SB1118

SECTION 1. The purpose of this Act is to establish a clear statutory authority for the recovery of overpayments of employees' retirement system benefits.

Specifically, this Act:

(1) Declares overpaid member benefits to be a debt due and owing to the employees' retirement system;

(2) Authorizes the employees' retirement system to adopt rules as necessary to recover overpaid member benefits; and

(3) Provides the board of trustees or the executive director of the employees' retirement system with the discretion to waive the recovery of overpayments in cases of bona fide hardship or where the costs of recovery would exceed the amount expected to be recovered.

SECTION 2. Section 88-6, Hawaii Revised Statutes, is amended to read as follows:

"§88-6 Payment of refunds and retirement benefits. (a) Notwithstanding any other provision of this chapter:

(1) All retirees and beneficiaries of the state retirement system or county pension funds shall be paid semimonthly; provided that:

(A) All retirees and beneficiaries of the state retirement system who either retire or become beneficiaries after January 1, 2003, shall be paid monthly; and

(B) Effective July 1, 2011, all retirees and beneficiaries of the state retirement system shall be paid monthly; provided that this subparagraph shall not apply to any retiree or beneficiary who:

(i) Became a retiree or beneficiary prior to January 1, 2003;

(ii) Is eighty years of age or older on January 1, 2011; and

(iii) Receives $800 or less of pension benefits each month; and

(2) Any retiree or beneficiary of the state retirement system whose benefit commences after June 30, 2001, shall designate a financial institution account into which the system shall be authorized to deposit their retirement benefit; and effective April 1, 2011, all retirees and beneficiaries of the state retirement system shall designate a financial institution account into which the system shall be authorized to deposit their state retirement system benefits. This method of payment may be waived by the system.

(b) Any member, former employee, retirant, or beneficiary to whom accumulated contributions or a hypothetical account balance, as defined in section 88-311, is payable after June 30, 2008, [~~shall,~~] if the payment will be greater than $250 and the member, former employee, retirant, or beneficiary does not elect to rollover the payment into an eligible retirement plan, shall designate a financial institution account into which the system shall be authorized to deposit the payment. This method of payment may be waived by the system if another method is determined to be more appropriate.

(c) An overpayment of a refund or retirement benefit, including the over-issuance of a death benefit, beneficiary benefit, payment to an alternate payee, or adjustment payment shall constitute a debt due and owing to the system by the recipient of the overpayment; provided that:

(1) In addition to the remedies prescribed elsewhere in this chapter for the recovery of benefits, recovery of an overpayment shall be made to the extent allowable by federal regulations; and

(2) Nothing in this section shall preclude the board of trustees or the executive director of the system from establishing procedures to waive the recovery of overpayments in cases of bona fide hardship or where the costs of recovery would exceed the amount expected to be recovered.

(e) The system shall adopt rules pursuant to chapter 91 to effectuate the maximum recovery of retirement benefit overpayments, which shall prescribe procedures for:

(1) Recourse to the civil courts when required;

(2) The filing of liens against the real property of overpaid recipients; and

(3) The filing of claims against the estate of a deceased recipient who has received overpayments that have not be recovered."

SECTION 3. Section 88-106, Hawaii Revised Statutes, is amended to read as follows:

"§88-106 Correction of errors. Should any change or error in records result in any member, retirant, or beneficiary receiving from the system more or less than the member, retirant, or beneficiary would have been entitled to receive had the records been correct, the board of trustees shall correct the error and as far as practicable, shall adjust the payments in [~~such~~] a manner that the actuarial equivalent of the benefit to which the member, retirant, or beneficiary was correctly entitled shall be paid. Should any error in calculation or records result in any member, retirant, or beneficiary receiving from the system more than the member, retirant, or beneficiary would have been entitled to receive had the calculation or records been correct, the board of trustees shall correct the error and [~~may forgive~~] shall recover [~~any such~~] the overpayment[.] unless recovery is waived pursuant to procedures adopted under section 88-6."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1118
THIRTIETH LEGISLATURE, 2019
STATE OF HAWAII