GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2013
HOUSE BILL 1195
RATIFIED BILL
AN ACT to enact anti‑pension‑spiking legislation by establishing a contribution‑based benefit cap, to allow members of the teachers' and state employees' retirement system and the local governmental employees' retirement system who leave employment within five years to receive a return of their contributions with accumulated interest, and to return to a five‑year vesting period for members of the teachers' and state employees' retirement system and the consolidated judicial retirement system who became members on or after august 1, 2011, and make a conforming change to the special separation allowance for law enforcement officers.
The General Assembly of North Carolina enacts:
SECTION 1.(a) G.S. 135‑5 is amended by adding a new subsection to read:
"(a3) Anti‑Pension‑Spiking Contribution‑Based Benefit Cap. – Notwithstanding any other provision of this section, every service retirement allowance provided under this section for members who retire on or after January 1, 2015, is subject to adjustment pursuant to a contribution‑based benefit cap under this subsection. The Board of Trustees shall adopt a contribution‑based benefit cap factor recommended by the actuary, based upon actual experience, such that no more than three‑quarters of one percent (0.75%) of retirement allowances are expected to be capped. The Board of Trustees shall modify such factors every five years, as shall be deemed necessary, based upon the five‑year experience study as required by G.S. 135‑6(n). Prior to establishing a service retirement allowance under this section, the Board shall:
(1) Determine an amount equal to the member's accumulated contributions as required under G.S. 135‑8(b)(1) for all years during which the member earned membership service used in the calculation of the retirement allowance that the member would receive under this section.
(2) Determine the amount of a single life annuity that is the actuarial equivalent of the amount determined under subdivision (1) of this subsection, adjusted for the age of the member at the time of retirement or, when appropriate, the age at the time of the member's death.
(3) Multiply the annuity amount determined under subdivision (2) of this subsection by the contribution‑based benefit cap factor.
(4) Determine the amount of the retirement allowance that results from the member's membership service.
The product of the multiplication in subdivision (3) of this subsection is the member's contribution‑based benefit cap. If the amount determined under subdivision (4) of this subsection exceeds the member's contribution‑based benefit cap, the member's retirement allowance shall be reduced by an amount equal to the difference between the contribution-based benefit cap and the amount determined under subdivision (4) of this subsection.
Notwithstanding the foregoing, the retirement allowance of a member with an average final compensation of less than one hundred thousand dollars ($100,000), as hereinafter indexed, shall not be subject to the contribution-based benefit cap. The minimum average final compensation necessary for a retirement allowance to be subject to the contribution-based benefit cap shall be increased on January 1 each year by the percent change between the December Consumer Price Index in the year prior to retirement and the December Consumer Price Index in the year most recently ended, calculated to the nearest tenth of a percent (0.1%), provided that this percent change is positive.
Notwithstanding the foregoing, the retirement allowance of a member who became a member before January 1, 2015, or who has not earned at least five years of membership service in the Retirement System after January 1, 2015, shall not be reduced; however, the member's last employer shall be required to make an additional contribution as specified in G.S. 135‑8(f)(2)f., if applicable."
SECTION 1.(b) G.S. 128‑27 is amended by adding a new section to read:
"(a3) Anti‑Pension‑Spiking Contribution‑Based Benefit Cap. – Notwithstanding any other provision of this section, every service retirement allowance provided under this section for members who retire on or after January 1, 2015, is subject to adjustment pursuant to a contribution‑based benefit cap under this subsection. The Board of Trustees shall adopt a contribution‑based benefit cap factor recommended by the actuary, based upon actual experience, such that no more than three‑quarters of one percent (0.75%) of retirement allowances are expected to be capped. The Board of Trustees shall modify such factors every five years, as shall be deemed necessary, based upon the five-year experience study as required by G.S. 128‑28(o).
Prior to establishing a service retirement allowance under this section, the Board shall:
(1) Determine an amount equal to the member's accumulated contributions as required under G.S. 128‑30(b)(1) for all years during which the member earned membership service used in the calculation of the retirement allowance that the member would receive under this section.
(2) Determine the amount of a single life annuity that is the actuarial equivalent of the amount determined under subdivision (1) of this subsection, adjusted for the age of the member at the time of retirement or, when appropriate, the age at the time of the member's death.
(3) Multiply the annuity amount determined under subdivision (2) of this subsection by the contribution‑based benefit cap factor.
(4) Determine the amount of the retirement allowance that results from the member's membership service.
The product of the multiplication in subdivision (3) of this subsection is the member's contribution‑based benefit cap. If the amount determined under subdivision (4) of this subsection exceeds the member's contribution‑based benefit cap, the member's retirement allowance shall be reduced by an amount equal to the difference between the contribution-based benefit cap and the amount determined under subdivision (4) of this subsection.
