Monday, March 1, 2021
Hawai'i Free Press

Current Articles | Archives

Wednesday, August 10, 2016
Full Text: ERS Files Suit to Stop SB2077 ‘Catastrophe’
By News Release @ 4:06 PM :: 5552 Views :: Maui County, Health Care, Labor

Employees' Retirement System of the State of Hawaii Files Suit to Stop Implementation of Improper Benefits Election in 2016 Hawaii Laws 2nd Sp. Sess. Act 1 (S.B. 2077)

News Release from Hawaii ERS August 9, 2016

The Employees' Retirement System of the State of Hawaii (ERS) filed a lawsuit today to protect the tax exempt status of the ERS and the retirement benefits of its almost 120,000 members. The ERS sued to stop 2016 Hawaii Laws 2nd Sp. Sess. Act 1 (S.B. 2077) from taking effect because it is unconstitutional as it impairs the retirement benefits of all State and county employees and retirees.

Act 1 gives certain state employees, who are terminated due to the transfer of Hawaii Health Systems Corporation's Maui and Lanai facilities to a private entity, the option of electing a cash severance payment or certain early retirement benefits. The United States Internal Revenue Code does not allow the ERS plan to offer employees such an election. If Act 1 goes into effect, it could result in the loss of the ERS’s status as a taxqualified defined benefit pension plan under the Internal Revenue Code.

The loss of tax-qualified status by the ERS would be catastrophic for all State and county employees. The employees would no longer be able to defer the payment of taxes on employee retirement contributions. Rather, the contributions would be included in the employees’ income and taxed as normal wages when contributed. Further, the employees would be subject to federal income taxes on the portion of their benefits funded by the employer at the time that the benefits vest, instead of when they actually receive the benefits. Additionally, the employees would lose their right to the tax deferred rollover of their retirement contributions to other retirement vehicles, such as IRAs.

To prevent such a catastrophe, the ERS is asking the State court to temporarily stay the effect of Act 1 so the ERS can seek guidance from the Internal Revenue Service (IRS). If the IRS determines that any portion of Act 1 would disqualify the ERS plan, then the ERS is seeking to have the court declare those provisions unconstitutional.

This lawsuit does not address the ongoing proposed transfer of Maui Memorial Medical Center, Kula Hospital & Clinic and Lanai Community Hospital from the Hawaii Health Systems Corporation to Kaiser Permanente Hawaii. The ERS takes no position as to that transaction, and the lawsuit does not seek to prevent it.

Thomas Williams, Executive Director for the ERS, stated “As the steward of all the State and county employees’ retirement, the ERS must do everything it can to protect its beneficiaries and the fund. All we want is to make sure this statute does not have the unintended consequence of jeopardizing the ERS plan.”


ERS Info:

ERS vs. State and HHSC – Frequently Asked Questions (as of 08-09-2016)
ERS - Complaint (Filed 08-09-2016)
ERS - Letter to T. Williams from J. Tom Maloney (d. 07-07-2016)
Copy of SB 2077, CD2 

TEXT "follow HawaiiFreePress" to 40404

Register to Vote


808 Silent Majority

ACA Signups Hawaii


Alliance Defending Freedom

Aloha Pregnancy Care Center

American Council of Trustees and Alumni


Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Ballotpedia Hawaii

Better Hawaii

Blaisdell Memorial Project

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

Coffee Break

DVids Hawaii

E Hana Kakou Kelii Akina


Fix Oahu!

Follow the Money Hawaii

Frank in Hawaii

Front Page Magazine

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Life Alliance

Hawaii March for Life

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

Heritage Foundation



Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

I Vote Hawaii

If Hawaii News

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

Iowa Meets Maui

Jackson v Abercrombie

Jihad Watch

July 4 in Hawaii

Kahle v New Hope

Kakaako Cares

Kau TEA Party

Kauai Co GOP

Keep Hawaii's Heroes


Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

Middle East Forum--The Legal Project

Mililani Conservatives for Change

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

Muslim Brotherhood in America

NAMI Hawaii


National Christian Foundation Hawaii

National Parents Org Hawaii

National Wind Watch

New Hawaiian

New Zeal

NFIB Hawaii News

No GMO Means No Aloha

Northwest Economic Policy Seminar

Not Dead Yet, Hawaii

Now What I Really Think

NRA-ILA Hawaii

Oahu Alternative Transport

ObamaCare Abortion Hawaii


OHA Lies

Opt Out Today

Pacific Aviation Museum

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons

Pro-GMO Hawaii


Rental by Owner Awareness Assn

Republican Party -- Hawaii State

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

Sink the Jones Act

Statehood for Guam

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii