Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 2879 entitled:

begs leave to report as follows:

The purpose of this measure is to amend the law relating to the Employees' Retirement System (ERS) to conform to the requirements of section 401(a) of the Internal Revenue Code (IRS) of 1986, as amended, by:

Testimony in support of this measure was submitted by the ERS.

Your Committee finds that certain provisions are required to be included in the pension plans of state and local governments, pursuant to section 401(a) of the IRC of 1986, as amended. However, some of these required provisions are not provided for under the current statutory law or pursuant to the rules adopted by the ERS Board of Trustees. Your Committee determines that in order to ensure that the tax-qualified status of the ERS is not further placed in jeopardy, the law must be amended to remain in compliance with the IRC.

Your Committee has amended this measure by making technical, nonsubstantive amendments for purposes of clarity and style.

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2879, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2879, S.D. 1, and be referred to the Committee on Ways and Means.