Notwithstanding the foregoing, the retirement allowance of a member with an average final compensation of less than one hundred thousand dollars ($100,000), as hereinafter indexed, shall not be subject to the contribution-based benefit cap. The minimum average final compensation necessary for a retirement allowance to be subject to the contribution-based benefit cap shall be increased on January 1 each year by the percent change between the December Consumer Price Index in the year prior to retirement and the December Consumer Price Index in the year most recently ended, calculated to the nearest tenth of a percent (0.1%), provided that this percent change is positive.
Notwithstanding the foregoing, the retirement allowance of a member who became a member before January 1, 2015, or who has not earned at least five years of membership service in the Retirement System after January 1, 2015, shall not be reduced; however, the member's last employer shall be required to make an additional contribution as specified in G.S. 128‑30(g)(2)b., if applicable."
SECTION 1.(c) G.S. 135‑4 is amended by adding a new subsection to read:
"(jj) Contribution‑Based Benefit Cap Purchase Provision. – If a member's retirement allowance is subject to an adjustment pursuant to the contribution‑based benefit cap established in G.S. 135‑5(a3), the retirement system shall notify the member and the member's employer that the member's retirement allowance has been capped. The retirement system shall compute and notify the member and the member's employer of the total additional amount the member would need to contribute in order to make the member not subject to the contribution‑based benefit cap. This total additional amount shall be the actuarial equivalent of a single life annuity adjusted for the age of the member at the time of retirement, or when appropriate, the age at the time of the member's death that would have had to have been purchased to increase the member's benefit to the pre‑cap level. The member shall have until 90 days after notification regarding this additional amount or until 90 days after the effective date of retirement, whichever is later, to submit a lump sum payment to the annuity savings fund in order for the retirement system to restore the retirement allowance to the uncapped amount. Nothing contained in this subsection shall prevent an employer from paying all or part of the cost of the amount necessary to restore the member's retirement allowance to the pre‑cap amount."
SECTION 1.(d) G.S. 128‑26 is amended by adding a new subsection to read:
"(y) Contribution‑Based Benefit Cap Purchase Provision. – If a member's retirement allowance is subject to an adjustment pursuant to the contribution‑based benefit cap established in G.S. 128‑27(a3), the retirement system shall notify the member and the member's employer that the member's retirement allowance has been capped. The retirement system shall compute and notify the member and the member's employer of the total additional amount the member would need to contribute in order to make the member not subject to the contribution‑based benefit cap. This total additional amount shall be the actuarial equivalent of a single life annuity adjusted for the age of the member at the time of retirement, or when appropriate, the age at the time of the member's death that would have had to have been purchased to increase the member's benefit to the pre‑cap level. The member shall have until 90 days after notification regarding this additional amount or until 90 days after the effective date of retirement, whichever is later, to submit a lump sum payment to the annuity savings fund in order for the retirement system to restore the retirement allowance to the uncapped amount. Nothing contained in this subsection shall prevent an employer from paying all or part of the cost of the amount necessary to restore the member's retirement allowance to the pre‑cap amount."
SECTION 1.(e) G.S. 135‑8(f)(2) is amended by adding a new sub‑subdivision to read:
"f. Each employer shall transmit to the Retirement System on account of each member who retires on or after January 1, 2015, having earned his last month of membership service as an employee of that employer the lump sum payment, as calculated under G.S. 135‑4(jj), that would have been necessary in order for the retirement system to restore the member's retirement allowance to the pre‑cap amount. Employers are not required to make contributions on account of any retiree who became a member on or after January 1, 2015, and who earned at least five years of membership service in the Retirement System after January 1, 2015.
Under such rules as the Board of Trustees shall adopt, the Retirement System shall report monthly to each employer a list of those members for whom the employer made a contribution to the Retirement System in the preceding month that are most likely to require an additional employer contribution should they elect to retire in the following 12 months, if applicable."
SECTION 1.(f) G.S.128‑30(g)(2) reads as rewritten:
"(2) The collections of employers' contributions shall be made as follows:
a. Upon the basis of each actuarial valuation provided herein the Board of Trustees shall annually prepare and certify to each employer a statement of the total amount necessary for the ensuing fiscal year to the pension accumulation fund as provided under subsection (d) of this section. Such employer contributions shall be transmitted to the secretary‑treasurer of the Board of Trustees together with the employee deductions as provided under sub‑subdivision b. of subdivision (1) of this subsection.
b. Each employer shall transmit to the Retirement System on account of each member who retires on or after January 1, 2015, having earned his last month of membership service as an employee of that employer the lump sum payment, as calculated under G.S. 128‑26(y), that would have been necessary in order for the retirement system to restore the member's retirement allowance to the pre‑cap amount. Employers are not required to make contributions on account of any retiree who became a member on or after January 1, 2015, and who earned at least five years of membership service in the Retirement System after January 1, 2015.
