STAND

STAND. COM. REP. NO. 1103

Honolulu, Hawaii

, 2005

RE: S.B. No. 738

S.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Labor & Public Employment, to which was referred S.B. No. 738, S.D. 1, entitled:

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

begs leave to report as follows:

The purpose of this bill is to allow the Board of Trustees of the Employees' Retirement System (ERS), under certain circumstances, to compromise or settle claims or potential claims for benefits by ERS members who detrimentally rely on erroneous information provided by ERS. A compromise or settlement would only be allowed with the approval of the Attorney General (AG) and under the following circumstances:

(1) The claim arises from a written representation made to a member concerning the member's eligibility for ERS benefits;

(2) The representation was made by an authorized ERS employee and was erroneous as to the amount or class of credited service to which the member was entitled;

(3) The member retired or terminated employment or membership in ERS in good faith and reasonable reliance on the representation; and

(4) The settlement or compromise would prevent manifest injustice.

The Board of Trustees of ERS, AG, and Hawaii State Teachers Association testified in support of this bill.

ERS may occasionally provide erroneous information to an ERS member relating to retirement or termination of government service. Based on that information, the member may wrongly believe that the member is entitled to benefits for which the member is ineligible. If such an error is discovered only after the member has taken action based on the erroneous information, correction of the error may result in significant adverse consequences to the member.

Your Committee finds that these problems can be addressed by allowing ERS, under limited circumstances, to settle or compromise such claims with the approval of the AG, thereby avoiding the costs of achieving resolution through litigation.

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 S.B. No. 738, S.D. 1, 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,

		____________________________ KIRK CALDWELL, Chair