Transfers the deferred compensation program to the ERS. Requires the ERS to pay interest on penalties that are not processed and issued within ninety days of a member's retirement.

A BILL FOR AN ACT

SECTION 1. Section 88-74.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The system shall finalize a retiree's pension benefit within [six calendar months] ninety days following the [month] actual date of the retiree's retirement. For pension benefits finalized after the [sixth calendar month] ninetieth day following the [month] actual date of the retiree's retirement, an interest payment amounting to [four and one-half] eight per cent per annum shall be paid to the retiree. Interest shall be calculated on the difference between the amount the retiree is entitled to receive from the [retiree's retirement date] ninety-first day up to the day the payment is made and the amount the retiree was paid including any refund of member contributions.

Beginning January 1, 2004, or the [first day of the seventh calendar month following the month] ninety-first day following the actual date of retirement, whichever is later, interest payments calculated as simple interest shall be prorated up to the date payment is made; provided that any pension adjustment made after the retiree's pension has once been finalized shall not be subject to any interest payment.

The system shall finalize ordinary and service-connected disability retirements within [six calendar months] ninety-days following the [month] date that the member's retirement is approved by the board of trustees or the actual retirement date specified by the member, whichever is later."

SECTION 2. Section 88E-3, Hawaii Revised Statutes, is amended to read as follows:

"§88E-3 Board of trustees. (a) The authority to establish the plan and implement this chapter is vested in the board of trustees[. The board shall be placed within the department of human resources development for administrative purposes.] of the employees' retirement system of the State of Hawaii."

SECTION 3. Section 88E-4, Hawaii Revised Statutes, is repealed.

["§88E-4 Composition of the board of trustees. The board of trustees shall consist of seven members as follows:

SECTION 4. Section 88E-5, Hawaii Revised Statutes, is repealed.

["§88E-5 Appointment and terms. Except for the directors of human resources development and finance, the members of the board shall be nominated and, by and with the advice and consent of the senate, appointed by the governor and shall serve terms of four years each; provided that of the trustees first appointed upon establishment of the board one shall be appointed for one year, one shall be appointed for two years, one shall be appointed for three years, and two shall be appointed for four years.

A vacancy on the board shall be filled by appointment of the governor. The person appointed to fill a vacancy shall serve for the remainder of the unexpired term. If by the end of a term a trustee is not reappointed or a successor is not appointed, the trustee shall serve until the trustee's successor is appointed.

Membership on the board shall not be deemed incompatible with the holding of any other public employment."]

SECTION 5. Section 88E-6, Hawaii Revised Statutes, is repealed.

["[§88E-6] Compensation and expenses. Each trustee shall serve without compensation but shall be reimbursed from the fund for any necessary expense incurred in the performance of the trustee's duties."]

SECTION 6. Section 88E-7, Hawaii Revised Statutes, is repealed.

["[§88E-7] Legal advisor. The attorney general shall be the legal advisor of the board."]

SECTION 7. Section 88F-4, Hawaii Revised Statutes, is repealed.

["[§88F-4] Compensation and expenses. Each trustee shall serve without compensation but shall be reimbursed by the plan for any necessary expense incurred in the performance of the trustee's duties pertaining to the plan."]

SECTION 8. Section 88F-5, Hawaii Revised Statutes, is repealed.

["[§88F-5] Legal adviser. The attorney general shall be the legal adviser of the board."]

SECTION 9. Transfer of records. Effective July 1, 2005, all records made, used, acquired, or held by the department of human resources development relating to the functions transferred to the employees' retirement system by this Act shall be transferred with the functions to which they relate.

SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act shall take effect on July 1, 2005.