GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2015

H                                                                                                                                                    1

HOUSE BILL 1134

 

 

Short Title:      Admin. Changes Retirement System/Treasurer.

(Public)

Sponsors:

Representatives McNeill and Ross (Primary Sponsors).

For a complete list of sponsors, refer to the North Carolina General Assembly web site.

Referred to:

Pensions and Retirement

May 23, 2016

A BILL TO BE ENTITLED

AN ACT TO make administrative changes to the retirement system and to make other changes affecting the state treasurer.

The General Assembly of North Carolina enacts:

SECTION 1.(a)  G.S. 58‑86‑2 is amended by adding a new subdivision to read:

"(9a)    "Killed in the line of duty" has the same meaning as in G.S. 143‑166.2(c)."

SECTION 1.(b)  G.S. 58‑86‑55 is amended by adding a new subsection to read:

"(d1)    Benefits shall be paid in the following manner when a member is killed in the line of duty and the requirements of Article 12A of Chapter 143 of the General Statutes are met:

(1)        If the member had been receiving a monthly pension fund benefit prior to being killed in the line of duty, there shall be paid to the member's principal beneficiary, if only one principal beneficiary is eligible, an amount of one hundred seventy dollars ($170.00) per month beginning the month following the member's month of death payable for 300 months or until the beneficiary's death, whichever occurs first.

(2)        If the member had been receiving a monthly pension fund benefit prior to being killed in the line of duty and the beneficiary is not payable as described in subdivision (1) of this section, a lump sum payment equal to the difference between the amount paid into the member's separate account by or on behalf of the member and the amount received by the member as a pensioner will be paid to the eligible beneficiaries, or if there are no eligible beneficiaries, shall be paid to the member's estate.

(3)        If the member had not yet begun receiving a monthly benefit prior to being killed in the line of duty, there shall be paid to the member's principal beneficiary, if only one principal beneficiary is eligible, an amount of one hundred seventy dollars ($170.00) per month beginning the month following the month the member would have attained age 55, or if the member had already attained age 55, beginning the month following the member's month of death, payable for 300 months or until the beneficiary's death, whichever occurs first.

(4)        If the member had not begun receiving a monthly benefit prior to being killed in the line of duty and the beneficiary is not payable as described in subdivision (3) of this section, a lump sum payment equal to the member's contributions will be paid to the eligible beneficiaries, or if there are no eligible beneficiaries, a return of the contributions shall be paid to the member's estate.

A beneficiary under this subsection shall not be required to make the monthly payment of ten dollars ($10.00) as required by G.S. 58‑86‑35 and G.S. 58‑86‑40 after the member has been killed in the line of duty."

SECTION 1.(c)  G.S. 58‑86‑60 reads as rewritten:

"§ 58‑86‑60.  Payments in lump sums.

The board shall direct payment in lump sums from the fund in the following cases:

(1)        To any firefighter or rescue squad worker upon the attaining of the age of 55 years, who, for any reason, is not qualified to receive the monthly retirement pension and who was enrolled as a member of the fund, an amount equal to the amount paid into the fund by him. This provision shall not be construed to preclude any active firefighter or rescue squad worker from completing the requisite number of years of active service after attaining the age of 55 years necessary to entitle the firefighter or rescue squad worker to the pension.

(2)        If any firefighter or rescue squad worker diesdies, except if the individual is killed in the line of duty, before attaining the age at which a pension is payable to the firefighter or rescue squad worker under the provisions of this Article, there shall be paid to his or her surviving spouse, or if there be no surviving spouse, to the person responsible for his or her child or children, or if there be no surviving spouse or children, then to his or her heirs at law as may be determined by the board or to his or her estate, if it is administered and there are no heirs,to the person or persons designated by the member, or if the member has not designated a beneficiary, to the surviving spouse of the deceased member, or if not survived by a designated beneficiary or spouse, to the deceased member's legal representative, an amount equal to the amount paid into the member's separate account by or on behalf of the said firefighter or rescue squad worker.

(3)        If any firefighter or rescue squad worker diesdies, except if the individual is killed in the line of duty, after beginning to receive the pension payable to the firefighter or rescue squad worker by this Article, and before receiving an amount equal to the amount paid into the fund by him or her, there shall be paid to his or her surviving spouse, or if there be no surviving spouse, then to the person responsible for his or her child or children, or if there be no surviving spouse or children, then to his or her heirs at law as may be determined by the board or to his or her estate, if it is administered and there are no heirs,to the person or persons designated by the member, or if the member has not designated a beneficiary, to the surviving spouse of the deceased retired member, or if not survived by a designated beneficiary or spouse, to the deceased retired member's legal representative, an amount equal to the difference between the amount paid into the member's separate account by or on behalf of the said firefighter or rescue squad worker and the amount received by him or her as a pensioner.

(4)        Any member who withdraws from the fund shall, upon proper application, be paid all moneys without accumulated earnings on the payments after the time they were made. A member may not purchase time under G.S. 58‑86‑45 for which he or she has received a refund."

SECTION 1.(d)  This section becomes effective July 1, 2018, and applies to benefits paid when a member is killed in the line of duty on or after that date.

SECTION 2.(a)  G.S. 58‑86‑90 reads as rewritten:

"§ 58‑86‑90.  Exemptions of pensions from attachment; rights nonassignable.

Except for the applications of the provisions of G.S. 110‑136, and in connection with a court‑ordered equitable distribution under G.S. 50‑20, the pensions provided are not subject to attachment, garnishments or judgments against the firefighter or rescue squad worker entitled to them, nor are any rights in the fund or the pensions or benefits assignable. Notwithstanding any provisions to the contrary, any overpayment of benefits to a member in a State‑administered retirement system, the Disability Salary Continuation Plan, or the Disability Income Plan of North Carolina, including any benefits paid to, or State Health Plan premiums paid on behalf of, any member who is later determined to have been ineligible for those benefits, may be offset against any retirement allowance, return of contributions, or any other right accruing under this Article to the same person, the person's estate, or designated beneficiary."

SECTION 2.(b)  G.S. 135‑5(n) reads as rewritten:

"(n)      No action shall be commenced against the State or the Retirement System by any retired member or beneficiary respecting any deficiency in the payment of benefits more than three years after such deficient payment was made, and no action shall be commenced by the State or the Retirement System against any retired member or former member or beneficiary respecting any overpayment of benefits or contributions more than three years after such overpayment was made. This subsection does not affect the right of the Retirement System to recoup overpaid benefits as provided in G.S. 135‑9."

SECTION 2.(c)  G.S. 128‑27(i) reads as rewritten:

"(i)       No action shall be commenced against the State or the Retirement System by any retired member or beneficiary respecting any deficiency in the payment of benefits more than three years after such deficient payment was made, and no action shall be commenced by the State or the Retirement System against any retired member or former member or beneficiary respecting any overpayment of benefits or contributions more than three years after such overpayment was made. This subsection does not affect the right of the Retirement System to recoup overpaid benefits as provided in G.S. 128‑31."

SECTION 2.(d)  This section becomes effective January 1, 2017.

SECTION 3.(a)  G.S. 135‑1 is amended by adding a new subdivision to read:

"(14a)  "Normal retirement age" shall mean, only for persons who became members on or after January 1, 2017:

a.         For members who are not law enforcement officers or eligible former law enforcement officers, (i) 55 years of age or older with 30 years of creditable service, (ii) 60 years of age or older with 25 years of creditable service, or (iii) 65 years of age or older with five years of membership service.

b.         For members who are law enforcement officers or eligible former law enforcement officers, 50 years of age or older with 30 years of creditable service or 55 years of age or older with five years of membership service."

SECTION 3.(b)  G.S. 135‑5(a) reads as rewritten:

"(a)      Service Retirement Benefits.

(1)        Any member 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, hethe member desires to be retired: Provided, that the said member at the time so specified for histhe member's 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)      Repealed by Session Laws 2014‑88, s. 3(b), effective July 30, 2014.

(1b)      Any member who became a member on or after January 1, 2017, 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 member at the time so specified for the member's retirement shall have attained normal retirement age.

(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 became a member prior to January 1, 2017, who is a law‑enforcement officerofficer, 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, hethe 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.

(4a)      Repealed by Session Laws 2014‑88, s. 3(b), effective July 30, 2014.

(4b)      Any member who became a member on or after January 1, 2017, who is a law enforcement officer and who has attained normal retirement age, may retire upon electronic submission or written application to 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 extension and filing thereof, the member desires to be retired; provided that 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.

.…"

SECTION 3.(c)  G.S. 135‑5(b19) reads as rewritten:

"(b19)  Service Retirement Allowance of Members Who Became Members Prior to January 1, 2017, Retiring on or After July 1, 2002. – Upon retirement from service in accordance with subsection (a) or (a1) of this section, on or after July 1, 2002, a member who became a member prior to January 1, 2017, shall receive the following service retirement allowance:

(1)        A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:

a.         If the member's service retirement date occurs on or after histhe member's 55th birthday, and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and eighty‑two hundredths percent (1.82%) of histhe member's average final compensation, multiplied by the number of years of histhe member's creditable service.

b.         If the member's service retirement date occurs on or after histhe member's 50th birthday and before histhe member's 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, histhe member's retirement allowance shall be equal to the greater of:

1.         The service retirement allowance payable under G.S. 135‑5(b19)(1)a. reduced by one‑third of one percent (1/3 of 1%) thereof for each month by which histhe member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained his or her 55th birthday; or

2.         The service retirement allowance as computed under G.S. 135‑5(b19)(1)a. reduced by five percent (5%) times the difference between 30 years and histhe member's creditable service at retirement.

(2)        A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:

a.         If the member's service retirement date occurs on or after histhe member's 65th birthday upon the completion of five years of membership service or after the completion of 30 years of creditable service or on or after histhe member's 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty‑two hundredths percent (1.82%) of his average final compensation, multiplied by the number of years of creditable service.

b.         If the member's service retirement date occurs after histhe member's 60th birthday and before histhe member's 65th birthday and prior to histhe member's completion of 25 years or more of creditable service, histhe member's retirement allowance shall be computed as in G.S. 135‑5(b19)(2)a. but shall be reduced by one‑quarter of one percent (1/4 of 1%) thereof for each month by which histhe member's retirement date precedes the first day of the month coincident with or next following histhe member's 65th birthday.

c.         If the member's early service retirement date occurs on or after histhe member's 50th birthday and before histhe member's 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, histhe member's early service retirement allowance shall be equal to the greater of:

1.         The service retirement allowance as computed under G.S. 135‑5(b19)(2)a. but reduced by the sum of five‑twelfths of one percent (5/12 of 1%) thereof for each month by which histhe member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained his or her 60th birthday, plus one‑quarter of one percent (1/4 of 1%) thereof for each month by which histhe member's 60th birthday precedes the first day of the month coincident with or next following histhe member's 65th birthday; or

2.         The service retirement allowance as computed under G.S. 135‑5(b19)(2)a. reduced by five percent (5%) times the difference between 30 years and histhe member's creditable service at retirement; or

3.         If the member's creditable service commenced prior to July 1, 1994, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 135‑5(b19)(2)b.

d.         Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1963, shall not receive less than the benefit provided by G.S. 135‑5(b)."

SECTION 3.(d)  G.S. 135‑5 is amended by adding a new subsection to read:

"(b21)  Service Retirement Allowance of Members Who Became a Member On or After January 1, 2017. – Upon retirement from service in accordance with subsection (a) or (a1) of this section, a member who became a member on or after January 1, 2017, shall receive the following service retirement allowance:

(1)        A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:

a.         If the member has attained normal retirement age, the allowance shall be equal to one and eighty‑two hundredths percent (1.82%) of the member's average final compensation, multiplied by the number of years of creditable service.

b.         If the member's service retirement date occurs on or after the member's 50th birthday, and before the member's 55th birthday, with 15 or more years of creditable service as a law enforcement officer and prior to completion of 30 years of creditable service, the member's retirement allowance shall be equal to the greater of the following amounts:

1.         The service retirement allowance payable under G.S. 135‑5(b21)(1)a. reduced by one‑third of one percent (1/3 of 1%) thereof for each month by which the member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained age 55.

2.         The service retirement allowance as computed under G.S. 135‑5(b21)(1)a. reduced by five percent (5%) multiplied by the difference between 30 years and the member's creditable service at retirement.

