ACT RELATING TO THE EMPLOYEES' RETIREMENT
     SYSTEM,"

begs leave to report as follows:

     The purpose of this measure is to allow qualified
contributory members of the Employees Retirement System to obtain
military service credit at the noncontributory pension accrual
rate.

     Specifically, the measure provides contributory members of
the Employees Retirement System who served in a qualifying
military service capacity, and who as of January 1, 1999, have
not purchased the military service credit provided in section
88-132.5, Hawaii Revised Statutes, with the option of either:

     (1)  Purchasing the military service credit at either the
          7.8% or 12.2% of current salary rate specified in
          section 88-45, Hawaii Revised Statutes, and thus
          obtaining the credit at the pension accrual rate of 2%,
          2.5%, or 3.5%, as applicable to the member's
          contributory class status; or

     (2)  Obtaining the military service credit free of charge at
          the noncontributory pension accrual rate of 1 and 1/4%
          per year.


 
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     The measure also allows the member to split the military
service credit between purchasing some contributory service
credit and obtaining some at the noncontributory rate; provided
that the splitting is done in not less than one year increments.

     Testimony in support of the measure was received from the
United Public Workers Union and two private citizens.  The Office
of Veterans Services supported the intent of the measure.  The
Employees Retirement System provided comments on the measure.

     Your Committee finds that providing contributory members
with the option to obtain military service credit at the
noncontributory rate is a fair premise in that noncontributory
members receive the military service credit at no cost.

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 39 and recommends that it pass Second Reading
and be referred to the Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Commerce and
                                   Consumer Protection,



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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