229
HOUSE OF REPRESENTATIVES             H.C.R. NO.            
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                     HOUSE  CONCURRENT
                        RESOLUTION

  REQUESTING THE LEGISLATIVE REFERENCE BUREAU TO REVIEW DEFINED
    CONTRIBUTION PLANS AS AN OPTION FOR PUBLIC EMPLOYEES.
 


 1        WHEREAS, Hawaii's public employees currently participate
 2   in a defined benefit plan that bases retirement benefits on a
 3   formula calculated on three variables, a person's final
 4   compensation, a percentage of the person's average final
 5   compensation, and the number of years of credited service; and
 6   
 7        WHEREAS, a defined benefit plan differs from a defined
 8   contribution plan because a defined contribution plan provides
 9   a retirement benefit based on the amount of money in the
10   employee's plan made up of any employer contribution, any
11   employee contribution, and the investment gains or losses; and
12   
13        WHEREAS, in a defined benefit plan the employer assumes
14   the risk involved in investing the plan's assets, while in a
15   defined contribution plan the employee assumes the risk of
16   investment decisions regarding his account; and
17   
18        WHEREAS, the employee in the defined contribution plan has
19   greater flexibility because the employee's plan is immediately
20   vested and therefore more portable if the employee wishes to
21   move on to another job; and
22   
23        WHEREAS, the employer in the defined contribution plan has
24   a better ability to plan for the costs of employee retirement
25   benefits because of the predictability of benefit payout and
26   the contributions and administration costs to the employer are
27   both known; and
28   
29        WHEREAS, the State of Hawaii needs to take a new look at
30   its public employee retirement system by examining the
31   possibility of offering a defined contribution plan for public
32   employees; and
33   
34        WHEREAS, while many cities and states have offered the
35   defined contribution plan to selected groups of employees such
36   as police officers, teachers, and others, only the State of

 
Page 2                                                     229
                                  H.C.R. NO.            
                                                        
                                                        


 1   Michigan has adopted a statewide defined contribution plan for
 2   its public employees; now, therefore,
 3   
 4        BE IT RESOLVED by the House of Representatives of the
 5   Twentieth Legislature of the State of Hawaii, Regular Session
 6   of 1999, the Senate concurring, that the Legislative Reference
 7   Bureau is requested to examine the issues and experience of
 8   Michigan regarding its statewide defined contribution plan; and
 9   
10        BE IT FURTHER RESOLVED that the Employees' Retirement
11   System is requested to provide needed data and advisory
12   assistance to the Legislative Reference Bureau in its
13   examination of the operation of a defined contribution plan for
14   Hawaii's public employees; and
15   
16        BE IT FURTHER RESOLVED that the Legislative Reference
17   Bureau is requested to report findings and recommendations to
18   the Legislature no later than twenty days before the convening
19   of the Regular Session of 2000; and
20   
21        BE IT FURTHER RESOLVED that certified copies of this
22   Concurrent Resolution be transmitted to the Acting Director of
23   the Legislative Reference Bureau and the Administrator of the
24   Employees' Retirement System.
25 
26 
27 
28                         OFFERED BY:  ____________________________