(2)        A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:

a.         If the member has attained normal retirement age, the allowance shall be equal to one and eighty‑two hundredths percent (1.82%) of the member's average final compensation multiplied by the number of years of creditable service.

b.         If the member's service retirement date occurs after the member's 60th birthday and before the member's 65th birthday and prior to the member's completion of 25 years or more of creditable service, the retirement allowance shall be computed as in G.S. 135‑5(b21)(2)a. but shall be reduced by one‑quarter of one percent (1/4 of 1%) thereof for each month by which the member's retirement date precedes the first day of the month coincident with or next following the member's 65th birthday.

c.         If the member's early service retirement date occurs on or after the member's 50th birthday and before the member's 60th birthday and after completion of 20 years creditable service but prior to the completion of 30 years of creditable service, the early service retirement allowance shall be equal to the greater of the following amounts:

1.         The service retirement allowance as computed under G.S. 135‑5(b21)(2)a. but reduced by the sum of five‑twelfths of one percent (5/12 of 1%) thereof for each month by which the member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained age 60, plus one‑quarter of one percent (1/4 of 1%) thereof for each month by which the member's 60th birthday precedes the first day of the month coincident with or next following the member's 65th birthday.

2.         The service retirement allowance as computed under G.S. 135‑5(b21)(2)a. reduced by five percent (5%) multiplied by the difference between 30 years and the member's creditable service at retirement."

SECTION 3.(e)  G.S. 135‑5 is amended by adding a new subsection to read:

"(m5)   Survivor's Alternate Benefit. – Upon the death of a member in service, who became a member on or after January 1, 2017, 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) of this section computed by assuming that the member had retired on the first day of the month following the date of the member's death, provided that all four of the following conditions apply:

(1)       a.         The member had attained such age or creditable service to be eligible to commence retirement with an early or service retirement allowance, or

b.         The member had obtained 20 years of creditable service in which case the retirement allowance shall be computed in accordance with G.S. 135‑5(b21)(1)b. or G.S. 135‑5(b21)(2)c., notwithstanding the requirement of obtaining age 50, or

b1.       The member was a law enforcement officer who had obtained 15 years of service as a law enforcement officer and was killed in the line of duty, in which case the retirement allowance shall be computed in accordance with G.S. 135‑5(b21)(1)b., notwithstanding the requirement of obtaining age 50.

(2)        At the time of the member's death, one and only one beneficiary is eligible to receive a return of the member's accumulated contributions.

(3)        The member had not instructed the Board of Trustees in writing that the member did not wish the provisions of this subsection to apply.

(4)        The member had not commenced to receive a retirement allowance as provided under this Chapter.

For the purpose of this benefit, a member is considered to be in service at the date of death if the member's death occurs within 180 days from the last day of the member's actual service. The last day of actual service shall be determined as provided in subsection (l) of this section. Upon the death of a member in service, the surviving spouse may make all purchases for creditable service as provided for under this Chapter for which the member had made application in writing prior to the date of death, provided that the date of death occurred prior to or within 60 days after notification of the cost to make the purchase. The term "in service" as used in this subsection includes a member in receipt of a benefit under the Disability Income Plan as provided in Article 6 of this Chapter.

Notwithstanding the foregoing, a member who is in receipt of Workers' Compensation during the period for which the member would have otherwise been eligible to receive short‑term benefits, as provided in G.S. 135‑105, and who dies on or after 181 days from the last day of the member's actual service but on or before the date the benefits as provided in G.S. 135‑105 would have ended, shall be considered in service at the time of the member's death for the purpose of this benefit.

For the purpose of calculating this benefit, any terminal payouts made after the date of death that meet the definition of compensation shall be credited to the month prior to the month of death. These terminal payouts do not include salary or wages paid for work performed during the month of death."

SECTION 3.(f)  G.S. 128‑21  is amended by adding a new subdivision to read:

"(14a)  "Normal retirement age" shall mean, only for persons who became members on or after January 1, 2017:

a.         For members who are not law enforcement officers or eligible former law enforcement officers, (i) 55 years of age or older with 30 years of creditable service, (ii) 60 years of age or older with 25 years of creditable service, or (iii) 65 years of age or older with five years of membership service.

b.         For members who are law enforcement officers or eligible former law enforcement officers, 50 years of age or older with 30 years of creditable service or 55 years of age or older with five years of membership service."

SECTION 3.(g)  G.S. 128‑27(a) reads as rewritten:

"(a)      Service Retirement Benefits. –

(1)        Any member 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, hethe member desires to be retired: Provided, that the said member at the time so specified for histhe member's retirement shall have attained the age of 60 years and have at least five years of creditable service or shall have completed 30 years of creditable service, or if a firefighter or rescue squad worker, hethe member shall have attained the age of 55 years and have at least five years of creditable service.

(1b)      Any member who became a member on or after January 1, 2017, 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 member at the time so specified for the member's retirement shall have attained normal retirement age.

(2)        Repealed by Session Laws 1983 (Regular Session, 1984), c. 1019, s. 1.

(3)        Repealed by Session Laws 1971, c. 325, s. 12.

(4)        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.

(5)        Any member who became a member prior to January 1, 2017, who is a law enforcement 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, hethe member desires to be retired; provided, also, any member who has met the conditions required by this subdivision but does not retire, and later becomes an employee other than as a law enforcement officer, continues to have the right to commence retirement.

(6)        Any member who became a member on or after January 1, 2017, who is a law enforcement officer and who has attained normal retirement age may retire upon electronic submission or written application to 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 extension and filing thereof, the member desires to be retired; provided that 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."

SECTION 3.(h)  G.S. 128‑27(b1) reads as rewritten:

"(b21)  Service Retirement Allowance of Member Who Became a Member Prior to January 1, 2017, Retiring on or After July 1, 2003. – Upon retirement from service in accordance with subsection (a) or (a1) above, on or after July 1, 2003, a member who became a member prior to January 1, 2017, shall receive the following service retirement allowance:

(1)        A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:

a.         If the member's service retirement date occurs on or after histhe member's 55th birthday and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and eighty‑five hundredths percent (1.85%) of histhe member's average final compensation, multiplied by the number of years of histhe member's creditable service.

b.         If the member's service retirement date occurs on or after histhe member's 50th birthday and before histhe member's 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, histhe member's retirement allowance shall be equal to the greater of:

1.         The service retirement allowance payable under G.S. 128‑27(b21)(1)a. reduced by one‑third of one percent (1/3 of 1%) thereof for each month by which histhe member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained his or her 55th birthday;

2.         The service retirement allowance as computed under G.S. 128‑27(b21)(1)a. reduced by five percent (5%) times the difference between 30 years and histhe member's creditable service at retirement.

(2)        A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:

a.         If the member's service retirement date occurs on or after histhe member's 65th birthday upon the completion of five years of creditable service or after the completion of 30 years of creditable service or on or after histhe member's 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty‑five hundredths percent (1.85%) of average final compensation, multiplied by the number of years of creditable service.

b.         If the member's service retirement date occurs after histhe member's 60th birthday and before histhe member's 65th birthday and prior to histhe member's completion of 25 years or more of creditable service, histhe member's retirement allowance shall be computed as in G.S. 128‑27(b21)(2)a. but shall be reduced by one‑quarter of one percent (1/4 of 1%) thereof for each month by which histhe member's retirement date precedes the first day of the month coincident with or next following histhe member's 65th birthday.

c.         If the member's early service retirement date occurs on or after histhe member's 50th birthday and before histhe member's 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, histhe member's early service retirement allowance shall be equal to the greater of:

1.         The service retirement allowance as computed under G.S. 128‑27(b21)(2)a. but reduced by the sum of five‑twelfths of one percent (5/12 of 1%) thereof for each month by which histhe member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained his or her 60th birthday, plus one‑quarter of one percent (1/4 of 1%) thereof for each month by which histhe member's 60th birthday precedes the first day of the month coincident with or next following histhe member's 65th birthday; or

2.         The service retirement allowance as computed under G.S. 128‑27(b21)(2)a. reduced by five percent (5%) times the difference between 30 years and histhe member's creditable service at retirement; or

3.         If the member's creditable service commenced prior to July 1, 1995, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 128‑27(b21)(2)b.

d.         Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1965, shall not receive less than the benefit provided by G.S. 128‑27(b)."

SECTION 3.(i)  G.S. 128‑27 is amended by adding a new subsection to read:

"(b22)  Service Retirement Allowance of Members Who Became a Member On or After January 1, 2017. – Upon retirement from service in accordance with subsection (a) or (a1) of this section, a member who became a member on or after January 1, 2017, shall receive the following service retirement allowance:

(1)        A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:

a.         If the member has attained normal retirement age, the allowance shall be equal to one and eighty‑five hundredths percent (1.85%) of the member's average final compensation, multiplied by the number of years of creditable service.

b.         If the member's service retirement date occurs on or after the member's 50th birthday, and before the member's 55th birthday, with 20 or more years of creditable service as a law enforcement officer and prior to completion of 30 years of creditable service, the member's retirement allowance shall be equal to the greater of the following amounts:

1.         The service retirement allowance payable under G.S. 128‑27(b22)(1)a. reduced by one‑third of one percent (1/3 of 1%) thereof for each month by which the member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained age 55.

2.         The service retirement allowance as computed under G.S. 128‑27(b22)(1)a. reduced by five percent (5%) multiplied by the difference between 30 years and the member's creditable service at retirement.

(2)        A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:

a.         If the member has attained normal retirement age, the allowance shall be equal to one and eighty‑five hundredths percent (1.85%) of the member's average final compensation multiplied by the number of years of creditable service.

b.         If the member's service retirement date occurs after the member's 60th birthday and before the member's 65th birthday and prior to the member's completion of 25 years or more of creditable service, the retirement allowance shall be computed as in G.S. 128‑27(b22)(2)a. but shall be reduced by one‑quarter of one percent (1/4 of 1%) thereof for each month by which the member's retirement date precedes the first day of the month coincident with or next following the member's 65th birthday.

c.         If the member's early service retirement date occurs on or after the member's 50th birthday and before the member's 60th birthday and after completion of 20 years creditable service but prior to the completion of 30 years of creditable service, the early service retirement allowance shall be equal to the greater of the following amounts:

1.         The service retirement allowance as computed under G.S. 128‑27(b22)(2)a. but reduced by the sum of five‑twelfths of one percent (5/12 of 1%) thereof for each month by which the member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained age 60, plus one‑quarter of one percent (1/4 of 1%) thereof for each month by which the member's 60th birthday precedes the first day of the month coincident with or next following the member's 65th birthday.

2.         The service retirement allowance as computed under G.S. 128‑27(b22)(2)a. reduced by five percent (5%) times the difference between 30 years and the member's creditable service at retirement.

3.         If the member's creditable service commenced prior to July 1, 1994, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed under G.S. 128‑27(b22)(2)b."

SECTION 3.(j)  G.S. 128‑27 is amended by adding a new subsection to read:

"(m4)   Survivor's Alternate Benefit. – Upon the death of a member in service, 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 two of subsection (g) of this section computed by assuming that the member had retired on the first day of the month following the date of the member's death, provided that all four of the following conditions apply:

(1)        a.         The member had attained such age or creditable service to be eligible to commence retirement with an early or service retirement allowance, or

b.         The member had obtained 20 years of creditable service in which case the retirement allowance shall be computed in accordance with G.S. 128‑27(b22)(1)b. or G.S. 128‑27(b22)(2)c., notwithstanding the requirement of obtaining age 50, or

b1.       The member was a law enforcement officer who had obtained 15 years of service as a law enforcement officer and was killed in the line of duty, or the member was a firefighter or a rescue squad worker who had obtained 15 years of service as a firefighter or a rescue squad worker and was killed in the line of duty, in which cases the retirement allowance shall be computed in accordance with G.S. 128‑27(b22)(1)b., notwithstanding the requirement of obtaining age 50.

(2)        At the time of the member's death, one and only one beneficiary is eligible to receive a return of the member's accumulated contributions.

(3)        The member had not instructed the Board of Trustees in writing that the member did not wish the provisions of this subsection apply.

(4)        The member had not commenced to receive a retirement allowance as provided under this Chapter.

For the purpose of this benefit, a member is considered to be in service at the date of the member's death if the death occurs within 180 days from the last day of the member's actual service. The last day of actual service shall be determined as provided in subsection (l) of this section. Upon the death of a member in service, the surviving spouse may make all purchases for creditable service as provided for under this Chapter for which the member had made application in writing prior to the date of death, provided that the date of death occurred prior to or within 60 days after notification of the cost to make the purchase.

For the purpose of calculating this benefit, any terminal payouts made after the date of death that meet the definition of compensation shall be credited to the month prior to the month of death. These terminal payouts do not include salary or wages paid for work performed during the month of death."

SECTION 3.(k)  G.S. 135‑53 is amended by adding a new subdivision to read:

"(12a)  "Normal retirement age" shall mean, only for persons who became members on or after January 1, 2017, 55 years of age or older with 30 years of creditable service or 65 years of age or older with five years of membership service."

