RETIREMENT COMPLEXITY REDUCTION ACT OF 2018.-AB

View NCGA Bill Details2017-2018 Session
House Bill 1055 (Public) Filed Thursday, May 31, 2018
AN ACT TO REDUCE COMPLEXITY AND ADD VALUE TO THE RETIREMENT BENEFITS OF PUBLIC EMPLOYEES AND TO INCREASE ADMINISTRATIVE EFFICIENCIES BY MAKING ADMINISTRATIVE AND PROGRAMMATIC CHANGES TO LAWS RELATING TO THE STATE TREASURER, TO THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM, TO THE LOCAL GOVERNMENT EMPLOYEES' RETIREMENT SYSTEM LAWS, TO THE STATE HEALTH PLAN FOR TEACHERS AND STATE EMPLOYEES, AND TO RELATED STATUTES.
Intro. by Collins, Ross, Dulin, McNeill.

Status: Re-ref Com On Rules, Calendar, and Operations of the House (House Action) (Jun 28 2018)
H 1055

Bill Summaries:

  • Summary date: Jun 26 2018 - More information

    The Governor vetoed the act on 06/25/18. The Governor's objections and veto message are available here: https://www.ncleg.net/Sessions/2017/H1055Veto/H1055Veto.html


  • Summary date: Jun 14 2018 - More information

    Senate committee substitute makes the following change to 3rd edition. Adds that if House Bill 977, 2017 Regular Session becomes law, then Section 3(b) of that act is amended to require that subsection (a) of that section expires five years after the effective date of that section. Requires that any charter school entering into a withdrawal liability payment plan prior to the expiration date will have the full three years to complete the payment plan. 


  • Summary date: Jun 12 2018 - More information

    House amendment makes the following changes to the 2nd edition.

    Makes Section 1(c), which amends GS 150B-1 effective when the act becomes law, with the exemption applicable to actuarial tables, assumptions, and contribution-based cap factors changed on or after that date.


  • Summary date: Jun 7 2018 - More information

    House committee substitute makes the following changes to the 1st edition.

    Section 1

    The previous edition amends GS 135-6(l) (concerning the Retirement System for Teachers and State Employees) and GS 128-28(m) (concerning the Retirement System for Counties, Cities, and Towns) with identical changes, requiring that the contribution-based benefit cap factor be included in the actuary of the retirement systems' periodic reports to the Board of Trustees. The previous edition also provides that the materials provided by the actuary to the Board of Trustees will become effective the first day of the month following adoption unless a different date is specified in the adopting resolution. Specifies that the effective date must be after the adoption date. 

    Adds the following new provisions.

    Section 5

    Makes the following changes to provisions in GS Chapter 135 relating to the Retirement System for Teachers and State Employees, and GS Chapter 128 relating to the Retirement System for Counties, Cities, and Towns. Makes organizational changes to GS 135-4 and GS 128-26, and makes language gender-neutral.

    Makes technical changes to GS 135-4 to eliminate outdated provisions concerning creditable service for teachers and state employees during the years preceding and immediately after the establishment of the System.

    Makes identical deletions to subsections (b) and (d) of GS 135-4 and GS 128-26, eliminating the Board of Trustees' duty to fix and determine how much service in any year is equivalent to one year of service. Also eliminates the provision permitting any member to request the applicable Board of Trustees to modify or correct the member's prior service credit up until the member's date of retirement or within one year thereafter. 

    Repeals GS 128-26(c), which requires the Board of Trustees of the Retirement System for Counties, Cities, and Towns to verify member statements of creditable service filed pursuant to the statute, and in lieu of verification of compensation rates for prior service received from members, use compensation rates of the same average salary of the members for the five years immediately preceding the date of participation of his employer with salary increases shown in the tables as prescribed in GS 128-28(o), as the records show the member actually received. 

    Makes identical deletions in subsection (e) of GS 135-4 and GS 128-26, eliminating outdated provisions concerning members of either System whose specified account was closed on or after July 1, 1971, or July 1, 1973, on account of absence from service and later returned eligible to repay the amount withdrawn plus interest in a lump sum payment.

