Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Labor, to which was referred H.C.R. No. 95 entitled:

begs leave to report as follows:

The purpose of this measure is to request that the Employees' Retirement System (ERS), an ERS-contracted actuary firm, the affected human resources agencies, public safety department representatives, the Hawaii Fire Fighters Association, and the State of Hawaii Organization of Police Officers study the feasibility of a deferred retirement option plan benefit for public safety employees.

Testimony in support of this measure was submitted by the Hawaii Fire Fighters Association. The Employees' Retirement System submitted comments on the measure.

Your Committee finds that deferred retirement option plans (DROPs) have been established in other states and municipalities, and warrant further consideration. A typical DROP allows eligible employees to "retire" on paper. Employers no longer make contributions to the ERS on behalf of the member and the member stops making the 12.2 percent contribution to the ERS. The member's retirement benefit allowance is calculated based on the date of enrollment, and no additional years of service will be credited to the calculation of the retirement allowance. The amount that is entitled to the member at the time of enrollment of the plan will be placed into a deferred retirement plan. DROPs may help with the recruitment and retention of public safety employees, and may result in savings for the employer during the DROP period.

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee concurs with the intent and purpose of H.C.R. No. 95, and recommends its adoption.