SECTION 3.(l)  G.S. 135‑58 reads as rewritten:

"§ 135‑58.  Service retirement benefits.

...

(a6)      Any member who became a member prior to January 1, 2017, and who retires under the provisions of G.S. 135‑57(a) or G.S. 135‑57(c) on or after July 1, 2008, after the member has either attained the member's 65th birthday or has completed 24 years or more of creditable service, shall receive an annual retirement allowance, payable monthly, which shall commence on the effective date of the member's retirement and shall be continued on the first day of each month thereafter during the member's lifetime, the amount of which shall be computed as the sum of the amounts in subdivisions (1), (2), (3), (4), and (5) of this subsection, provided that in no event shall the annual allowance payable to any member be greater than an amount which, when added to the allowance, if any, to which the member is entitled under the Teachers' and State Employees' Retirement System, the Legislative Retirement System, or the Local Governmental Employees' Retirement System (prior in any case to any reduction for early retirement or for an optional mode of payment), would total three‑fourths of the member's final compensation:

(1)        Four and two hundredths percent (4.02%) of the member's final compensation, multiplied by the number of years of creditable service rendered as a justice of the Supreme Court, a judge of the Court of Appeals, or the Director of the Administrative Office of the Courts;

(2)        Three and fifty‑two hundredths percent (3.52%) of the member's final compensation, multiplied by the number of years of creditable service rendered as a judge of the superior court;

(3)        Three and two hundredths percent (3.02%) of the member's final compensation, multiplied by the number of years of creditable service rendered as a judge of the district court, district attorney, clerk of superior court, public defender, or the Director of Indigent Defense Services;

(4)        A service retirement allowance computed in accordance with the service retirement provisions of Article 3 of Chapter 128 of the General Statutes using an average final compensation as defined in G.S. 135‑53(2a) and creditable service equal to the number of years of the member's creditable service that was transferred from the Local Governmental Employees' Retirement System to this System as provided in G.S. 135‑56; and

(5)        A service retirement allowance computed in accordance with the service retirement provisions of Article 1 of this Chapter using an average final compensation as defined in G.S. 135‑53(2a) and creditable service, including any sick leave standing to the credit of the member, equal to the number of years of the member's creditable service that was transferred from the Teachers' and State Employees' Retirement System or the Legislative Retirement System to this System as provided in G.S. 135‑56.

(a7)      Any member who became a member on or after January 1, 2017, who retires under the provisions of G.S. 135‑57(a) or G.S. 135‑57(c) after the member has attained normal retirement age shall receive an annual retirement allowance, payable monthly, which shall commence on the effective date of the member's retirement and shall be continued on the first day of each month thereafter during the member's lifetime, the amount of which shall be computed as the sum of the amounts in subdivisions (1), (2), (3), (4), and (5) of this subsection, provided that in no event shall the annual allowance payable to any member be greater than an amount which, when added to the allowance, if any, to which the member is entitled under the Teachers' and State Employees' Retirement System, the Legislative Retirement System, or the Local Governmental Employees' Retirement System (prior in any case to any reduction for early retirement or for an optional mode of payment), would total three‑fourths of the member's final compensation:

(1)        Four and two hundredths percent (4.02%) of the member's final compensation, multiplied by the number of years of creditable service rendered as a justice of the Supreme Court, a judge of the Court of Appeals, or the Director of the Administrative Office of the Courts;

(2)        Three and fifty‑two hundredths percent (3.52%) of the member's final compensation, multiplied by the number of years of creditable service rendered as a judge of the superior court;

(3)        Three and two hundredths percent (3.02%) of the member's final compensation, multiplied by the number of years of creditable service rendered as a judge of the district court, district attorney, clerk of superior court, public defender, or the Director of Indigent Defense Services;

(4)        A service retirement allowance computed in accordance with the service retirement provisions of Article 3 of Chapter 128 of the General Statutes using an average final compensation as defined in G.S. 135‑53(2a) and creditable service equal to the number of years of the member's creditable service that was transferred from the Local Governmental Employees' Retirement System to this System as provided in G.S. 135‑56; and

(5)        A service retirement allowance computed in accordance with the service retirement provisions of Article 1 of this Chapter using an average final compensation as defined in G.S. 135‑53(2a) and creditable service, including any sick leave standing to the credit of the member, equal to the number of years of the member's creditable service that was transferred from the Teachers' and State Employees' Retirement System or the Legislative Retirement System to this System as provided in G.S. 135‑56.

(b)        Any member who became a member prior to January 1, 2017, who retires under the provisions of subsection (a) or subsection (c) of G.S. 135‑57 before hethe member either has attained his or her sixty‑fifth birthday or has completed 24 years of creditable service shall receive an annual retirement allowance, payable monthly, which shall commence on the effective date of histhe member's retirement and shall be continued on the first day of each month thereafter during histhe member's lifetime, the amount of which shall be determined in the same manner and be subject to the same maximum limitation as provided for in subsection (a) above except that the allowance so computed shall be reduced by one quarter of one percent (Ό of 1%) thereof for each month by which the member's retirement date precedes the first day of the month coincident with or next following the earlier of

(1)        The member's sixty‑fifth birthday or

(2)        The date the member would have completed 24 years of creditable service if hethe member had been in membership service from his or her retirement date until such date.

For the sole purpose of determining whether a member has completed the required 24 years of creditable service referred to in this subsection (b) or the date on which hethe member would have completed such period of creditable service if hethe member had remained in membership service, in the case of a member of the Teachers' and State Employees' Retirement System who became a member of this Retirement System under circumstances described in G.S. 135‑28.1, and who at the time of histhe member's retirement hereunder is in service and has retained his or her membership in the Teachers' and State Employees' Retirement System as provided for in G.S. 135‑28.1, histhe member's creditable service shall be taken as the sum of histhe member's creditable service hereunder plus the amount of creditable service remaining to histhe member's credit in such other system as provided for in G.S. 135‑28.1.

(b1)      Any member who became a member on or after January 1, 2017, who retires under the provisions of subsection (a) or subsection (c) of G.S. 135‑57 before the member has attained normal retirement age shall receive an annual retirement allowance, payable monthly, which shall commence on the effective date of the member's retirement and shall be continued on the first day of each month thereafter during the member's lifetime, the amount of which shall be determined in the same manner and be subject to the same maximum limitation as provided for in subsection (a) of this section except that the allowance so computed shall be reduced by one quarter of one percent (1/4 of 1%) thereof for each month by which the member's retirement date precedes the first day of the month coincident with or next following the month the member would have attained normal retirement age had the member continued working.

For the sole purpose of determining whether a member has completed the required 30 years of creditable service referred to in this subsection or the date on which the member would have completed such period of creditable service if the member had remained in membership service, in the case of a member of the Teachers' and State Employees' Retirement System who became a member of this Retirement System under circumstances described in G.S. 135‑28.1, and who at the time of the member's retirement hereunder is in service and has retained his or her membership in the Teachers' and State Employees' Retirement System as provided for in G.S. 135‑28.1, the member's creditable service shall be taken as the sum of the member's creditable service hereunder plus the amount of creditable service remaining to the member's credit in such other system as provided for in G.S. 135‑28.1.

…."

SECTION 3.(m)  G.S. 135‑74(c1) reads as rewritten:

"(c1)    A member who has contributions in this System and is not eligible for a retirement benefit as set forth in G.S. 135‑58(a6) or G.S. 135‑58(a7) shall be paid his or her contributions in a lump sum as provided in G.S. 135‑62 by April 1 of the calendar year following the later of the calendar year in which the member (i) attains 70 and one‑half years of age or (ii) has ceased to be a judge, district attorney, public defender, the Director of Indigent Defense Services, or clerk of superior court as provided in G.S. 135‑53, except by death. If such member fails, following reasonable notification, to complete a refund application by such required date, the requirement that a refund application be completed shall be waived and the refund shall be paid without a refund application as a single lump‑sum payment with applicable required North Carolina and federal income taxes withheld. For purposes of this subsection, a member shall not be considered to have ceased to be a judge, district attorney, public defender, the Director of Indigent Defense Services, or clerk of superior court as provided in G.S. 135‑53 if the member is actively contributing to the Teachers' and State Employees' Retirement System, Local Governmental Employees' Retirement System, or Consolidated Judicial Retirement System. A lump‑sum refund shall not be paid under this subsection if the member is actively contributing to the Teachers' and State Employees' Retirement System, Local Governmental Employees' Retirement System, or Consolidated Judicial Retirement System.

A member who has contributions in this System and is eligible for a retirement benefit as set forth in G.S. 120‑4.21 shall begin to receive a monthly benefit no later than April 1 of the calendar year following the later of the calendar year in which the member (i) attains 70 and one‑half years of age or (ii) has ceased to be a judge, district attorney, public defender, the Director of Indigent Defense Services, or clerk of superior court as provided in G.S. 135‑53, except by death. If such member fails, following reasonable notification, to complete the retirement process as set forth under Chapter 120 of the General Statutes by such required beginning date, the requirement that a retirement application and an election of payment plan form be completed shall be waived and the retirement allowance shall be paid as a single life annuity. The single life annuity shall be calculated and processed in accordance with G.S. 120‑4.21. For purposes of this subsection, a member shall not be considered to have ceased to be a judge, district attorney, public defender, the Director of Indigent Defense Services, or clerk of superior court as provided in G.S. 135‑53 if the member is actively contributing to the Teachers' and State Employees' Retirement System, Local Governmental Employees' Retirement System, or Consolidated Judicial Retirement System. A retirement benefit shall not be paid under this subsection if the member is actively contributing to the Teachers' and State Employees' Retirement System, Local Governmental Employees' Retirement System, or Consolidated Judicial Retirement System."

SECTION 3.(n)  This section becomes effective January 1, 2017.

SECTION 4.(a)  G.S. 135‑1(7b) is recodified as G.S. 135‑1(7c).

SECTION 4.(b)  G.S. 135‑1, as amended by Section 3(a) of this act, is amended by adding a new subdivision to read:

"(7b)    "Compliance investigation" shall mean an independent review or examination by Retirement Systems Division staff or authorized representatives who are assisting the Retirement Systems Division staff of records, activities, actions, or decisions by employers or other affiliated or associated entities having an impact on the Retirement System. The purpose of a compliance investigation is to help detect errors and ensure compliance and full accountability in the use of pension funds."

SECTION 4.(c)  G.S. 135‑1(11b) reads as written:

"(11b)  "Fraud investigation" means an independent review or examination by Retirement Systems Division staff or authorized representatives who are assisting the Retirement Systems Division staff of records, activities, actions, or decisions by employers or other affiliated or associated entities having an impact on the Retirement System. The purpose of a fraud investigation is to help detect and prevent fraud and to ensure full accountability in the use of pension funds."

SECTION 4.(d)  G.S. 135‑6 reads as rewritten:

"§ 135‑6.  Administration.

…

(q)        Compliance Investigations and Fraud Investigations – Access to Persons and Records. In the course of conducting a compliance investigation or a fraud investigation, the Retirement Systems Division, or authorized representatives who are assisting the Retirement Systems Division staff, shall:

(1)        Have ready access to persons and may examine and copy all books, records, reports, vouchers, correspondence, files, personnel files, investments, and any other documentation of any employer. The review of State tax returns shall be limited to matters of official business, and the Division's report shall not violate the confidentiality provisions of tax laws.

(2)        Have such access to persons, records, papers, reports, vouchers, correspondence, books, and  any other documentation that is in the possession of any individual, private corporation,  institution, association, board, or other organization that pertain to the following:

a.         Amounts received pursuant to a grant or contract from the federal government, the State, or its political subdivisions.

b.         Amounts received, disbursed, or otherwise handled on behalf of the federal government or the State.

(3)        Have the authority, and shall be provided with ready access, to examine and inspect all property, equipment, and facilities in the possession of any employer agency or any individual, private corporation, institution, association, board, or other organization that  were furnished or otherwise provided through grant, contract, or any other type of funding by  the employer agency.

With respect to the requirements of sub‑subdivision (2)b. of this subsection, providers of social and medical services to a beneficiary shall make copies of records they maintain for services provided to a beneficiary available to the Retirement Systems Division, or to the authorized representatives who are assisting the Retirement Systems Division staff. Copies of the records of social and medical services provided to a beneficiary will permit verification of the health or other status of a beneficiary as required for the payment of benefits under Article 1, Article 4, or Article 6 of this Chapter. The Retirement Systems Division, or authorized representatives who are assisting the Retirement Systems Division staff, shall request records in writing by providing the name of each beneficiary for whom records are sought, the purpose of the request, the statutory authority for the request, and a reasonable period of time for the production of record copies by the provider. A provider may charge, and the Retirement Systems Division, or authorized representatives who are assisting the Retirement Systems Division staff, shall, in accordance with G.S. 90‑411, pay a reasonable fee to the provider for copies of the records provided in accordance with this subsection.

