STAND. COM. REP. NO.  387

Honolulu, Hawaii

                , 2013

RE:   H.B. No. 808

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Seventh State Legislature

Regular Session of 2013

State of Hawaii

Sir:

     Your Committee on Labor & Public Employment, to which was referred H.B. No. 808 entitled:

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

begs leave to report as follows:

The purpose of this measure is to preserve the tax-qualified status of the Employees' Retirement System by providing that civil union partners are not entitled to spousal rights under the Employees' Retirement System in instances where application of those spousal rights to civil union partners would conflict with the Internal Revenue Code.

Your Committee received testimony in support of this measure from the Department of Budget and Finance and the Employees' Retirement System.

     Your Committee finds that amending spousal rights for civil union partners in chapter 88, Hawaii Revised Statutes, is necessary to preserve the tax-qualified status of the Employees' Retirement System under section 401(a) of the Internal Revenue Code.  If the Employees' Retirement System were to lose its tax-exempt status, members' contributions would be taxed at the time of contribution and at the time of vesting, instead of only at the time that a member receives retirement benefits.  Your Committee notes that this measure would not change the rights of civil union partners that are accorded to spouses under the Employees' Retirement System that are not restricted by the Internal Revenue Code.  Your Committee further finds that this measure is a compliance measure necessary to preserve the viability of the Employees' Retirement System, by protecting its tax-qualified status.

     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 H.B. No. 808 and recommends that it pass Second Reading and be referred to the Committee on Finance.

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

____________________________

MARK M. NAKASHIMA, Chair