Under such rules as the Board of Trustees shall adopt, the Retirement System shall report monthly to each employer a list of those members for whom the employer made a contribution to the Retirement System in the preceding month that are most likely to require an additional employer contribution should they elect to retire in the following 12 months, if applicable."
SECTION 2.(a) G.S. 135‑5(f) reads as rewritten:
"(f) Return of
Accumulated Contributions. – Should a member cease to be a teacher or State
employee except by death or retirement under the provisions of this Chapter, he
shall upon submission of an application be paid, not earlier than 60 days from
the date of termination of service, his contributions, and if he has
attained at least five years of membership service or if termination of his
membership service is involuntary as certified by the employer, the
accumulated regular interest thereon, provided that he has not in the meantime
returned to service. Upon payment of such sum his membership in the System
shall cease and, if he thereafter again becomes a member, no credit shall be
allowed for any service previously rendered except as provided in G.S. 135‑4,
and such payment shall be in full and complete discharge of any rights in or to
any benefits otherwise payable hereunder. Upon receipt of proof satisfactory to
the Board of Trustees of the death, prior to retirement, of a member or former
member there shall be paid to such person or persons as he shall have nominated
by electronic submission prior to completing 10 years of service in a form
approved by the Board of Trustees or by written designation duly acknowledged
and filed with the Board of Trustees, if such person or persons are living at
the time of the member's death, otherwise to the member's legal
representatives, the amount of his accumulated contributions at the time of his
death, unless the beneficiary elects to receive the alternate benefit under the
provisions of (m) below. An extension service employee who made contributions
to the Local Governmental Employees' Retirement System and the Teachers' and
State Employees' Retirement System as a result of dual employment may not be
paid his accumulated contributions unless he is eligible to be paid his
accumulated contributions in both systems for the same period of service.
Pursuant to the provisions of G.S. 135‑56.2, a member who is also a member of the Consolidated Judicial Retirement System may irrevocably elect to transfer any accumulated contributions to the Consolidated Judicial Retirement System or to the Supplemental Retirement Income Plan and forfeit any rights in or to any benefits otherwise payable hereunder.
A member who is a participant or beneficiary of the Disability Income Plan of North Carolina as is provided in Article 6 of this Chapter shall not be paid a return of accumulated contributions, notwithstanding the member's status as an employee or teacher. Notwithstanding any other provision of law to the contrary, a member who is a beneficiary of the Disability Income Plan of North Carolina as provided in Article 6 of this Chapter and who is receiving disability benefits under the transition provisions as provided in G.S. 135‑112, shall not be prohibited from receiving a return of accumulated contributions as provided in this subsection."
SECTION 2.(b) G.S. 128‑27(f) reads as rewritten:
"(f) Return of
Accumulated Contributions. – Should a member cease to be an employee except by
death or retirement under the provisions of this Chapter, he shall upon
submission of an application be paid, not earlier than 60 days from the date of
termination of service, his contributions and, if he has attained at least
five years of membership service or if termination of his membership service is
involuntary as certified by the employer, and the accumulated
regular interest thereon, provided that he has not in the meantime returned to
service. Upon payment of such sum his membership in the System shall cease and,
if he thereafter again becomes a member, no credit shall be allowed for any
service previously rendered except as provided in G.S. 128‑26; and
such payment shall be in full and complete discharge of any rights in or to any
benefits otherwise payable hereunder. Upon receipt of proof satisfactory to the
Board of Trustees of the death, prior to retirement, of a member or former
member there shall be paid to such person or persons as he shall have nominated
by electronic submission prior to completing 10 years of service in a form
approved by the Board of Trustees or by written designation duly acknowledged
and filed with the Board of Trustees, if such person or persons are living at
the time of the member's death, otherwise to the member's legal
representatives, the amount of his accumulated contributions at the time of his
death, unless the beneficiary elects to receive the alternate benefit under the
provisions of (m) below. An extension service employee who made contributions
to the Local Governmental Employees' Retirement System and the Teachers' and
State Employees' Retirement System as a result of dual employment may not be
paid his accumulated contributions unless he is eligible to be paid his
accumulated contributions in both systems for the same period of service.
Pursuant to the provisions of G.S. 135‑56.2, a member who is also a member of the Consolidated Judicial Retirement System may irrevocably elect to transfer any accumulated contributions to the Consolidated Judicial Retirement System or to the Supplemental Retirement Income Plan and forfeit any rights in or to any benefits otherwise payable hereunder."
SECTION 2.(c) G.S. 120‑4.25 reads as rewritten:
"§ 120‑4.25. Return of accumulated contributions.
