CONFERENCE COMMITTEE REP

CONFERENCE COMMITTEE REP. NO. 122-04

Honolulu, Hawaii

, 2004

RE: S.B. No. 2879

S.D. 2

H.D. 2

C.D. 1

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 2879, S.D. 2, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO FEDERAL TAX QUALIFICATION OF THE EMPLOYEES' RETIREMENT SYSTEM,"

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this measure is to conform the Employees' Retirement System to the requirements of section 401(a) of the Internal Revenue Code of 1986, as amended.

Specifically, this measure:

(1) Incorporates the necessary provisions required for pension plans of state and local governments to qualify as tax-qualified plans under the Internal Revenue Code;

(2) Requires the Board of Trustees of the Employees' Retirement System to adopt any remaining required rules to facilitate qualification as a tax-qualified retirement plan under the Internal Revenue Code;

(3) Provides for expedited rulemaking by the Board of Trustees of the Employees' Retirement System to comply with the requirements of section 401(a) of the Internal Revenue Code of 1986, as amended;

(4) Includes a definition for the term "compensation"; and

(5) Amends the definition of "actuarial equivalent" to allow the computation of the benefit to be based upon actuarial tables and other written assumptions approved by the Board of Trustees.

Your Committee on Conference finds that pursuant to section 401(a) of the Internal Revenue Code of 1986, as amended, certain provisions are required to be included in state and local government pension plans. However, a number of these required provisions are not provided for under the current law and the rules adopted by the Board of Trustees of the Employees' Retirement System. Your Committee on Conference determines that in order to ensure that the tax-qualified status of the Employees' Retirement System is not further compromised, the law must be amended to allow the Employees' Retirement System to remain in compliance with the Internal Revenue Code.

Upon further consideration, your Committee on Conference has amended this measure by making its provisions effective upon approval, rather than on July 1, 2010.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 2879, S.D. 2, H.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 2879, S.D. 2, H.D. 2, C.D. 1.

Respectfully submitted on behalf of the managers:

ON THE PART OF THE HOUSE

ON THE PART OF THE SENATE

____________________________ MARCUS R. OSHIRO, Co-Chair		____________________________ BRIAN KANNO, Co-Chair
____________________________ DWIGHT Y. TAKAMINE, Co-Chair		____________________________ RUSSELL KOKUBUN, Co-Chair