STAND. COM. REP. NO. 227

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 211
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred S.B. No. 211 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 extend the pensioners'
bonus originally extended to retirants of the Employees'
Retirement System (ERS) under Act 339, Session Laws of Hawaii
1990, for another two years.

     Testimony in support of the measure was submitted by the
Retirees' Unit of the Hawaii Government Employees Association,
the Hawaii State Teachers Association - Retired, the Hawaii State
Teachers Association, and the Oahu Retired Teachers Association.
The ERS submitted comments on the measure.

     Your Committee finds that pensions provided by the ERS to
its retired members have cost of living increases computed on
simple interest and are not compounded.  In other words, interest
on any subsequent cost of living increases are computed on the
original amount of the pension.  This formula has caused the
pensions of many long-retired members to fall behind inflation.

     In an effort to offset this problem, the 1990 Legislature
enacted Act 339, Session Laws of Hawaii 1990, which provided an
annual bonus in addition to the annual cost of living increases
already provided to retirants under section 88-90, Hawaii Revised

 
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                                   STAND. COM. REP. NO. 227
                                   Page 2


Statutes.  Since then, subsequent Legislatures have extended the
bonus to ensure that pensions of long-retired members of the ERS
do not fall too far behind the cost of living.

     Your Committee has amended the measure by changing the
effective date to June 29, 1999, rather than upon approval, in
order to prevent the sunset provision from taking place.

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 211, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 211, S.D. 1, and be referred to the Committee on Ways and
Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Commerce and
                                   Consumer Protection,



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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