If a member ceases to be a member
of the General Assembly except by death or retirement, he shall, upon
submission of an application, be paid not earlier than 60 days following the
date of termination of service, the sum of his contributions if he has less
than five years of creditable service, or service the sum of his
accumulated contributions if he has five or more years of creditable
service, provided he has not in the meantime returned to service. Upon
payment of this sum his membership in the System ceases. If he becomes a member
afterwards, no credit shall be allowed for any service previously rendered
except as provided in G.S. 120‑4.14 and the payment shall be in full
and complete discharge of any rights in or to any benefits otherwise payable
under this Article. Upon receipt of proof satisfactory to the Board of Trustees
of the death, prior to retirement, of a member or former member, there shall be
paid to the person or persons he nominated by electronic submission prior to
completing 10 years of service in a form approved by the Board of Trustees or
by written designation duly acknowledged and filed with the Board of Trustees,
if the person or persons are living at the time of the member's death,
otherwise to the member's legal representatives, the amount of his accumulated
contributions at the time of his death, unless the beneficiary elects to
receive the alternate benefit under the provisions of G.S. 120‑4.28."
SECTION 2.(d) G.S. 135‑62(a) reads as rewritten:
"(a) Should a member
cease membership service otherwise than by death or retirement under the
provisions of this Article, he shall, upon submission of an application, be
paid, not earlier than 60 days from the date of termination of service, his
contributions and, if he has attained at least five years of membership
service or if termination of his membership service is involuntary as certified
by the employer, and the accumulated regular interest thereon,
provided that he has not in the meantime returned to service as a judge. Upon
payment of such accumulated contributions his membership in the Retirement
System shall cease and, if he thereafter again becomes a member, no credit
shall be allowed for any service previously rendered, except as otherwise
provided in G.S. 135‑56(b). Any such payment of a member's
accumulated contributions shall be in full and complete discharge of any rights
in or to any benefits otherwise payable under this Article."
SECTION 3.(a) G.S. 135‑3(8) reads as rewritten:
"(8) The provisions of this subsection (8) shall apply to any member whose membership is terminated on or after July 1, 1963 and who becomes entitled to benefits hereunder in accordance with the provisions hereof.
a. Notwithstanding any
other provision of this Chapter, any member who became a member prior to
August 1, 2011, and who separates from service prior to the attainment of
the age of 60 years for any reason other than death or retirement for
disability as provided in G.S. 135‑5(c), after completing 15 or more
years of creditable service, and who leaves his total accumulated contributions
in said System shall have the right to retire on a deferred retirement allowance
upon attaining the age of 60 years; provided that such member may retire only
upon electronic submission or written application to the Board of Trustees
setting forth at what time, not less than one day nor more than 120 days
subsequent to the execution and filing thereof, he desires to be retired; and
further provided that in the case of a member who so separates from service on
or after July 1, 1967, or whose account is active on July 1, 1967, or has not
withdrawn his contributions, the aforestated requirement of 15 or more years of
creditable service shall be reduced to 12 or more years of creditable service;
and further provided that in the case of a member who so separates from service
on or after July 1, 1971, or whose account is active on July 1, 1971, the
aforestated requirement of 12 or more years of creditable service shall be
reduced to five or more years of creditable service. Such deferred retirement
allowance shall be computed in accordance with the service retirement
provisions of this Article pertaining to a member who is not a law enforcement
officer or an eligible former law enforcement officer. Notwithstanding the
foregoing, any member whose services as a teacher or employee are terminated
for any reason other than retirement, who becomes employed by a nonprofit,
nonsectarian private school in North Carolina below the college level within
one year after such teacher or employee has ceased to be a teacher or employee,
may elect to leave his total accumulated contributions in the Teachers' and
State Employees' Retirement System during the period he is in the employment of
such employer; provided that he files notice thereof in writing with the Board
of Trustees of the Retirement System within five years after separation from
service as a public school teacher or State employee; such member shall be
deemed to have met the requirements of the above provisions of this subdivision
upon attainment of age 60 while in such employment provided that he is
otherwise vested.
b. In lieu of the benefits
provided in paragraph a of this subdivision (8), any member who became a
member prior to August 1, 2011, and who separates from service prior to the
attainment of the age of 60 years, for any reason other than death or
retirement for disability as provided in G.S. 135‑5(c), after
completing 20 or more years of creditable service, and who leaves his total
accumulated contributions in said System, may elect to retire on an early
retirement allowance upon attaining the age of 50 years or at any time thereafter;
provided that such member may so retire only upon electronic submission or
written application to the Board of Trustees setting forth at what time, not
less than one day nor more than 120 days subsequent to the execution and filing
thereof, he desires to be retired. Such early retirement allowance so elected
shall be equal to the deferred retirement allowance otherwise payable at the
attainment of the age of 60 years reduced by the percentage thereof indicated
below.