(r)        Compliance or Fraud Investigative Reports and Work Papers. – The Director of the Retirement Systems Division shall maintain for 10 years a complete file of all compliance investigative reports, fraud investigative reports and reports of other examinations, investigations, surveys, and reviews issued under the Director's authority. Fraud or compliance investigation work papers and other evidence or related supportive material directly pertaining to the work of the Retirement Systems Division of the Department of State Treasurer shall be retained according to an agreement between the Director of Retirement and State Archives. To promote intergovernmental cooperation and avoid unnecessary duplication of fraud and compliance investigative effort, and notwithstanding local unit personnel policies to the contrary, pertinent work papers and other supportive material relating to issued fraud or compliance investigation reports may be, at the discretion of the Director of Retirement and unless otherwise prohibited by law, made available for inspection by duly authorized representatives of the State and federal government who desire access to and inspection of such records in connection with some matter officially before them, including criminal investigations. Except as provided in this section, or upon an order issued in Wake County Superior Court upon 10 days' notice and hearing finding that access is necessary to a proper administration of justice, fraud and compliance investigation work papers and related supportive material shall be kept confidential, including any information developed as a part of the investigation.

...."

SECTION 4.(e)  G.S. 128‑21(7b) is recodified as G.S. 128‑21(7c).

SECTION 4.(f)  G.S. 128‑21, as amended by Section 3(e) of this act, is amended by adding a new subdivision to read:

"(7b)    "Compliance investigation" shall mean an independent review or examination by Retirement Systems Division staff or authorized representatives who are assisting the Retirement Systems Division staff of records, activities, actions, or decisions by employers or other affiliated or associated entities having an impact on the Retirement System. The purpose of a compliance investigation is to help detect errors and ensure compliance and full accountability in the use of pension funds."

SECTION 4.(g)  G.S. 128‑21(11c) reads as rewritten:

"(11c)  "Fraud investigation" means an independent review or examination by Retirement Systems Division staff or authorized representatives who are assisting the Retirement Systems Division staff of records, activities, actions, or decisions by employers or other affiliated or associated entities having an impact on the Retirement System. The purpose of a fraud investigation is to help detect and prevent fraud and to ensure full accountability in the use of pension funds."

SECTION 4.(h)  G.S. 128‑28 reads as rewritten:

"§ 128‑28.  Administration and responsibility for operation of System.

…

(r)        Fraud Investigations and Compliance Investigations – Access to Persons and Records. – In the course of conducting a fraud investigation or compliance investigation, the Retirement Systems Division, or authorized representatives who are assisting the Retirement Systems Division staff, shall:

(1)        Have ready access to persons and may examine and copy all books, records, reports, vouchers, correspondence, files, personnel files, investments, and any other documentation of any employer. The review of State tax returns  shall be limited to matters of official business, and the Division's report shall not violate the confidentiality provisions of tax laws.

(2)        Have such access to persons, records, papers, reports, vouchers, correspondence, books, and any other documentation that is in the possession of any individual, private corporation, institution, association, board, or other organization which pertain to the following:

a.         Amounts received pursuant to a grant or contract from the federal government, the State, or its political subdivisions.

b.         Amounts received, disbursed, or otherwise handled on behalf of the federal government or the State.

(3)        Have the authority, and shall be provided with ready access, to examine and inspect all property, equipment, and facilities in the possession of any employer agency or any individual, private corporation, institution, association, board, or other organization that were furnished or otherwise provided through grant, contract, or any other type of funding by the employer agency.

With respect to the requirements of sub‑subdivision (2)b. of this subsection, providers of social and medical services to a beneficiary shall make copies of records they maintain for services provided to a beneficiary available to the Retirement Systems Division, or to the authorized representatives who are assisting the Retirement Systems Division staff. Copies of the records of social and medical services provided to a beneficiary will permit verification of the health or other status of a beneficiary as required for the payment of benefits under Article 3 of this Chapter. The Retirement Systems Division, or authorized representatives who are assisting the Retirement Systems Division staff, shall request records in writing by providing the name of each beneficiary for whom records are sought, the purpose of the request, the statutory authority for the request, and a reasonable period of time for the production of record copies by the provider. A provider may charge, and the Retirement Systems Division, or authorized representatives who are assisting the Retirement Systems Division staff, shall, in accordance with G.S. 90‑411, pay a reasonable fee to the provider for copies of the records provided in accordance with this subsection.

(s)        Fraud Investigative Reports and Work Papers or Compliance Investigative Reports and Work Papers. – The Director of the Retirement Systems Division shall maintain for 10 years a complete file of all fraud investigative reportsreports, compliance investigative reports, and reports of other examinations, investigations, surveys, and reviews issued under the Director's authority. Fraud investigation work paperspapers, compliance investigation work papers, and other evidence or related supportive material directly pertaining to the work of the Retirement Systems Division of the Department of State Treasurer shall be retained according to an agreement between the Director of Retirement and State Archives. To promote intergovernmental cooperation and avoid unnecessary duplication of fraud or compliance investigative effort, and notwithstanding local unit personnel policies to the contrary, pertinent work papers and other supportive material relating to issued fraud investigation reports or compliance investigative reports may be, at the discretion of the Director of Retirement and unless otherwise prohibited by law, made available for inspection by duly authorized representatives of the State and federal government who desire access to and inspection of such records in connection with some matter officially before them, including criminal investigations. Except as provided in this section, or upon an order issued in Wake County Superior Court upon 10 days' notice and hearing finding that access is necessary to a proper administration of justice, fraud or compliance investigation work papers and related supportive material shall be kept confidential, including any information developed as a part of the investigation.

...."

SECTION 5.(a)  G.S. 135‑4(jj) reads as rewritten:

"(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. 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. Except as otherwise provided in this subsection, 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. Notwithstanding the requirement that the payment be made as a lump sum, the retirement system may allow an employer 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, to pay the lump‑sum amount required in this subsection on an installment payment plan under one of the following two options:

(1)        Option one. – An installment payment plan beginning no less than 90 days after the retirement of the member and ending no lessmore than one year15 months after the retirement of the member.

(2)        Option two. – An installment payment plan beginning no less than 90 days after the retirement of the member and ending no more than 27 months after the retirement of the member. Interest shall be assessed on the principal amount of the contribution‑based benefit cap liability owed and applied to any installment payment plan term exceeding 12 months at a rate corresponding with the interest rate assumption based on the most recent actuarial valuation approved by the Board of Trustees.

Payment under such anboth installment planplans must be completed regardless of whether the member continues to receive a recurring monthly retirement benefit through the end of the installment period."

SECTION 5.(b)  G.S. 128‑26(y) reads as rewritten:

"(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. Except as otherwise provided in this subsection, 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. Notwithstanding the requirement that the payment be made as a lump sum, the retirement system may allow an employer 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, to pay the lump‑sum amount required in this subsection on an installment payment plan under one of the following two options:

(1)        Option one. – An installment payment plan beginning no less than 90 days after the retirement of the member and ending no lessmore than one year15 months after the retirement of the member.

(2)        Option two. – An installment payment plan beginning no less than 90 days after the retirement of the member and ending no more than 27 months after the retirement of the member. Interest shall be assessed on the principal amount of the contribution‑based benefit cap liability owed and applied to any installment payment plan term exceeding 12 months at a rate corresponding with the interest rate assumption based on the most recent actuarial valuation approved by the Board of Trustees.

Payment under such anboth installment planplans must be completed regardless of whether the member continues to receive a recurring monthly retirement benefit through the end of the installment period."

SECTION 6.(a)  G.S. 135‑5(a3) reads as rewritten:

"(a3)    Anti‑Pension‑Spiking Contribution‑Based Benefit Cap. – Notwithstanding Chapter 150B of the General Statutes and 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 DecemberJune Consumer Price Index in the year prior to retirement and the DecemberJune Consumer Price Index in the fiscal 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 6.(b)  G.S. 128‑27(a3) reads as rewritten:

"(a3)    Anti‑Pension‑Spiking Contribution‑Based Benefit Cap. – Notwithstanding Chapter 150B of the General Statutes and 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 DecemberJune Consumer Price Index in the year prior to retirement and the DecemberJune Consumer Price Index in the fiscal 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 6.(c)  This section is effective when it becomes law and applies retroactively to January 1, 2015.

SECTION 7.(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, hethe member shall upon submission of an application be paid, not earlier than 60 days from the date of termination of service, histhe member's contributions, and the accumulated regular interest thereon, provided that hethe member has not in the meantime returned to service. Upon payment of such sum his or her membership in the System shall cease and, if he or she 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 hethe member or former member 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 histhe member's accumulated contributions at the time of histhe member's 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 or her accumulated contributions unless hethe extension service employee is eligible to be paid his or her 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 7.(b)  G.S. 135‑5(l) reads as rewritten:

"(l)       Death Benefit Plan. – There is hereby created a Group Life Insurance Plan (hereinafter called the "Plan") which is established as an employee welfare benefit plan that is separate and apart from the Retirement System and under which the members of the Retirement System shall participate and be eligible for group life insurance benefits. Upon receipt of proof, satisfactory to the Board of Trustees in their capacity as trustees under the Group Life Insurance Plan, of the death, in service, of a member who had completed at least one full calendar year of membership in the Retirement System, there shall be paid to such person as hethe member 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 is living at the time of the member's death, otherwise to the member's legal representatives, a death benefit. Such death benefit shall be equal to the greater of:

(1)        The compensation on which contributions were made by the member during the calendar year preceding the year in which histhe member's death occurs, or

(2)        The greatest compensation on which contributions were made by the member during a 12‑month period of service within the 24‑month period of service ending on the last day of the month preceding the month in which histhe member's last day of actual service occurs;

(3),       (4) Repealed by Session Laws 1983 (Regular Session, 1984), c. 1049, s. 2.

subject to a minimum of twenty‑five thousand dollars ($25,000) and to a maximum of fifty thousand dollars ($50,000). Such death benefit shall be payable apart and separate from the payment of the member's accumulated contributions under the System on histhe member's death pursuant to the provisions of subsection (f) of this section. For the purpose of the Plan, a member shall be deemed to be in service at the date of histhe member's death if histhe member's death occurs within 180 days from the last day of histhe member's actual service."

SECTION 7.(c)  G.S. 135‑63 reads as rewritten:

"§ 135‑63.  Benefits on death before retirement.

(a)        Upon receipt of proof, satisfactory to the Board of Trustees, of the death of a member in service, there shall be paid in a lump sum to such person as the member 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 is living at the time of the member's death, otherwise to the member's legal representatives, a death benefit equal to the sum of (i) the member's accumulated contributions, plus (ii) the member's final compensation; provided, however, that if the member has attained his or her fiftieth birthday with at least five years of membership service at histhe member's date of death, and if the designated recipient of the death benefits is the member's spouse who survives him,him or her, and if the spouse so elects, then the lump‑sum death benefit provided for herein shall consist only of a payment equal to the member's final compensation and there shall be paid to the surviving spouse an annual retirement allowance, payable monthly, which shall commence on the first day of the calendar month coinciding with or next following the death of the member and shall be continued on the first day of each month thereafter until the remarriage or death of the spouse. The amount of any such retirement allowance shall be equal to one half of the amount of the retirement allowance to which the member would have been entitled had hethe member retired under the provisions of G.S. 135‑57(a) on the first day of the calendar month coinciding with or next following histhe member's date of death, reduced by two percent (2%) thereof for each full year, if any, by which the age of the member at his or her date of death exceeds that of histhe member's spouse. If the retirement allowance to the spouse shall terminate on the remarriage or death of the spouse before the total of the retirement allowance payments made equals the amount of the member's accumulated contributions at date of death, the excess of such accumulated contributions over the total of the retirement allowances paid to the spouse shall be paid in a lump sum to such person as the member shall have nominated by electronic submission 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 is living at the time such payment falls due, otherwise to the former member's legal representatives.

...

(c)        Upon receipt of proof, satisfactory to the Board of Trustees, of the death of a member not in service, there shall be paid in a lump sum to such person as the member 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 is living at the time of the member's death, otherwise to the member's legal representatives, a death benefit equal to the member's accumulated contributions.

...."

