STAND. COM. REP. NO.1173

Honolulu, Hawaii

, 2003

RE: H.B. No. 130

H.D. 1

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Labor, to which was referred H.B. No. 130, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO PENSION AND RETIREMENT SYSTEMS,"

begs leave to report as follows:

The purpose of this measure is to require spousal or reciprocal beneficiary consent to any retirement benefit option selected by a member of the Employees' Retirement System (ERS).

This measure also selects Option 2 for spouses or reciprocal beneficiaries of contributory members, or Option B for spouses or reciprocal beneficiaries of noncontributory members, when a spouse or reciprocal beneficiary refuses to consent to a member's election of a benefit option, thereby entitling the spouse or reciprocal beneficiary to an annuity of an unspecified percentage of the allowance received by the member prior to death.

The Hawaii Civil Rights Commission and the Hawaii State Commission on the Status of Women submitted testimony in support of this measure.

The ERS submitted comments on this measure.

Your Committee finds that members of the ERS are presented with various options with respect to the manner in which they may receive their retirement benefits. These options range from the receipt of a lump-sum payment with no survivor benefits to the receipt of reduced payments to provide for survivor benefits. Your Committee further finds that the method of benefits payment is currently solely at the discretion of the member. Your Committee determines that the lack of spousal or reciprocal beneficiary notification or consent often results in such spouses or reciprocal beneficiaries being unaware and thus unable to protect themselves against financial hardship in the future.

However, first and foremost, your Committee is concerned with protecting the rights of the ERS members, the public employees. Your Committee is also concerned that the consent requirement may prove unduly burdensome not only for the members, but also for the ERS. In order to more appropriately balance the interests involved, your Committee believes that a notification requirement will provide spouses or reciprocal beneficiaries with ample notice, thereby allowing them to plan for their futures accordingly, as well as provide members with a requirement that is less restrictive and more easily accomplished.

Additionally, Act 128, Hawaii Session Laws of 2002, amended the law governing when a retiree's retirement becomes effective to require all members to retire on the first day of the month, or on the last day of the year, in order to facilitate the expeditious processing of pension benefits.

Your Committee finds that nine-, ten-, and eleven-month employees, elective officers, and appointees of the governor, due to their unique situations, should be allowed to specify their own date of retirement to coincide with their work obligations in order to preserve their benefits. This measure accommodates these unique employees by exempting them from the timeframe requirements, thus enabling them to select their own retirement date.

Your Committee has amended this measure as follows:

(1) By removing the requirement that a member obtain the consent of a spouse or reciprocal beneficiary when selecting a retirement benefit option, and any consequences associated with the failure to obtain consent;

(2) By including the requirement that a member provide notice to a spouse or reciprocal beneficiary when selecting a retirement benefit option;

(3) By including language that indicates that the ERS board of trustees will determine what constitutes adequate notice to a spouse or reciprocal beneficiary of the election of a retirement benefit option; and

(4) By including an amendment to section 88-73, Hawaii Revised Statutes, which allows nine-, ten-, and eleven-month employees, elective officers, and appointees of the governor to specify the effective date of their retirement.

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 H.B. No. 130, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 130, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Labor,

____________________________

BRIAN KANNO, Chair