Age at Percentage
Retirement Reduction
59 7
58 14
57 20
56 25
55 30
54 35
53 39
52 43
51 46
50 50
b1. In lieu of the benefits
provided in paragraphs a and b of this subdivision, any member who became a
member prior to August 1, 2011, and who is a law‑enforcement officer
at the time of separation from service prior to the attainment of the age of 50
years, for any reason other than death or disability as provided in this
Article, after completing 15 or more years of creditable service in this
capacity immediately prior to separation from service, and who leaves his total
accumulated contributions in this System may elect to retire on a deferred
early retirement allowance upon attaining the age of 50 years or at any time
thereafter; provided, that the member may commence retirement only upon
electronic submission or written application to the Board of Trustees setting
forth at what time, as of the first day of a calendar month, not less than one
day nor more than 120 days subsequent to the execution and filing thereof, he
desires to commence retirement. The deferred early retirement allowance shall
be computed in accordance with the service retirement provisions of this
Article pertaining to law‑enforcement officers.
b2. In lieu of the benefits
provided in paragraphs a and b of this subdivision, any member who became a
member prior to August 1, 2011, and who is a law‑enforcement officer
at the time of separation from service prior to the attainment of the age of 55
years, for any reason other than death or disability as provided in this
Article, after completing five or more years of creditable service in this
capacity immediately prior to separation from service, and who leaves his total
accumulated contributions in this System may elect to retire on a deferred
early retirement allowance upon attaining the age of 55 years or at any time
thereafter; provided, that the member may commence retirement only upon
electronic submission or written application to the Board of Trustees setting
forth at what time, as of the first day of a calendar month not less than one
day nor more than 120 days subsequent to the execution and filing thereof, he
desires to commence retirement. The deferred early retirement allowance shall
be computed in accordance with the service retirement provisions of this Article
pertaining to law‑enforcement officers.
b3. Vested deferred
retirement allowance of members retiring on or after July 1, 1994. – In lieu of
the benefits provided in paragraphs a. and b. of this subdivision, any member who
became a member prior to August 1, 2011, and who separates from service
prior to attainment of age 60 years, after completing 20 or more years of
creditable service, and who leaves his total accumulated contributions in said
System, may elect to retire on a deferred retirement allowance upon attaining
the age of 50 years or any time thereafter; provided that such member may so
retire only upon electronic submission or written application to the Board of
Trustees setting forth at what time, not less than one day nor more than 120 days
subsequent to the execution and filing thereof, he desires to be retired. Such
deferred retirement allowance shall be computed in accordance with the service
retirement provisions of this Article pertaining to a member who is not a law
enforcement officer or an eligible former law enforcement officer.
b4. Any member who
became a member on or after August 1, 2011, and who is not a law enforcement
officer and (i) separates from service prior to the attainment of the age of 60
years, after completing 25 or more years of creditable service, and who leaves
the member's total accumulated contributions in said System, may elect to
retire on an unreduced service retirement allowance upon attaining the age of
60 years or at any time thereafter; or (ii) separates from service prior to the
attainment of the age of 50 years, after completing 20 or more years of
creditable service, and who leaves the member's total accumulated contributions
in said System, may elect to retire on an early reduced retirement allowance
upon attaining the age of 50 years or at any time thereafter; or (iii)
separates from service prior to the attainment of the age of 60 years, after
completing 10 or more years but less than 25 years of creditable service, and
who leaves the member's total accumulated contributions in said System, may
elect to retire on an early reduced retirement allowance upon attaining the age
of 60 years or at any time thereafter; or (iv) separates from service prior to
the attainment of the age of 65 years, after completing 10 or more years of
creditable service, and who leaves the member's total accumulated contributions
in said System, may elect to retire on an unreduced retirement allowance upon
attaining the age of 65 years or at any time thereafter; provided that such member
may so retire only upon electronic submission or written application to the
Board of Trustees setting forth at what time, not less than one day nor more
than 120 days subsequent to the execution and filing thereof, the member
desires to be retired.
b5. Any member who
became a member on or after August 1, 2011, who is a law enforcement officer
and (i) separates from service prior to attainment of age 50 years, after
completing 15 or more years of creditable service in this capacity, and who
leaves the member's total accumulated contributions in said System, may elect
to retire on an early reduced retirement allowance upon attaining the age of 50
years or any time thereafter; or (ii) separates from service prior to
attainment of age 55 years, after completing 10 or more years of creditable
service in this capacity, and who leaves the member's total accumulated
contributions in said System, may elect to retire on an unreduced retirement
allowance upon attaining the age of 55 years or any time thereafter; provided
that such member may so retire only upon electronic submission or written
application to the Board of Trustees setting forth at what time, not less than
one day nor more than 120 days subsequent to the execution and filing thereof,
the member desires to be retired.
…."
SECTION 3.(b) G.S. 135‑5(a) reads as rewritten:
"(a) Service Retirement Benefits.