SECTION 7.(d)  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, hethe member shall upon submission of an application be paid, not earlier than 60 days from the date of termination of service, histhe member's contributions and the accumulated regular interest thereon, provided that hethe member has not in the meantime returned to service. Upon payment of such sum his or her membership in the System shall cease and, if he or she 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 hethe member or former member 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 histhe member's accumulated contributions at the time of histhe member's 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 or her accumulated contributions unless hethe extension service employee is eligible to be paid his or her 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 7.(e)  G.S. 128‑27(l) reads as rewritten:

"(l)       Death Benefit Plan. – The provisions of this subsection shall become effective for any employer only after an agreement to that effect has been executed by the employer and the Director of the Retirement System. There is hereby created a Group Life Insurance Plan (hereinafter called the "Plan") which is established as an employee welfare benefit plan that is separate and apart from the Retirement System and under which the members of the Retirement System shall participate and be eligible for group life insurance benefits. Upon receipt of proof, satisfactory to the Board of Trustees in their capacity as trustees under the Group Life Insurance Plan, of the death, in service, of a member who had completed at least one full calendar year of membership in the Retirement System, there shall be paid to such person as hethe member 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 is living at the time of the member's death, otherwise to the member's legal representatives, a death benefit. Such death benefit shall be equal to the greater of:

(1)        The compensation on which contributions were made by the member during the calendar year preceding the year in which his the member's death occurs, or

(2)        The greatest compensation on which contributions were made by the member during a 12‑month period of service within the 24‑month period of service ending on the last day of the month preceding the month in which histhe member's last day of actual service occurs;

(3)        Repealed by Session Laws 1983 (Regular Session, 1984), c. 1049, s. 2;

subject to a minimum of twenty‑five thousand dollars ($25,000) and a maximum of fifty thousand dollars ($50,000). Such death benefit shall be payable apart and separate from the payment of the member's accumulated contributions under the System on his the member's death pursuant to the provisions of subsection (f) of this section. For the purpose of the Plan, a member shall be deemed to be in service at the date of his the member's death if his the member's death occurs within 180 days from the last day of his the member's actual service.

...."

SECTION 7.(f)  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, hethe member shall, upon submission of an application, be paid not earlier than 60 days following the date of termination of service the sum of histhe member's accumulated contributions provided hethe member has not in the meantime returned to service. Upon payment of this sum his or her membership in the System ceases. If hethe individual 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 hethe member or former member 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 histhe member's accumulated contributions at the time of histhe member's death, unless the beneficiary elects to receive the alternate benefit under the provisions of G.S. 120‑4.28."

SECTION 7.(g)  This section becomes effective January 1, 2017.

SECTION 8.(a)  G.S. 135‑6(b) reads as rewritten:

"(b)      Membership of Board; Terms. – The Board shall consist of the following 13 members, as follows:members:

(1)        The State Treasurer, ex officio;officio.

(2)        The Superintendent of Public Instruction, ex officio;officio.

(3)        The Director of the Office of State Human Resources, ex officio.

(3)(4)   NineEight members to be appointed by the Governor and confirmed by the Senate of North Carolina. One of the appointive members shall be a member of the teaching profession of the State; one of the appointive members shall be a representative of higher education appointed by the Governor for a term of four years commencing July 1, 1969, and quadrennially thereafter; one of the appointive members shall be a retired teacher who is drawing a retirement allowance, appointed by the Governor for a term of four years commencing July 1, 1969, and quadrennially thereafter; one shall be a retired State employee who is drawing a retirement allowance, appointed by the Governor for a term of four years commencing July 1, 1977, and quadrennially thereafter; one to be a general State employee, and two who are not members of the teaching profession or State employees; two to be appointed for a term of two years, two for a term of three years and one for a term of four years; one appointive member shall be a law‑enforcement officer employed by the State, appointed by the Governor, for a term of four years commencing April 1, 1985. One member shall be an active or retired member of the North Carolina National Guard appointed by the Governor for a term of four years commencing July 1, 2013. At the expiration of these terms of office the appointment shall be for a term of four years;years.

(4)(5)   Two members appointed by the General Assembly, one appointed upon the recommendation of the Speaker of the House of Representatives, and one appointed upon the recommendation of the President Pro Tempore of the Senate in accordance with G.S. 120‑121. Neither of these members may be an active or retired teacher or State employee or an employee of a unit of local government. The initial members appointed by the General Assembly shall serve for terms expiring June 30, 1983. Thereafter, their successors shall serve for two‑year terms beginning July 1 of odd‑numbered years. Vacancies in appointments made by the General Assembly shall be filled in accordance with G.S. 120‑122."

SECTION 8.(b)  G.S. 135‑6(g) reads as rewritten:

"(g)      Officers and Other Employees; Salaries and Expenses. – The State Treasurer shall be ex officio chairmanchair of the Board of Trustees. The Board of Trustees shall, by a majority vote of all the members, appoint a director, who may be, but need not be, one of its members. The salary of the director of the Retirement System is subject to the provisions of Chapter 126 of the General Statutes of North Carolina. Trustees and shall appoint a director. The Board of Trustees shall engage such actuarial and other service as shall be required to transact the business of the Retirement System. The compensation of all persons, other than the director, engaged by the Board of Trustees, and all other expenses of the Board necessary for the operation of the Retirement System, shall be paid at such rates and in such amounts as the Board of Trustees shall approve, subject to the approval of the Director of the Budget."

SECTION 8.(c)  G.S. 128‑28(h) reads as rewritten:

"(h)      Officers and Other Employees, Salaries and Expenses. – The Board of Trustees shall elect from its membership a chairman, and shall, by a majority vote of all the members, appoint a director, who may be, but need not be, one of its members. The State Treasurer shall be ex officio chair of the Board of Trustees and shall appoint a director. The Board of Trustees shall engage such actuarial and other service as shall be required to transact the business of the Retirement System. The compensation of all persons engaged by the Board of Trustees, and all other expenses of the Board necessary for the operation of the Retirement System, shall be paid at such rates and in such amounts as the Board of Trustees shall approve."

SECTION 9.(a)  G.S. 135‑6 is amended by adding a new subsection to read:

"(u)      In order to promote achievement of long‑term administrative objectives and to retain key public employees with benefits administration expertise, the State Treasurer is authorized to establish market‑oriented compensation plans for employees in positions designated as key management roles who possess specialized skills or knowledge necessary for the effective administration of retirement benefits and who shall be exempt from the classification and compensation rules established by the Office of State Human Resources. The design and administration of those compensation plans shall be based on compensation studies conducted by a nationally recognized firm specializing in employee benefits. The costs of the compensation and other associated employee benefits shall be apportioned from administrative receipts of the Retirement System. The Treasurer shall report the salaries paid under this provision to the Joint Legislative Oversight Committee on General Government annually, on or before December 1 of each year."

SECTION 9.(b)  G.S. 128‑28 is amended by adding a new subsection to read:

"(v)      In order to promote achievement of long‑term administrative objectives and to retain key public employees with benefits administration expertise, the State Treasurer is authorized to establish market‑oriented compensation plans for employees in positions designated as key management roles who possess specialized skills or knowledge necessary for the effective administration of retirement benefits and who shall be exempt from the classification and compensation rules established by the Office of State Human Resources. The design and administration of those compensation plans shall be based on compensation studies conducted by a nationally recognized firm specializing in employee benefits. The costs of the compensation and other associated employee benefits shall be apportioned from administrative receipts of the Retirement System. The Treasurer shall report the salaries paid under this provision to the Joint Legislative Oversight Committee on General Government annually, on or before December 1 of each year."

SECTION 9.(c)  G.S. 126‑5 is amended by adding a new subsection to read:

"(c14)  Except as to G.S. 126‑13, 126‑14, 126‑14.1, and the provisions of Articles 6, 7, 14, 15, and 16 of this Chapter, the provisions of this Chapter shall not apply to employees of the Department of State Treasurer possessing specialized skills or knowledge necessary for the proper administration of retirement benefits and compensated pursuant to G.S. 135‑6(u) and G.S. 128‑28(v)."

SECTION 9.(d)  This section becomes effective January 1, 2017.

SECTION 10.(a)  G.S. 135‑7 is amended by adding a new subsection to read:

"(g)      Legislative Enactment Implementation Arrangement. – The Legislative Enactment Implementation Arrangement (LEIA) is established effective October 1, 2016, and placed under the management of the Board of Trustees. The purpose of the LEIA is to provide for timely administrative implementation of legislative provisions regarding the retirement of, or payment of retirement benefits to, public officers or public employees. The LEIA shall have the following parameters:

(1)        Administration. – The LEIA shall be administered by the Board of Trustees, which shall compile and maintain all records necessary or appropriate for administration. The Board of Trustees shall have full discretionary authority to interpret, construe, and implement the LEIA and to adopt such rules and regulations as may be necessary or desirable to implement the provisions of the LEIA.

(2)        Funding of the LEIA. – In the event that the General Assembly creates or modifies any provision for the retirement of, or payment of retirement benefits to, public officers or public employees that has a cost savings as measured by actuarial note required by Article 15 of Chapter 120 of the General Statutes, the Board of Trustees may direct up to one hundredth percent (0.01%) of the required contributions to fund the LEIA. These funds must be deposited in a separate fund from the fund into which regular employer contributions are deposited for the Retirement System. The Board of Trustee shall not direct any employer contributions into the LEIA after November 1, 2021.

(3)        Allocation of LEIA funds. – The Board of Trustees may allocate LEIA funds to the implementation of legislative provisions regarding the retirement of, or payment for retirement benefits to, public officers or public employees, subject to the following restrictions:

a.         The Board of Trustees must identify individual implementation projects that will be paid for with LEIA funds. These implementation projects must be necessitated by a specific statute or session law that was enacted within five years of the allocation of the funds. The Board of Trustees must also identify the number of years for which each individual implementation project with be paid for with LEIA funds.

b.         For implementation projects that will be paid for with LEIA funds for a period of one year or less, the Board of Trustees must determine that the cost savings from implementing the project is projected to be no less than half of the amount of LEIA funds utilized to pay for implementation.

c.         For implementation projects that will be paid for with LEIA funds for a period of greater than one year, but not more than four years, the Board of Trustees must determine that the long‑term cost savings from implementing the project is projected to be at least three times greater than the cost of implementation.

d.         No implementation project shall be paid for with LEIA funds for a period of more than four years.

(4)        Treatment of unused assets. – Any assets of the LEIA not used to pay allowed administrative expenses for timely administrative implementation of legislative provisions shall be transferred to the Retirement System as an additional employer contribution."

SECTION 10.(b)  G.S. 128‑29 is amended by adding a new subsection to read:

"(g)      Legislative Enactment Implementation Arrangement. – The Legislative Enactment Implementation Arrangement (LEIA) is established effective October 1, 2016, and placed under the management of the Board of Trustees. The purpose of the LEIA is to provide for timely administrative implementation of legislative provisions regarding the retirement of, or payment of retirement benefits to, public officers or public employees. The LEIA shall have the following parameters:

(1)        Administration. – The LEIA shall be administered by the Board of Trustees, which shall compile and maintain all records necessary or appropriate for administration. The Board of Trustees shall have full discretionary authority to interpret, construe, and implement the LEIA and to adopt such rules and regulations as may be necessary or desirable to implement the provisions of the LEIA.

(2)        Funding of the LEIA. – In the event that the General Assembly creates or modifies any provision for the retirement of, or payment of retirement benefits to, public officers or public employees that has a cost savings as measured by actuarial note required by Article 15 of Chapter 120 of the General Statutes, the Board of Trustees may direct up to one hundredth percent (0.01%) of the required contributions to fund the LEIA. These funds must be deposited in a separate fund from the fund into which regular employer contributions are deposited for the Retirement System. The Board of Trustees shall not direct any employer contributions into the LEIA after November 1, 2021.

(3)        Allocation of LEIA funds. – The Board of Trustees may allocate LEIA funds to the implementation of legislative provisions regarding the retirement of, or payment for retirement benefits to, public officers or public employees, subject to the following restrictions:

a.         The Board of Trustees must identify individual implementation projects that will be paid for with LEIA funds. These implementation projects must be necessitated by a specific statute or session law that was enacted within five years of the allocation of the funds. The Board of Trustees must also identify the number of years for which each individual implementation project with be paid for with LEIA funds.

b.         For implementation projects that will be paid for with LEIA funds for a period of one year or less, the Board of Trustees must determine that the cost savings from implementing the project is projected to be no less than half of the amount of LEIA funds utilized to pay for implementation.

c.         For implementation projects that will be paid for with LEIA funds for a period of greater than one year, but not more than four years, the Board of Trustees must determine that the long‑term cost savings from implementing the project is projected to be at least three times greater than the cost of implementation.

d.         No implementation project shall be paid for with LEIA funds for a period of more than four years.

