Amends GS 135-1, adding the defined term COLA-eligible member to the defined terms applicable to the Chapter, which governs the Teachers' and State Employees' Retirement System (TSERS). Defines the term to mean teachers and State employees who did not earn membership service prior to July 1, 2021, or withdrew any membership service earned prior to July 1, 2021. Makes conforming organizational changes. 

Amends GS 135-5(b21), providing for the following retirement allowance for COLA-eligible members upon retirement on or after July 1, 2019. For (1) members who are law enforcement officers or eligible law enforcement officers whose service retirement date occurs on or after the member's 55th birthday and completion of five years of creditable service as a law enforcement officer, or after completion of 30 years of creditable service, or (2) members who are not law enforcement officers or eligible law enforcement officers whose service retirement date occurs on or after the 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 the member's 60th birthday upon the completion of 25 years of creditable service, provides a retirement allowance in the amount of 1.5% of the member's average final compensation, multiplied by the number of years of the member's creditable service.

Enacts new subsection (d1) to GS 135-8, providing for the retirement allowance of COLA-eligible members to be paid from the pension distribution fund, with balance transfers from the pension accumulation fund to this fund equivalent to the present value of the member's future benefits. Requires the consulting actuary to make an annual valuation of the fund and the asset return assumption, as specified, and required the TSERS Board of Trustees to annually adjust the benefits paid from the fund to increase or decrease the fund liabilities to equal the fund assets. Sets parameters and restrictions for the increases or decreases.

Effective on the date the act becomes law, directs the TSERS Board of Trustees to, by June 30, 2021, develop a process to allow teachers and State employees who became members prior to July 1, 2021, to elect to begin participating as COLA-eligible members.

Effective July 1, 2021.