STAND. COM. REP. NO. 316

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 834
                                        S.D. 1




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. 834 entitled: 

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

begs leave to report as follows:

     The purpose of this measure is to amend the manner in which
post retirement allowances paid by the Employees Retirement
System are calculated.

     Specifically, the measure amends the post retirement
allowance formula by compounding the cost of living increase
provided to retirants.

     Testimony in support of this measure was submitted by the
Coalition of State/County Retirees, Inc., the Hawaii State
Teachers Association, and the Public Employees Management
Association of Hawaii.  The Employees Retirement System submitted
comments on the measure.

     Your Committee finds that the Employees Retirement System
currently employs a simple interest formula to calculate existing
post retirement benefits.  This means that any post retirement
benefit owing to a member is calculated using the member's
original pension amount, then adding the product of that amount
multiplied by 2.5%.  For long time retirants, this simple
interest formula has left their pensions far behind "real world"
cost of living increases.

 
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                                   STAND. COM. REP. NO. 316
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     Although your Committee understands the fiscal problems
currently facing the State, it believes that this measure, in
addition to other related measures, should be passed on to the
Committee on Ways and Means to provide that committee with
options to remedy inequities in the State's retirement system.

     Your Committee has amended the measure by making technical
amendments to clarify its intent.

     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. 834, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 834, S.D. 1, 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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