Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committees on Labor and Transportation, Military Affairs and Government Operations, to which was referred S.B. No. 2078 entitled:

beg leave to report as follows:

The purpose of this measure is to transfer the Deferred Compensation Program (DCP) of the Department of Human Resources Development (DHRD) to the Employees' Retirement System (ERS) and to require the ERS to pay interest on pensions that are not processed and issued within ninety days of retirement.

Testimony in support of the measure was received from the Department of Budget and Finance. The City and County of Honolulu's Police Department and the Hawaii Government Employees Association opposed the measure. The ERS submitted comments.

Your Committees find that if the DCP is transferred to the ERS as proposed under this measure, it is unclear as to who will be paying for the administration of the DCP. Although the concept of transferring the DCP to the ERS is worthy of consideration, your Committees do not believe that such a transfer should occur in the near future.

However, with regard to the requirement that the ERS pay interest on pensions that are not processed and issued within ninety days of retirement, your Committees believe that retirants should not have to wait excessively for their pensions to be finally determined and issued. Your Committees also believe that the eight percent interest penalty that accrues from the ninety-first day after a retirant retires to the date that the finalized pension is made is not unreasonable.

Your Committees have amended the measure by deleting the sections that transfer the DCP from the DHRD to the ERS.

As affirmed by the records of votes of the members of your Committees on Labor and Transportation, Military Affairs and Government Operations that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2078, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2078, S.D. 1, and be referred to the Committee on Ways and Means.