EMPLOYEES' RETIREMENT SYSTEM

 

Section 2. Membership in any employees' retirement system of the State or any political subdivision thereof shall be a contractual relationship, the accrued benefits of which shall not be diminished or impaired. [Ren Const Con 1978 and election Nov 7, 1978]

 

Cross References

 

Employees' retirement system, see chapter 88.

 

Attorney General Opinions

 

Board of trustees may periodically change and adopt new option factor tables applicable to all members who have not retired prior to effective date of tables. Att. Gen. Op. 82-3.

 

Case Notes

 

The non-impairment clause of this section protects not only system member accrued benefits, but also as a necessary implication, the sources for those benefits; because of this implied protection, Act 100, L 1999 violated this section by impairing the sources used to fund the constitutionally protected "accrued benefits". 114 H. 302, 162 P.3d 696.

Where employees' retirement system (ERS) trustees were alleging in lawsuit that Act 100, L 1999 was unconstitutional as being violative of this section, their claims were not "founded upon any statute of the State; or upon any regulation of an executive department; or upon any contract" and were not referred to the court by the legislature; thus, trustees' claims were not cognizable under chapter 661, and, therefore, were not subject to the statute of limitations set forth in 661-5. 114 H. 302, 162 P.3d 696.

A retired employee's health benefits that are included in a health benefits plan falls within the constitutional protection contemplated by this section inasmuch as 87A-21(b) clearly and unambiguously conditions a retired state or county government employee's eligibility for health benefits on, inter alia, being a retired member of the employees' retirement system. 122 H. 402, 228 P.3d 282 (2010).

This section evinces an intent to protect a state or county government employee's "accrued benefits" that are derived from that employee's membership in an employees' retirement system (ERS); although this section provides protection for any additional benefits that the legislature may decide to provide to state and county government employees as members of an ERS, consistent with the framers' intent, the legislature may also "reduce benefits as to persons already in the system in so far as their future services were concerned, but it could not, however, reduce the benefits attributable to past services". 122 H. 402, 228 P.3d 282 (2010).

While the accrual and extent of an employee's benefits are governed by the applicable statutory provisions of chapter 88, the duty of the employees' retirement system to pay accrued benefits is deemed to be contractual under this section; thus, a circuit court's jurisdiction under 661-1(1) over such claims is "founded upon contract", as well as statute and the circuit court did not err in rejecting defendant's contention that plaintiffs' claims were barred by sovereign immunity. 121 H. 462 (App.), 220 P.3d 1043 (2009).

 

 

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