The state Employees' Retirement System has filed a motion in Circuit Court asking to join a police union's $350 million class-action lawsuit against the state over its withholding of contributions to ERS's pension fund. Retirement system
wants in on suit
By Dave Segal
dsegal@starbulletin.comIn seeking to join the suit, ERS wants to make sure the court addresses the withholding issue so the pension system remains sound in the future. The ERS fund provides retirement, disability and survivor benefits for 96,000 county and state employees, retirees and their beneficiaries.
"Simply ordering the state to pay money back into the system will not necessarily ensure that something similar couldn't happen in the future," said Special Deputy Attorney General Jim Duffy, ERS's lead attorney.
"The (ERS) trustees feel the court should establish standards for future contributions to assure stability and actuarial soundness of the system."
The suit by the State of Hawaii Organization of Police Officers alleges the state improperly diverted about $347 million from the retirement system and violated pensioners' constitutional rights to a financially sound retirement system.
In October the court allowed the city to join the state in defending the suit. A ruling on ERS's motion is expected shortly after the parties file their pleadings.
Peter Gruenstein, attorney for SHOPO, said he was pleased to see the retirement system make a move to join the suit.
"We have been urging the ERS since the filing of the lawsuit to support it to the extent that the ERS will be a vigorous advocate on behalf of the rights of its members to have their retirement system fully protected," Gruenstein said.
Gruenstein added that he expects the state's position will change once Linda Lingle takes office as governor because "during the campaign (she) expressed on a number of occasions the viewpoint that the raids on the ERS were unlawful."
As of June 30, 2001, the ERS fund was underfunded by 9.4 percent.
That number is expected to grow when audited numbers for the 2002 fiscal year are released next month.
The basis for the suit occurred in 1998, when the cash-strapped state passed legislation enabling it to use all of ERS's investment earnings over 10 percent to reduce state and county employer contributions during a two-year period, which actually continued into a third year.
The state, which has asked for the case to be dismissed, has said the Hawaii Constitution gives it the flexibility to decide how much money is put into the pension fund as long as the pensioners are ultimately paid what they are due.
A hearing on two motions by SHOPO and one by the state is set for February.
Attorney Clyde Matsui, who is representing the state, was unavailable for comment.
Hawaii Employees' Retirement System
State of Hawaii
