STAND. COM. REP. NO.  785-10

Honolulu, Hawaii

                , 2010

RE:   S.B. No. 2691

      S.D. 1

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fifth State Legislature

Regular Session of 2010

State of Hawaii

Sir:

     Your Committee on Labor & Public Employment, to which was referred S.B. No. 2691, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO THE PAYMENT OF EMPLOYEES' RETIREMENT SYSTEM BENEFITS,"

begs leave to report as follows:

     The purpose of this bill is to streamline the processing of retirement benefits and provide cost savings to the State by authorizing, beginning March 1, 2011, all retirees and beneficiaries of the state Employees' Retirement System (ERS) to be paid by direct deposit.

     The ERS; Hawaii Government Employees Association, AFSCME Local 152, AFL-CIO; and United Public Workers testified in support of this bill.

     According to the ERS, requiring all ERS beneficiaries who do not currently use direct deposit to have their benefits directly deposited to their financial institution instead of receiving paper checks will save approximately $32,000 each year.  Your Committee finds that even greater streamlining and costs savings can be achieved if payments are made monthly rather than semi-monthly.  The costs savings resulting from these changes could then be used toward increasing ERS' investment earnings.

     Accordingly, your Committee has amended this bill by requiring that payments to beneficiaries be made on a monthly, rather than semimonthly basis.  Technical, nonsubstantive amendments have also been made for clarity, consistency, and style.

     Your Committee notes that concerns were raised that the changing of payment methods to retirees may present a financial burden to older retirees.  Therefore, the ERS is strongly encouraged to clearly inform those affected by these changes well in advance of the change.

     As affirmed by the record of votes of the members of your Committee on Labor & Public Employment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2691, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2691, S.D. 1, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Labor & Public Employment,

____________________________

KARL RHOADS, Chair