(4)        Treatment of unused assets. – Any assets of the LEIA not used to pay allowed administrative expenses for timely administrative implementation of legislative provisions shall be transferred to the Retirement System as an additional employer contribution."

SECTION 10.(c)  This section becomes effective October 1, 2016.

SECTION 11.(a)  The February 5, 2008, Attorney General's advisory opinion entitled "Advisory Opinion: Confidentiality of Retirement Benefit Information; Session Law 2007‑508" concluded that information about retirement benefits was intended to be included among those records required to be maintained for public inspection by each department, agency, institution, commission, and bureau of the State and that as a result the Retirement Systems Division of the Department of the State Treasurer makes that information available for public inspection and examination. The General Assembly finds that the interests of clarity require statutory language providing guidance to the Retirement Systems Division in determining and maintaining consistency as to what information should be made available about the retirement accounts of State and local employees.

SECTION 11.(b)  Article 1 of Chapter 135 of the General Statutes is amended by adding a new section to read:

"§ 135‑6.1.  Member retirement record files held by the Retirement System.

(a)        The following definitions apply in this section:

(1)        Employment‑related information. – As defined in G.S. 126‑22(b)(3).

(2)        Personal information. – As defined in G.S. 126‑22(b)(3).

(3)        Retirement file. – Any employment‑related, retirement‑related, or personal information of members in a State‑administered retirement plan gathered by the Retirement Systems Division of the Department of State Treasurer.

(4)        Retirement‑related information. – Information including membership and service details, benefit payment information, and other information the Retirement Systems Division of the Department of State Treasurer deems necessary to administer a retirement plan.

(b)        Member retirement files are not subject to inspection and examination as authorized by G.S. 132‑6 except as provided in G.S. 135‑6(p), G.S. 128‑28(q), and subsections (c), (d), and (e) of this section.

(c)        The following information regarding members and individuals in receipt of a recurring monthly benefit, if held by the Retirement System, is public and subject to subsection (d) of this section:

(1)        Name.

(2)        Age.

(3)        Date of membership in the applicable retirement system, first service earned date, date of first enrollment, date of first employment, and date of retirement.

(4)        The terms of any contract by which the member is employed whether written or oral, past and current, to the extent that the Retirement System has the written contract or a record of the oral contract in its possession.

(5)        Current or most recently held position or title.

(6)        Compensation and other relevant remuneration history and benefits paid.

(7)        Date, general description, and type of each change and the corresponding employing agency.

(8)        The office or station to which the member is currently assigned, if any.

(9)        The record of benefit payments made by one of the Retirement Systems or Disability Benefits Programs administered by the Department of State Treasurer to a member or to the survivor, beneficiary, or alternate payee of a member.

(10)      Purchases of educational leave.

(d)       Subject only to rules and policies for the safekeeping of member retirement files adopted by the Board of Trustees, every person having custody of the retirement file information outlined in subsection (b) of this section shall permit the information to be inspected and examined and copies thereof made by any person during regular business hours. Any person who is denied access to any retirement file for the purpose of inspecting, examining, or copying the file has a right to compel compliance with the provisions of this section by application to a court of competent jurisdiction for a writ of mandamus or other appropriate relief.

(e)        The Retirement Systems Division of the Department of State Treasurer may disclose the name and mailing address of former State employees, former public school employees, or former community college employees to domiciled, nonprofit organizations representing 10,000 or more retired State government, local government, or public school employees.

(f)        All information other than the information listed in subsection (c) of this section contained in a retirement file is confidential and not open for inspection and examination except to the following persons:

(1)        The member, or the member's authorized agent, who may examine his or her own retirement file, except for any information concerning a medical disability, mental or physical, that a prudent physician would not divulge to a patient. A member's medical record may be disclosed to a licensed physician in writing by the member.

(2)        A member of the General Assembly who may inspect and examine records under the authority of G.S. 120‑19.

(3)        A party by authority of a proper court order may inspect and examine a particular confidential portion of a member's retirement file.

(g)        Any public official or employee who knowingly and willfully permits any person to have access to or custody or possession of any portion of a retirement file designated as confidential by this section, unless the person is one specifically authorized by this section to have access thereto for inspection and examination, is guilty of a Class 3 misdemeanor and upon conviction shall only be fined in the discretion of the court but not in excess of five hundred dollars ($500.00).

(h)        Any person not specifically authorized by this section to have access to a retirement file designated as confidential by this section, who knowingly and willfully examines, removes, or copies any portion of a confidential retirement file, is guilty of a Class 3 misdemeanor and upon conviction shall be fined in the discretion of the court but not in excess of five hundred dollars ($500.00)."

SECTION 11.(c)  Article 3 of Chapter 128 of the General Statutes is amended by adding a new section to read:

"§ 128‑33.1.  Public records held by the Retirement System.

(a)        The following definitions apply in this section:

(1)        Employment‑related information. – As defined in G.S. 126‑22(b)(3).

(2)        Personal information. – As defined in G.S. 126‑22(b)(3).

(3)        Retirement file. – Any employment‑related, retirement‑related, or personal information of members in a State‑administered retirement plan gathered by the Retirement Systems Division of the Department of State Treasurer.

(4)        Retirement‑related information. – Information including membership and service details, benefit payment information, and other information the Retirement Systems Division of the Department of State Treasurer deems necessary to administer a retirement plan.

(b)        Member retirement files are not subject to inspection and examination as authorized by G.S. 132‑6 except as provided in G.S. 135‑6(p), G.S. 128‑28(q), and subsections (c), (d), and (e) of this section.

(c)        The following information regarding members and individuals in receipt of a recurring monthly benefit, if held by the Retirement System, is public subject to subsection (d) of this section:

(1)        Name.

(2)        Age.

(3)        Date of membership in the applicable retirement system, first service earned date, date of first enrollment, date of first employment, and date of retirement.

(4)        The terms of any contract by which the member is employed whether written or oral, past and current, to the extent that the Retirement System has the written contract or a record of the oral contract in its possession.

(5)        Current or most recently held position or title.

(6)        Compensation and other relevant remuneration history and benefits paid.

(7)        Date, general description, and type of each change and the corresponding employing agency.

(8)        The office or station to which the member is currently assigned, if any.

(9)        The record of benefit payments made by one of the Retirement Systems or  Disability Benefits Programs administered by the Department of State Treasurer to a member or to the survivor, beneficiary, or alternate payee of a member.

(10)      Purchases of educational leave.

(d)       Subject only to rules and policies for the safekeeping of member retirement files adopted by the Board of Trustees, every person having custody of the retirement file information outlined in subsection (b) of this section shall permit the information to be inspected and examined and copies thereof made by any person during regular business hours. Any person who is denied access to any retirement file for the purpose of inspecting, examining, or copying the file has a right to compel compliance with the provisions of this section by application to a court of competent jurisdiction for a writ of mandamus or other appropriate relief.

(e)        The Retirement Systems Division of the Department of State Treasurer may disclose the name and mailing address of former State employees, former public school employees, or former community college employees to domiciled, nonprofit organizations representing 10,000 or more retired State government, local government, or public school employees.

(f)        All information other than the information listed in subsection (c) of this section contained in a retirement file is confidential and not open for inspection and examination except to the following persons:

(1)        The member, or the member's authorized agent, who may examine his or her own retirement file, except for any information concerning a medical disability, mental or physical, that a prudent physician would not divulge to a patient. A member's medical record may be disclosed to a licensed physician in writing by the member.

(2)        A member of the General Assembly who may inspect and examine records under the authority of G.S. 120‑19.

(3)        A party by authority of a proper court order may inspect and examine a particular confidential portion of a member's retirement file.

(g)        Any public official or employee who knowingly and willfully permits any person to have access to or custody or possession of any portion of a retirement file designated as confidential by this section, unless the person is one specifically authorized by this section to have access thereto for inspection and examination, is guilty of a Class 3 misdemeanor and upon conviction shall only be fined in the discretion of the court but not in excess of five hundred dollars ($500.00).

(h)        Any person not specifically authorized by this section to have access to a retirement file designated as confidential by this section, who knowingly and willfully examines, removes, or copies any portion of a confidential retirement file, is guilty of a Class 3 misdemeanor and upon conviction shall be fined in the discretion of the court but not in excess of five hundred dollars ($500.00)."

SECTION 11.(d)  G.S. 126‑22 reads as rewritten:

"§ 126‑22.  Personnel files not subject to inspection under § 132‑6.

(a)        Except as provided in G.S. 126‑23 and G.S. 126‑24, personnel files of State employees shall not be subject to inspection and examination as authorized by G.S. 132‑6.

(b)        For purposes of this Article the following definitions apply:

(1)        "Employee" means any current State employee, former State employee, or applicant for State employment.

(2)        "Employer" means any State department, university, division, bureau, commission, council, or other agency subject to Article 7 of this Chapter.

(3)        "Personnel file" means any employment‑related or personal information gathered by an employer, the Retirement Systems Division of the Department of State Treasurer, employer or by the Office of State Human Resources. Employment‑related information contained in a personnel file includes information related to an individual's application, selection, promotion, demotion, transfer, leave, salary, contract for employment, benefits, suspension, performance evaluation, disciplinary actions, and termination. Personal information contained in a personnel file includes an individual's home address, social security number, medical history, personal financial data, marital status, dependents, and beneficiaries.

(4)        "Record" means the personnel information that each employer is required to maintain in accordance with G.S. 126‑23.

(c)        Personnel files of former State employees who have been separated from State employment for 10 or more years may be open to inspection and examination except for papers and documents relating to demotions and to disciplinary actions resulting in the dismissal of the employee and personnel files maintained by the Retirement Systems Division of the Department of State Treasurer.employee. Retirement files maintained by the Retirement Systems Division of the Department of State Treasurer shall be made public pursuant to G.S. 128‑33.1 and G.S. 135‑6.1.

(d)       Notwithstanding any provision of this section to the contrary, the Retirement Systems Division of the Department of State Treasurer may disclose the name and mailing address of former State employees to domiciled, nonprofit organizations representing 10,000 or more retired State government, local government, or public school employees."

SECTION 11.(e)  G.S. 115C‑321(b1) is repealed.

SECTION 11.(f)  G.S. 115D‑29(c) is repealed.

SECTION 11.(g)  G.S. 153A‑98(c3) is repealed.

SECTION 11.(h)  G.S. 160A‑168(c3) is repealed.

SECTION 12.(a)  G.S. 135‑10.1 reads as rewritten:

"§ 135‑10.1.  Failure to respond.

If a member fails to respond within 120 days after preliminary option figures and the Form 6‑E or Form 7‑E are mailed,transmitted to the member, or if a member fails to respond within 120 days after the effective date of retirement, whichever is later, the Form 6 or Form 7 shall be null and void; the retirement system shall not be liable for any benefits due on account of the voided application, and a new application must be filed establishing a subsequent effective date of retirement. If an applicant for disability retirement fails to furnish requested additional medical information within 90 days following such request, the application shall be declared null and void under the same conditions outlined above, unless the applicant is eligible for early or service retirement in which case the application shall be processed accordingly, using the same effective date as would have been used had the application for disability retirement been approved. The Director of the Retirement Systems Division, acting on behalf of the Board of Trustees, may extend the 120‑day limitation provided for in this section when a member has suffered incapacitation such that a reasonable person would not have expected the member to be able to complete the required paperwork within the regular deadline, or when an omission by the Retirement Systems Division prevents the member from having sufficient time to meet the regular deadline."

SECTION 12.(b)  G.S. 128‑32.1 reads as rewritten:

"§ 128‑32.1.  Failure to respond.

If a member fails to respond within 120 days after preliminary option figures and the Form 6‑E or Form 7‑E are mailed,transmitted to the member, or if a member fails to respond within 120 days after the effective date of retirement, whichever is later, the Form 6 or Form 7 shall be null and void; the retirement system shall not be liable for any benefits due on account of the voided application, and a new application must be filed establishing a subsequent effective date of retirement. If an applicant for disability retirement fails to furnish requested additional medical information within 90 days following such request, the application shall be declared null and void under the same conditions outlined above, unless the applicant is eligible for early or service retirement in which case the application shall be processed accordingly, using the same effective date as would have been used had the application for disability retirement been approved. The Director of the Retirement Systems Division, acting on behalf of the Board of Trustees, may extend the 120‑day limitation provided for in this section when a member has suffered incapacitation such that a reasonable person would not have expected the member to be able to complete the required paperwork within the regular deadline, or when an omission by the Retirement Systems Division prevents the member from having sufficient time to meet the regular deadline."

SECTION 13.(a)  G.S. 135‑18.8 reads as rewritten:

"§ 135‑18.8.  Deduction for payments allowed.