(1) Any member who became
a member prior to August 1, 2011, may retire upon electronic submission or
written application to the Board of Trustees setting forth at what time, as of
the first day of a calendar month, not less than one day nor more than 120 days
subsequent to the execution of and filing thereof, he desires to be retired:
Provided, that the said member at the time so specified for his retirement
shall have attained the age of 60 years and have at least five years of
membership service or shall have completed 30 years of creditable service.
(1a) Any member who
became a member on or after August 1, 2011, may retire upon electronic
submission or written application to the Board of Trustees setting forth at
what time, as of the first day of a calendar month, not less than one day nor
more than 120 days subsequent to the execution of and filing thereof, the
member desires to be retired: Provided, that the said member at the time so
specified for the member's retirement shall have attained the age of 60 years
and have at least 10 years of membership service or shall have completed 30
years of creditable service.
(2) Repealed by Session Laws 1983 (Regular Session, 1984), c. 1019, s. 1.
(3) Any member who was in service October 8, 1981, who had attained 60 years of age, may retire upon electronic submission or written application to the Board of Trustees setting forth at what time, as of the first day of a calendar month, not less than one day nor more than 120 days subsequent to the execution and filing thereof, he desires to be retired.
(4) Any member who is a law‑enforcement
officer, who became a member prior to August 1, 2011, officer and
who attains age 50 and completes 15 or more years of creditable service in this
capacity or who attains age 55 and completes five or more years of creditable
service in this capacity, may retire upon electronic submission or written
application to the Board of Trustees setting forth at what time, as of the
first day of a calendar month, not less than one day nor more than 120 days
subsequent to the execution and filing thereof, he desires to be retired;
Provided, also, any member who has met the conditions herein required but does
not retire, and later becomes a teacher or an employee other than as a law‑enforcement
officer shall continue to have the right to commence retirement.
(4a) Any member who
is a law‑enforcement officer, who became a member on or after August 1,
2011, and who attains age 50 and completes 15 or more years of creditable
service in this capacity or who attains age 55 and completes 10 or more years
of creditable service in this capacity, may retire upon electronic submission
or written application to the Board of Trustees setting forth at what time, as
of the first day of a calendar month, not less than one day nor more than 120
days subsequent to the execution and filing thereof, the member desires to be
retired; Provided, also, any member who has met the conditions herein required
but does not retire, and later becomes a teacher or an employee other than as a
law‑enforcement officer shall continue to have the right to commence
retirement.
(5) Any member who is eligible for and is being paid a benefit under the Disability Income Plan as provided in G.S. 135‑105 or G.S. 135‑106 shall be deemed a member in service and may not retire under the provisions of this section. Any member who has made electronic submission or written application for long‑term or extended short‑term benefits under the Disability Income Plan as provided in G.S. 135‑105 or G.S. 135‑106, and who has been rejected by the Plan's Medical Board for a long‑term or extended short‑term benefit shall have 90 days from the date of notification of the rejection to convert his application to an early or service retirement application, provided that the member meets the eligibility requirements, effective the first day of the month following the month in which short‑term disability benefits ended or the first day of the month following the month in which any salary continuation as may be provided in G.S. 135‑104 ended, whichever is later."
SECTION 3.(c) G.S. 135‑5(a2) is repealed.
SECTION 3.(d) G.S. 135‑5(b19) reads as rewritten:
"(b19) Service Retirement
Allowance of Members Who Became a Member Prior to August 1, 2011, Retiring
on or After July 1, 2002. – Upon retirement from service in accordance with subdivision
(a)(1), (a)(4), or subsection (a) or (a1) of this section, on or
after July 1, 2002, a member shall receive the following service retirement
allowance:
.…"
SECTION 3.(e) G.S. 135‑5(b20) is repealed.
SECTION 3.(f) G.S. 135‑5(m) reads as rewritten:
"(m) Survivor's
Alternate Benefit. – Upon the death of a member in service, who became a
member prior to August 1, 2011, the beneficiary designated to receive a
return of accumulated contributions shall have the right to elect to receive in
lieu thereof the reduced retirement allowance provided by Option 2 of
subsection (g) above computed by assuming that the member had retired on the
first day of the month following the date of his death, provided that all four
of the following conditions apply:
.…"
SECTION 3.(g) G.S. 135‑5(m3) is repealed.
SECTION 3.(h) G.S. 135‑57 reads as rewritten:
"§ 135‑57. Service retirement.
(a) Any member on or after
January 1, 1974, who became a member prior to August 1, 2011, and who
has attained his fiftieth birthday and five years of membership service may
retire upon electronic submission or written application to the board of
trustees setting forth at what time, as of the first day of a calendar month,
not less than one day nor more than 120 days subsequent to the execution and
filing thereof, he desires to be retired.
