(1) Repayment may be waived at the discretion of the board of trustees where overpayments in retirement benefits have been made through an error committed by the retirement division if it is determined that the member or beneficiary:

(A) Was without fault or knowledge;

(B) Did not participate or induce the additional payment; and

(C) There was no way under the circumstance that the member or beneficiary knew or could have known that an overpayment had been made;

(2) It is further provided that waivers shall only be granted in cases where it can be shown to the board's satisfaction that repayment would deprive the person of income required for ordinary and necessary living expenses;

(3) The board's authority to grant a waiver shall be based upon a recommendation by a preliminary review committee composed of one (1) representative from each of the following state agencies or departments:

(A) Treasury department;

(B) Office of the comptroller of the treasury; and

(C) The department of finance and administration;

(4) Waivers, where granted, shall only be valid during the lifetime of the member or beneficiary and shall not defeat the right of the state to proceed against the estate upon death; nor shall the granting of a waiver prohibit the retirement system from requiring security to assure repayment upon death;

(5) Notwithstanding anything contained herein to the contrary, overpayments of one hundred dollars ($100) or less where the error was committed by the retirement division and without fault, knowledge, or participation on the part of the person overpaid shall be reviewed by the herein designated committee and repayment may be waived; and

(6) In the event that a retired member receives an overpayment in retirement benefits from the retirement system and that member returns to service, the retirement system may initiate an automatic payroll deduction to recoup the overpaid amount. The employer shall comply with the retirement system's request for an automatic payroll deduction.