(a)        Any beneficiary who is a member of a domiciled employees' or retirees' association that has at least 2,00010,000 members, the majority of whom are active or retired employees of the State or public school employees, may authorize, in writing, the periodic deduction from the beneficiary's retirement benefits a designated lump sum to be paid to the employees' or retirees' association. The authorization shall remain in effect until revoked by the beneficiary.beneficiary, and proof of the authorization must be available upon request to the Department of the State Treasurer. A plan of deductions pursuant to this section shall become void if the employees' or retirees' association engages in collective bargaining with the State, any political subdivision of the State, or any local school administrative unit.

(b)        Any beneficiary may also authorize, in writing, the monthly deduction from the beneficiary's retirement benefits of a designated lump sum to be paid to the State Health Plan for any dependent whom the beneficiary wishes to cover under the State Health Plan. In the event that the beneficiary's own State Health Plan coverage is contributory, in whole or in part, the beneficiary may also authorize a designated lump sum to be paid to the State Health Plan on behalf of the beneficiary. In addition, a beneficiary may similarly authorize the deduction for supplemental voluntary insurance benefits, provided that the deduction is authorized by the Department of State Treasurer and is payable to a company with which the Department of State Treasurer has or had an exclusive contractual relationship. Any such authorization shall remain in effect until revoked by the beneficiary.beneficiary, and proof of the authorization must be available on request by the Department of the State Treasurer."

SECTION 13.(b)  G.S. 135‑75 reads as rewritten:

"§ 135‑75.  Deduction for payments allowed.

(a)        Any beneficiary who is a member of a domiciled employees' or retirees' association that has at least 2,00010,000 members, the majority of whom are active or retired employees of the State or public school employees, may authorize, in writing, the periodic deduction from the beneficiary's retirement benefits a designated lump sum to be paid to the employees' or retirees' association. The authorization shall remain in effect until revoked by the beneficiary.beneficiary, and proof of the authorization must be available on request of the Department of the State Treasurer. A plan of deductions pursuant to this section shall become void if the employees' or retirees' association engages in collective bargaining with the State, any political subdivision of the State, or any local school administrative unit.

(b)        Any beneficiary eligible for coverage under the State Health Plan may also authorize, in writing, the monthly deduction from the beneficiary's retirement benefits of a designated lump sum to be paid to the State Health Plan for any dependent whom the beneficiary wishes to cover under the State Health Plan. In the event that the beneficiary's own State Health Plan coverage is contributory, in whole or in part, the beneficiary may also authorize a designated lump sum to be paid to the State Health Plan on behalf of the beneficiary. In addition, a beneficiary may similarly authorize the deduction for supplemental voluntary insurance benefits, provided that the deduction is authorized by the Department of State Treasurer and is payable to a company with which the Department of State Treasurer has or had an exclusive contractual relationship. Any such authorization shall remain in effect until revoked by the beneficiary.beneficiary, and proof of the authorization must be available on request of the Department of the State Treasurer."

SECTION 13.(c)  G.S. 128‑38.3 reads as rewritten:

"§ 128‑38.3.  Deduction for payments allowed.

(a)        Any beneficiary who is a member of a domiciled employees' or retirees' association that has at least 2,00010,000 members, the majority of whom are active or retired employees of employers as defined in G.S. 128‑21(11), may authorize, in writing, the periodic deduction from the beneficiary's retirement benefits a designated lump sum to be paid to the employees' or retirees' association. The authorization shall remain in effect until revoked by the beneficiary.beneficiary, and proof of the authorization must be available on request of the Department of the State Treasurer. A plan of deductions pursuant to this section shall become void if the employees' or retirees' association engages in collective bargaining with the State, any political subdivision of the State, or any local school administrative unit.

(b)        Any beneficiary eligible for coverage under the State Health Plan may also authorize, in writing, the monthly deduction from the beneficiary's retirement benefits of a designated lump sum to be paid to the State Health Plan for any dependent whom the beneficiary wishes to cover under the State Health Plan. In the event that the beneficiary's own State Health Plan coverage is contributory, in whole or in part, the beneficiary may also authorize a designated lump sum to be paid to the State Health Plan on behalf of the beneficiary. In addition, a beneficiary may similarly authorize the deduction for supplemental voluntary insurance benefits, provided that the deduction is authorized by the Department of State Treasurer and is payable to a company with which the Department of State Treasurer has or had an exclusive contractual relationship. Any such authorization shall remain in effect until revoked by the beneficiary.beneficiary, and proof of the authorization must be available on request of the Department of the State Treasurer.

(c)        For local employers who made arrangements with the Retirement System prior to January 1, 2016, any beneficiary who is a retiree from an employer in the Retirement System under this Article may authorize the periodic deduction from the beneficiary's retirement benefits as designated lump sum to be paid to the beneficiary's former employer for the purpose of providing health benefits. The authorization shall remain in effect until revoked by the beneficiary, and proof of the authorization must be available on request of the Department of the State Treasurer."

SECTION 13.(d)  G.S. 120‑4.32 reads as rewritten:

"§ 120‑4.32.  Deduction for payments allowed.

(a)        Any beneficiary who is a member of a domiciled employees' or retirees' association that has at least 2,00010,000 members, the majority of whom are active or retired employees of the State or public school employees, may authorize, in writing, the periodic deduction from the beneficiary's retirement benefits a designated lump sum to be paid to the employees' or retirees' association. The authorization shall remain in effect until revoked by the beneficiary.beneficiary, and proof of the authorization must be available on request of the Department of the State Treasurer. A plan of deductions pursuant to this section shall become void if the employees' or retirees' association engages in collective bargaining with the State, any political subdivision of the State, or any local school administrative unit.

(b)        Any beneficiary eligible for coverage under the State Health Plan may also authorize, in writing, the monthly deduction from the beneficiary's retirement benefits of a designated lump sum to be paid to the State Health Plan for any dependent whom the beneficiary wishes to cover under the State Health Plan. In the event that the beneficiary's own State Health Plan coverage is contributory, in whole or in part, the beneficiary may also authorize a designated lump sum to be paid to the State Health Plan on behalf of the beneficiary. In addition, a beneficiary may similarly authorize the deduction for supplemental voluntary insurance benefits, provided that the deduction is authorized by the Department of State Treasurer and is payable to a company with which the Department of State Treasurer has or had an exclusive contractual relationship. Any such authorization shall remain in effect until revoked by the beneficiary.beneficiary, and proof of the authorization must be available on request of the Department of the State Treasurer."

SECTION 13.(e)  G.S. 135‑18.8(a) is repealed.

SECTION 13.(f)  G.S. 135‑75(a) is repealed.

SECTION 13.(g)  G.S. 128‑38.3(a) is repealed.

SECTION 13.(h)  G.S. 128‑38.3(c) is repealed.

SECTION 13.(i)  G.S. 120‑4.32(a) is repealed.

SECTION 13.(j)  Subsections (e), (f), (g), (h), and (i) of this section become effective July 1, 2017. The remainder of this section is effective when it becomes law.

SECTION 14.(a)  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, effective the first of the month following the month of initial entitlement.

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, 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 is eligible for an unreduced service retirement allowance from the Retirement System, at which time the beneficiary would receive a retirement allowanceAt such time as the beneficiary receiving long‑term disability benefits becomes eligible for an unreduced service retirement, the long‑term disability benefit of the beneficiary shall be recalculated according to the formula set forth in G.S. 135‑5(b21), 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 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. In lieu of the recalculated long‑term benefit described in this subsection, the beneficiary shall have the right to elect to convert to an unreduced service retirement benefit and thereby cease to receive further long‑term benefits, provided all other requirements are met pursuant to the provisions of G.S. 135‑5. 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 14.(b)  This section becomes effective January 1, 2017.

SECTION 15.(a)  G.S. 143B‑426.40G(b) reads as rewritten:

"(b)      The State Treasurer may impose on an agency with non‑State funds a fee of fifteen dollars ($15.00) for each check drawn against the agency's disbursing account that causes the balance in the account to be in overdraft or while the account is in overdraft. The financial officer shall pay the fee from the agency's non‑State or personal funds to the General Fund to the credit of the miscellaneous nontax revenue account by the agency."

SECTION 15.(b)  This section becomes effective October 1, 2016.

SECTION 16.  Article 6 of Chapter 147 of the General Statutes is amended by adding a new section to read:

"§ 147‑68.2.  Confidentiality of warrants issued by the State.

Information contained in records held by the State about outstanding, unpaid warrants issued by the State are confidential and not available for public inspection to the extent that the Treasurer determines that information would be sufficient to counterfeit a warrant."

SECTION 17.  G.S. 147‑79(a) reads as rewritten:

"(a)      The amount of funds deposited by the State Treasurer in an official depository shall be adequately secured by deposit insurance, surety bonds, letters of credit issued by a Federal Home Loan Bank, or investment securities of such nature, in such amounts, and in such manner, as may be prescribed by rule or regulation of the State Treasurer with the approval of the Governor and Council of State. No security is required for the protection of funds remitted to and received by a bank or trust company designated by the State Treasurer under G.S. 142‑1 and acting as paying agent for the payment of the principal of or interest on bonds or notes of the State."

SECTION 18.(a)  G.S. 115C‑341.2 reads as rewritten:

"§ 115C‑341.2.  Department of State Treasurer sponsored 403(b) option.

(a)        In addition to the opportunities for local boards of education to offer section 403(b) of the Internal Revenue Code of 1986 retirement annuities and/or mutual funds to their employees under G.S. 115C‑341, the Department of State Treasurer may establish an approved third‑party vendor of retirement offerings as described in section 403(b) of the Internal Revenue Code of 1986, as now and hereafter amended, pursuant to which employees of local school boards may enter into nonforfeitable 403(b) plan options by way of salary reduction through the auspices of the Department of State Treasurer. This statewide plan of 403(b) offerings shall be known as the "North Carolina Public School Teachers' and Professional Educators' Investment Plan." The vendor authorized under this section shall be selected by use of StateSupplemental Retirement Board of Trustees procurement procedures,procedures under Article 5 of Chapter 135 of the General Statutes, with the goal of attaining lower administrative fees and enhanced services for participants and employer compliance with applicable law and regulations. Eligible employees of local school boards shall all be allowed to use this vendor for the tax‑deferred 403(b) option of their choice.

(b)        The criteria in this subsection apply to the Department of State Treasurer's 403(b) offerings to employees of local school boards under this section.

(1)        Annuity contracts, trust accounts, and/or custodial accounts shall be administered by a qualified third‑party administrator that shall, under written agreement with the Department of State Treasurer, provide custodial, record‑keeping, and administrative services. The third‑party administrator may also be the selected vendor for the North Carolina Public School Teachers' and Professional Educators' Investment Plan.

For employers choosing to participate in the North Carolina Public School Teachers' and Professional Educators' Investment Plan, the third‑party administrator shall, at a minimum, provide the following:

a.         Maintain a written plan document.

b.         Review hardship withdrawal requests, loan requests, and other disbursements permitted under section 403(b) of the Internal Revenue Code of 1986.

c.         Maintain specimen salary reduction agreements for the employer and employees of that employer to initiate payroll deferrals.

d.         Monitor maximum contributions.

e.         Coordinate responses to the Internal Revenue Service in any case of an IRS audit.

f.          Generate educational communication materials to employees concerning the enrollment process, program eligibility, and investment options.

g.         Maintain internal reports to ensure compliance with Section 403(b) of the Internal Revenue Code and Title 26 of the Code of Federal Regulations.

h.         Provide compliance monitoring/oversight for all 403(b) plans established under G.S. 115C‑341 within each participating local board of education plan by creating and establishing the necessary connections and processes with existing and future vendors.

i.          Keep an updated schedule of vendor fees and commissions as to the Department's statewide plan.plan of 403(b) offerings.

(2)        Governance and oversight of the North Carolina Public School Teachers' and Professional Educators' Investment Plan will be performed under Article 5 of Chapter 135 of the General Statutes by the Department of State Treasurer and the Supplemental Retirement Board of Trustees for the North Carolina Supplemental Retirement Plans established pursuant to G.S. 135‑96. Because of the administrative and record‑keeping duties enumerated in subdivision (1) of this subsection, any existing vendor of a 403(b) with a participating employer must either agree to share data with the State's 403(b) vendor under this provision (so as to permit oversight over contribution limits, loans, and hardship withdrawals) or be directed by the participating employer to cease accepting new contributions, loans, and hardship withdrawals.

(3)        Investment options shall be solely determined by the Department of State Treasurer and the Supplemental Retirement Board of Trustees for the North Carolina Supplemental Retirement Plans consistent with section 403(b) of the Internal Revenue Code of 1986, as amended.