(a1) Any member who
became a member on or after August 1, 2011, and who has attained the member's
fiftieth birthday and 10 years of membership service may retire upon electronic
submission or written application to the Board of Trustees setting forth at
what time, as of the first day of a calendar month, not less than one day nor
more than 120 days subsequent to the execution and filing thereof, the member
desires to be retired.
(b) Any member who is a justice or judge of the General Court of Justice shall be automatically retired as of the first day of the calendar month coinciding with or next following the later of January 1, 1974, or his attainment of his seventy‑second birthday; provided, however, that no judge who is a member on January 1, 1974, shall be forced to retire under the provisions of this subsection at an earlier date than the last day that he is permitted to remain in office under the provisions of G.S. 7A‑4.20.
(c) Any member who
terminates service on or after January 1, 1974, having accumulated five or more
years of creditable service and having become a member prior to August 1,
2011, may retire under the provisions of subsection (a) above, provided
that he shall not have withdrawn his accumulated contributions prior to the
effective date of his retirement, and the requirement of subsection (a) that
the member be in service shall not apply.
(c1) Any member
having accumulated 10 or more years of creditable service and having become a
member on or after August 1, 2011, may retire under the provisions of
subsection (a1) above, provided that the member shall not have withdrawn the
member's accumulated contributions prior to the effective date of the member's
retirement, and the requirement of subsection (a1) that the member be in
service shall not apply.
(d) Any member who was in service October 8, 1981, who had attained 50 years of age, may retire upon electronic submission or written application to the board of trustees setting forth at what time, as of the first day of a calendar month, not less than one day nor more than 120 days subsequent to the execution and filing thereof, he desires to be retired."
SECTION 3.(i) G.S. 135‑106(b) reads as rewritten:
"(b) After the commencement of benefits under this section, the benefits payable under the terms of this section during the first 36 months of the long‑term disability period shall be equal to sixty‑five percent (65%) of 1/12th of the annual base rate of compensation last payable to the participant or beneficiary prior to the beginning of the short‑term disability period as may be adjusted for percentage increases as provided under G.S. 135‑108, plus sixty‑five percent (65%) of 1/12th of the annual longevity payment to which the participant or beneficiary would be eligible, to a maximum of three thousand nine hundred dollars ($3,900) per month reduced by any primary Social Security disability benefits to which the beneficiary may be entitled, effective as of the first of the month following the month of initial entitlement, and by monthly payments for Workers' Compensation to which the participant or beneficiary may be entitled. When primary Social Security disability benefits are increased by cost‑of‑living adjustments, the increased reduction shall be applied in the first month following the month in which the member becomes entitled to the increased Social Security benefit. The monthly benefit shall be further reduced by the amount of any monthly payments from the federal Department of Veterans Affairs, any other federal agency or any payments made under the provisions of G.S. 127A‑108, to which the participant or beneficiary may be entitled on account of the same disability. Provided, in any event, the benefit payable shall be no less than ten dollars ($10.00) a month. However, a disabled participant may elect to receive any salary continuation as provided in G.S. 135‑104 in lieu of long‑term disability benefits; provided such election shall not extend the first 36 consecutive calendar months of the long‑term disability period. An election to receive any salary continuation for any part of any given day shall be in lieu of any long‑term benefit payable for that day, provided further, any lump‑sum payout for vacation leave shall be treated as if the beneficiary or participant had exhausted the leave and shall be in lieu of any long‑term benefit otherwise payable. Provided that, in any event, a beneficiary's benefit shall be reduced during the first 36 months of the long‑term disability period by an amount, as determined by the Board of Trustees, equal to a primary Social Security retirement benefit to which the beneficiary might be entitled.
After 36 months of long‑term disability, no further benefits are payable under the terms of this section unless the member has been approved and is in receipt of primary Social Security disability benefits. In that case the benefits payable shall be equal to sixty‑five percent (65%) of 1/12th of the annual base rate of compensation last payable to the participant or beneficiary prior to the beginning of the short‑term disability period as may be adjusted for percentage increases as provided under G.S. 135‑108, plus sixty‑five percent (65%) of 1/12th of the annual longevity payment to which the participant or beneficiary would be eligible, to a maximum of three thousand nine hundred dollars ($3,900) per month reduced by the primary Social Security disability benefits to which the beneficiary may be entitled, effective as of the first of the month following the month of initial entitlement, and by monthly payments for Workers' Compensation to which the participant or beneficiary may be entitled. When primary Social Security disability benefits are increased by cost‑of‑living adjustments, the increased reduction shall be applied in the first month following the month in which the member becomes entitled to the increased Social Security benefit. The monthly benefit shall be further reduced by the amount of any monthly payments from the federal Department of Veterans Affairs, for payments from any other federal agency, or for any payments made under the provisions of G.S. 127A‑108, to which the participant or beneficiary may be entitled on account of the same disability. Provided, in any event, the benefit payable shall be no less than ten dollars ($10.00) a month.
