STAND. COM. REP. NO. 2765

Honolulu, Hawaii

RE:    S.B. No. 2346

       S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B. No. 2346, S.D. 1, entitled:

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

begs leave to report as follows:

     The purpose and intent of this measure is to strengthen the investment capabilities and societal responsibilities of the Employees' Retirement System.

     The measure accomplishes these objectives by:

(1)  Increasing the types of investment personnel that the Board of Trustees of the Employees' Retirement System may appoint, and to exempt, or authorize the exemption, of all investment personnel from both civil service and collective bargaining laws;

(2)  Requiring the Employees' Retirement System to pay a spouse or former spouse of a member or retirant all or a portion of the member's or retirant's benefits pursuant to a Hawaii domestic relations order; and

(3)  Appropriating funds for a claims examiner position and for planning and expenditures necessary to implement this measure.

     Your Committee received written comments on this measure from the Employees' Retirement System and the Hawaii Government Employees Association.

     Your Committee finds that seventy to eighty per cent of member and retirant benefits are attributable to investment earnings, and that the Board of Trustees of the Employees' Retirement System relies heavily on internal and external investment experts for advice.  The Employees' Retirement System believes that its current staffing structure will not meet its long term needs and will need to be augmented, given the complexity of the system's portfolios and the dynamics of modern financial markets.  This measure will ensure that the Employees' Retirement System will be able to recruit and maintain a team of seasoned and experienced investment specialists.

     Your Committee further finds that a spouse or former spouse of a member or retirant, who is authorized by a domestic relations order to receive payments from the member or retirant, must rely upon that member or retirant to send the payment.  In some cases, the member or retirant does not send the full amount due, does not send the payment in a timely manner, or does not send it at all.  This measure will ensure that the spouse or former spouse receives payments directly from the Employees' Retirement System and not from the member or retirant.

     Your Committee has amended this measure by:

     (1)  Changing the term "Hawaii domestic relations order" to "qualified domestic relations order;" and

     (2)  Making technical nonsubstantive amendments for the purposes of clarity and style.

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2346, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2346, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

________________________________

JILL N. TOKUDA, Chair