(4)        Investment staff of the Department of State Treasurer may make recommendations to the State Treasurer and the Supplemental Retirement Board of Trustees for the North Carolina Supplemental Retirement Plans as to appropriate investment options. ThePursuant to G.S. 135‑96, the State Treasurer and Board of Trustees shall have sole responsibility for the selection of the vendor, third‑party administrator, providers of investment options, and any other service provider for the North Carolina Public School Teachers' and Professional Educators' Investment Plan.

(5)        All contributions made in accordance with the provisions of section 403(b) of the Internal Revenue Code of 1986, as amended, and this section shall be remitted directly to the administrator and held by the administrator in a custodial account on behalf of each participating employee. Any investment gains or losses shall be credited to those accounts. The forms of payment and disbursement procedures shall be consistent with those generally offered by similar annuity contracts, trust accounts, and custodial accounts and applicable federal and State statutes governing those contracts and accounts.

(6)        Any local board of education may elect to make contributions to the employee's account on behalf of the employee. The employer shall take whatever action is necessary to implement this section.

(7)        The design and administration of annuity contracts, trust accounts, and custodial accounts under this provision shall comply with all applicable provisions of the Internal Revenue Code of 1986, as amended."

SECTION 18.(b)  G.S. 115D‑25.4(b) reads as rewritten:

"(b)      The criteria in this subsection apply to the Department of State Treasurer's 403(b) offerings to employees of local boards of trustees under this section:

(1)        Annuity contracts, trust accounts, and/or custodial accounts shall be administered by a qualified third‑party administrator that shall, under written agreement with the Department of State Treasurer, provide custodial, record‑keeping, and administrative services. The third‑party administrator may also be the selected vendor for the North Carolina Public School Teachers' and Professional Educators' Investment Plan.

For local boards of trustees as employers choosing to participate in the North Carolina Public School Teachers' and Professional Educators' Investment Plan, the third‑party administrator shall, at a minimum, provide the following:

a.         Maintain a written plan document.

b.         Review hardship withdrawal requests, loan requests, and other disbursements permitted under section 403(b) of the Internal Revenue Code of 1986.

c.         Maintain specimen salary reduction agreements for the employer and employees of that employer to initiate payroll deferrals.

d.         Monitor maximum contributions.

e.         Coordinate responses to the Internal Revenue Service in any case of an IRS audit.

f.          Generate educational communication materials to employees concerning the enrollment process, program eligibility, and investment options.

g.         Maintain internal reports to ensure compliance with section 403(b) of the Internal Revenue Code and Title 26 of the Code of Federal Regulations.

h.         Provide compliance monitoring/oversight for all 403(b) plans established under G.S. 115D‑25 within each participating local board of trustees plan by creating and establishing the necessary connections and processes with existing and future vendors.

i.          Keep an updated schedule of vendor fees and commissions as to the Department's statewide plan.plan of 403(b) offerings.

(2)        Governance and oversight of the North Carolina Public School Teachers' and Professional Educators' Investment Plan will be performed under Article 5 of Chapter 135 of the General Statutes by the Department of State Treasurer and the Supplemental Retirement Board of Trustees for the North Carolina Supplemental Retirement Plans established pursuant to G.S. 135‑96. Because of the administrative and record‑keeping duties enumerated in subdivision (1) of this subsection, any existing vendor of a 403(b) with a participating employer must either agree to share data with the State's 403(b) vendor under this provision (so as to permit oversight over contribution limits, loans, and hardship withdrawals) or be directed by the participating employer to cease accepting new contributions, loans, and hardship withdrawals.

(3)        Investment options shall be solely determined by the Department of State Treasurer and the Supplemental Retirement Board of Trustees for the North Carolina Supplemental Retirement Plans consistent with section 403(b) of the Internal Revenue Code of 1986, as amended.

(4)        Investment staff of the Department of State Treasurer may make recommendations to the State Treasurer and the Supplemental Retirement Board of Trustees for the North Carolina Supplemental Retirement Plans as to appropriate investment options. ThePursuant to G.S. 135‑96, the State Treasurer and Board of Trustees shall have sole responsibility for the selection of the vendor, third‑party administrator, providers of investment options, and any other service provider for the North Carolina Public School Teachers' and Professional Educators' Investment Plan.

(5)        All contributions made in accordance with the provisions of section 403(b) of the Internal Revenue Code of 1986, as amended, and this section shall be remitted directly to the administrator and held by the administrator in a custodial account on behalf of each participating employee. Any investment gains or losses shall be credited to those accounts. The forms of payment and disbursement procedures shall be consistent with those generally offered by similar annuity contracts, trust accounts, and custodial accounts and applicable federal and State statutes governing those contracts and accounts.

(6)        Any local board of trustees may elect to make contributions to the employee's account on behalf of the employee. The local board of trustees shall take whatever action is necessary to implement this section.

(7)        The design and administration of annuity contracts, trust accounts, and custodial accounts under this provision shall comply with all applicable provisions of the Internal Revenue Code of 1986, as amended."

SECTION 19.  G.S. 115C‑436 is amended by adding a new subsection to read:

"(c)      Upon receipt of a report from the North Carolina Teachers' and State Employees' Retirement System, generated pursuant to G.S. 135‑8(f)(2)f., containing a list of employees for whom the local board of education made a contribution to the North Carolina Teachers' and State Employees' Retirement System that is likely to require an additional employer contribution should the employee elect to retire in the following 12 months, the school financial officer shall transmit a copy of the report to the local board of education. The school financial officer shall also notify the board of county commissioners of the county in which the local administrative unit is located that the report was received and the number of employees listed in the report."

SECTION 20.(a)  G.S. 135‑1(7a) reads as rewritten:

"(7a)    a.         "Compensation" shall meanmean, for members who became members prior to January 1, 2017, all salaries and wages prior to any reduction pursuant to sections 125, 401(k), 403(b), 414(h)(2), and 457 of the Internal Revenue Code, not including any terminal payments for unused sick leave, derived from public funds which are earned by a member of the Retirement System for service as an employee or teacher in the unit of the Retirement System for which he is performing full‑time work. In addition to the foregoing, "compensation" shall include:include the following:

1.         Performance‑based compensation (regardless of whether paid in a lump sum, in periodic installments, or on a monthly basis);basis).

2.         Conversion of additional benefits to salary (additional benefits such as health, life, or disability plans), so long as the benefits are other than mandated by State law or regulation;regulation.

3.         Payment of tax consequences for benefits provided by the employer, so long as they constitute an adjustment or increase in salary and not a "reimbursement of expenses";expenses."

4.         Payout of vacation leaveleave, so long as such payouts are permitted by applicable law and regulation;regulation.

5.         Employee contributions to eligible deferred compensation plans; andplans.

6.         Effective July 1, 2009, payment of military differential wages.

a1.       "Compensation" shall mean, for members who became members on or after January 1, 2017, all salaries and wages prior to any reduction pursuant to sections 125, 401(k), 403(b), 414(h)(2), and 457 of the Internal Revenue Code, not including any terminal payments for unused sick leave, derived from public funds which are earned by a member of the Retirement System for service as an employee or teacher in the unit of the Retirement System for which he or she is performing full‑time work. In addition to the foregoing, "compensation" shall include the following:

1.         Performance‑based compensation (regardless of whether paid in a lump sum, in periodic installments, or on a monthly basis).

2.         Payment of tax consequences for benefits provided by the employer, so long as they constitute an adjustment or increase in salary and not a "reimbursement of expenses."

3.         Payout of vacation leave, so long as such payouts are permitted by applicable law and regulation.

4.         Employee contributions to eligible deferred compensation plans.

5.         Payment of military differential wages.

b.         "Compensation" shall not include any payment, as determined by the Board of Trustees, for the reimbursement of expenses or payments for housing or any other allowances whether or not classified as salary and wages. "Compensation" includes all special pay contribution of annual leave made to a 401(a) Special Pay Plan for the benefit of an employee. Notwithstanding any other provision of this Chapter, "compensation" shall not include:

1.         Supplement/allowance provided to employee to purchase additional benefits such as health, life, or disability plans;

2.         Travel supplement/allowance (nonaccountable allowance plans);

3.         Employer contributions to eligible deferred compensation plans;

4.         Employer‑provided fringe benefits (additional benefits such as health, life, or disability plans);

5.         Reimbursement of uninsured medical expenses;

6.         Reimbursement of business expenses;

7.         Reimbursement of moving expenses;

8.         Reimbursement/payment of personal expenses;

9.         Incentive payments for early retirement;

10.       Bonuses paid incident to retirement;

10a.     Local supplementation as authorized under G.S. 7A‑300.1 for Judicial Department employees;

11.       Contract buyout/severance payments; and

12.       Payouts for unused sick leave.

13.       For members who became members after January 1, 2017, conversion of additional benefits to salary, such as health, life, or disability plans, so long as the benefits are other than mandated by State law or regulation.

c.         In the event an employer reports as "compensation" payments not specifically included or excluded as "compensation", such payments shall be "compensation" for retirement purposes only if the employer pays the Retirement System the additional actuarial liability created by such payments."

SECTION 20.(b)  G.S. 128‑21(7a) reads as rewritten:

"(7a)    a.         "Compensation" shall meanmean, for members who became members prior to January 1, 2017, all salaries and wages prior to any reduction pursuant to sections 125, 401(k), 403(b), 414(h)(2), and 457 of the Internal Revenue Code, not including any terminal payments for unused sick leave, derived from public funds which are earned by a member of the Retirement System for service as an employee in the unit of the Retirement System for which he is performing full‑time work. In addition to the foregoing, "compensation" shall include:include the following:

1.         Performance‑based compensation (regardless of whether paid in a lump sum, periodic installments, or on a monthly basis);basis).

2.         Conversion of additional benefits to salary (additional benefits such as health, life, or disability plans), so long as the benefits are other than mandated by State law or regulation;regulation.

3.         Payment of tax consequences for benefits provided by the employer so long as they constitute an adjustment or increase in salary and not a "reimbursement of expenses";expenses."

4.         Payout of vacation leaveleave, so long as such payouts are permitted by applicable law and regulation;regulation.

5.         Employee contributions to eligible deferred compensation plans; andplans.

6.         Effective July 1, 2009, payment of military differential wages.

a1.       "Compensation" shall mean, for members who became members on or after January 1, 2017, all salaries and wages prior to any reduction pursuant to sections 125, 401(k), 403(b), 414(h)(2), and 457 of the Internal Revenue Code, not including any terminal payments for unused sick leave, derived from public funds which are earned by a member of the Retirement System for service as an employee in the unit of the Retirement System for which he or she is performing full‑time work. In addition to the foregoing, "compensation" shall include the following:

1.         Performance‑based compensation (regardless of whether paid in a lump sum, in periodic installments, or on a monthly basis).

2.         Payment of tax consequences for benefits provided by the employer, so long as they constitute an adjustment or increase in salary and not a "reimbursement of expenses."

3.         Payout of vacation leave, so long as such payouts are permitted by applicable law and regulation.

4.         Employee contributions to eligible deferred compensation plans.

5.         Payment of military differential wages.

b.         "Compensation" shall not include any payment, as determined by the Board of Trustees, for the reimbursement of expenses or payments for housing or any other allowances whether or not classified as salary and wages. Notwithstanding any other provision of this Chapter, "compensation" shall not include:

1.         Supplement/allowance provided to employee to purchase additional benefits such as health, life, or disability plans;

2.         Travel supplement/allowance (nonaccountable allowance plans);

3.         Employer contributions to eligible deferred compensation plans;

4.         Employer‑provided fringe benefits (additional benefits such as health, life, or disability plans);

5.         Reimbursement of uninsured medical expenses;

6.         Reimbursement of business expenses;

7.         Reimbursement of moving expenses;

8.         Reimbursement/payment of personal expenses;

9.         Incentive payments for early retirement;

10.       Bonuses paid incident to retirement;

11.       Contract buyout/severance payments; and

12.       Payouts for unused sick leave.

13.       For members who became members after January 1, 2017, conversion of additional benefits to salary, such as health, life, or disability plans, so long as the benefits are other than mandated by State law or regulation.

c.         In the event an employer reports as "compensation" payments not specifically included or excluded as "compensation", such payments shall be "compensation" for retirement purposes only if the employer pays the Retirement System the additional actuarial liability created by such payments."

SECTION 20.(c)  This section becomes effective January 1, 2017.

SECTION 21.  If any provision of this act or its application is held invalid, the invalidity does not affect other provisions or applications of this act that can be given effect without the invalid provisions or application, and to this end the provisions of this act are severable.

SECTION 22.  Except as otherwise provided, this act is effective when it becomes law.