Notwithstanding the foregoing, but
subject to an additional integration with the five‑year and 10‑year
retirement vesting provisions as set forth in this paragraph, the long‑term
disability benefit is payable so long as the beneficiary is disabled and is in
receipt of a primary Social Security disability benefit until the earliest date
at which the beneficiary who became a member prior to August 1, 2011, is
eligible for an unreduced service retirement allowance from the Retirement
System, at which time the beneficiary would receive a retirement allowance calculated
on the basis of the beneficiary's average final compensation at the time of
disability as adjusted to reflect compensation increases subsequent to the time
of disability and the creditable service accumulated by the beneficiary,
including creditable service while in receipt of benefits under the Plan. In
the case of any long‑term disability beneficiary who became a member on
and after August 1, 2011, and ordinarily would not be eligible for a retirement
benefit without 10 years of membership service, for purposes of this conversion
from long‑term disability to service retirement, and for that purpose
only, noncontributory creditable service granted while in receipt of disability
benefits under this Article shall be deemed to be membership service, through
the completion of 10 years of combined membership and noncontributory service
on short‑term and long‑term disability benefits in total. In
the event the beneficiary has not been approved and is not in receipt of a
primary Social Security disability benefit, the long‑term disability
benefit shall cease after the first 36 months of the long‑term disability
period. When such a long‑term disability recipient begins receiving this
unreduced service retirement allowance from the System, that recipient shall
not be subject to the six‑month waiting period set forth in G.S. 135‑1(20).
However, a beneficiary shall be entitled to a restoration of the long‑term
disability benefit in the event the Social Security Administration grants a
retroactive approval for primary Social Security disability benefits with a
benefit effective date within the first 36 months of the long‑term
disability period. In such event, the long‑term disability benefit shall
be restored retroactively to the date of cessation."
SECTION 3.(j) G.S. 143‑166.41 reads as rewritten:
"§ 143‑166.41. Special separation allowance.
(a) Notwithstanding any
other provision of law, every sworn law‑enforcement officer as defined by
G.S. 135‑1(11c) or G.S. 143‑166.30(a)(4) employed by a
State department, agency, or institution prior to August 1, 2011, and who
qualifies under this section shall receive, beginning in the month in which he
retires on a basic service retirement under the provisions of G.S. 135‑5(a),
an annual separation allowance equal to eighty‑five hundredths percent
(0.85%) of the annual equivalent of the base rate of compensation most recently
applicable to him for each year of creditable service. The allowance shall be
paid in equal installments on the payroll frequency used by the employer. To
qualify for the allowance the officer shall:
(1) Have (i) completed 30 or more years of creditable service or, (ii) have attained 55 years of age and completed five or more years of creditable service; and
(2) Not have attained 62 years of age; and
(3) Have completed at least five years of continuous service as a law enforcement officer as herein defined immediately preceding a service retirement. Any break in the continuous service required by this subsection because of disability retirement or disability salary continuation benefits shall not adversely affect an officer's qualification to receive the allowance, provided the officer returns to service within 45 days after the disability benefits cease and is otherwise qualified to receive the allowance.
(a1) Notwithstanding
any other provision of law, every sworn law‑enforcement officer as
defined by G.S. 135‑1(11c) or G.S. 143‑166.30(a)(4)
employed by a State department, agency, or institution on or after August 1,
2011, and who qualifies under this section shall receive, beginning in the
month in which the member retires on a basic service retirement under the
provisions of G.S. 135‑5(a), an annual separation allowance equal to
eighty‑five hundredths percent (0.85%) of the annual equivalent of the
base rate of compensation most recently applicable to him for each year of
creditable service. The allowance shall be paid in equal installments on the
payroll frequency used by the employer. To qualify for the allowance, the
officer shall:
(1) Have (i) completed
30 or more years of creditable service or (ii) attained 55 years of age and
completed 10 or more years of creditable service; and
(2) Not have
attained 62 years of age; and
(3) Have completed
at least 10 years of continuous service as a law enforcement officer as herein
defined immediately preceding a service retirement. Any break in the continuous
service required by this subsection because of disability retirement or
disability salary continuation benefits shall not adversely affect an officer's
qualification to receive the allowance, provided the officer returns to service
within 45 days after the disability benefits cease and is otherwise qualified
to receive the allowance.
...."
SECTION 4. Sections 1 and 2 of this act become effective January 1, 2015. The remainder of this act is effective when it becomes law.
In the General Assembly read three times and ratified this the 23rd day of July, 2014.
s/ Philip E. Berger
President Pro Tempore of the Senate
s/ Paul Stam
Speaker Pro Tempore of the House of Representatives
___________________________________________
Pat McCrory
Governor
Approved __________.m. this ______________ day of ___________________, 2014