Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 741 entitled:

begs leave to report as follows:

The purpose of this measure is to authorize the Board of Trustees of the Employees' Retirement System (ERS) to include the post retirement allowance as an actuarial assumption in the calculation of a member's retirement benefit.

Testimony in support of this measure was submitted by the Employees' Retirement System, the Hawaii State Teachers Association, and the Hawaii Fire Fighters Association.

Your Committee finds that beneficiaries of the ERS are entitled to a post retirement allowance providing for a fixed annual increase in the benefits payable to them. The ERS, unlike most public pensions with similar retirement benefit provisions, does not include the effect of post retirement adjustments in the actuarial assumptions on which the actuarial equivalency of benefit options are determined. However, the effect of the post retirement allowance is one of the assumptions which the ERS' actuary utilizes to value the system's assets and liabilities. Your Committee determines that the current law should specifically authorize the Board to approve the effect of post retirement allowances as an assumption for the purpose of establishing amounts payable under the benefit options available pursuant to sections 88-83, 88-283, and 88-333, Hawaii Revised Statutes.

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. 741 and recommends that it pass Second Reading and be referred to the Committee on Ways and Means.