    Further amends GS 128-26(e), eliminating the outdated provision allowing a member who entered service or was restored to service prior to July 1, 1982, and who was excluded from membership service solely on account of having attained 62 years of age, to purchase serve credits for the excluded service by making a lump sum payment plus interest. Repeals GS 135-4(q), which holds an identical provision for members in that system.

    Makes technical changes to GS 135-4(e) relating to service purchase provisions for North Carolina General Assembly employees and state law enforcement officers. 

    Repeals GS 128-26(f), establishing three classes of prior service certificates issued on account of served rendered to the respective Class A, B, or C employee.

    Repeals GS 135-4(i), a service purchase provision for persons that joined the System after June 30, 1947, and before July 1, 1955.

    Amends GS 135-4(k) and GS 128-26(i), limiting those existing purchase provisions for withdrawn service for law enforcement officers to the period on or before December 31, 2018.

    Enacts identical subsections GS 135-4(k1) and GS 128-26(i1), providing for the purchase of withdrawn service on or after January 1, 2019, by law enforcement officers who return to service and complete five years of membership service upon return. Limits the total amount of creditable service purchased under the respective subsection to five years. Specifies the calculation of the lump sum amount to purchase the service and details assumptions specific to the calculation. Adds that the calculation must include an administrative fee set by the respective Board. Authorizes an employer to pay all or part of the cost of a service purchase of a member in service, which cost must be credited to the pension accumulation fund, while costs paid by the member must be credited to the member's annuity savings account. 

    Amends GS 135-4(l1) and GS 128-26(j2), limiting those existing provisions concerning service purchase for creditable service rendered to any state, territory, or other governmental subdivision of the United States other than this state to the period on or before December 31, 2018.

    Enacts identical subsections GS 135-4(l2) and GS 128-26(j3), providing for members with service of five or more years of membership service to purchase creditable service previously rendered to any state, territory, or other governmental subdivision of the United States other than this state on or after January 1, 2019. Limits the total amount of creditable service purchased under the respective subsection to five years. Similar to new GS 135-4(k1) and GS 128-26(i1), specifies the calculation of the lump sum amount to purchase the service and details assumptions specific to the calculation. Adds that the calculation must include an administrative fee set by the respective Board. Includes identical language as that included in existing GS 135-4(l1) and GS 128-26(j2), to further specify the allowable credit and limit the maximum allowable purchase of out-of-state service to five years. Also carries over the language allowing for out-of-state credit only if no benefit is allowable in any other public retirement system as a result of the service. Authorizes an employer to pay all or part of the cost of a service purchase of a member in service, which cost must be credited to the pension accumulation fund, while costs paid by the member must be credited to the member's annuity savings account. 

    Amends GS 135-4(r), relating to the purchase of creditable service for leaves of absence terminating on and after January 1, 1988, by removing "return to service" language to instead refer to the end of the leave of absence, thereby removing the requirement that the member return to service. Similarly, amends GS 128-26(l), relating to the purchase of creditable service for leaves of absence terminating on and after July 1, 1983, by removing "return to service" language to instead refer to the end of the leave of absence, thereby removing the requirement that the member return to service.

    Amends GS 135-4(w) and GS 128-26(o), relating to service purchases for federal employment, limiting the amount of creditable service purchased under the subsection to a total of five years. Additionally, eliminates existing language concerning the calculation of the lump sum amount payable to purchase the credit. Instead, provides for the calculation in terms similar to new GS 135-4(k1) and GS 128-26(i1), and GS 135-4(l2) and GS 128-26(j3), and provides assumptions specific to the calculation in the same manner. Adds that the calculation must include an administrative fee set by the respective Board. Authorizes an employer to pay all or part of the cost of a service purchase of a member in service, which cost must be credited to the pension accumulation fund, while costs paid by the member must be credited to the member's annuity savings account. Further, limits the existing provisions for the purchase of creditable service for periods of employment with public community service entities within the state funded entirely with federal funds to the period on or before December 31, 2018. Eliminates language including programs the Board of Trustees adopts as public community service entities. Further amends GS 128-26(o) to eliminate clarifying language relating to the terms "full cost," "full liability," and "full actuarial cost." 

    Repeals GS 134-4(p1) and GS 128-26(p), relating to part-time service credit. Enacts GS 134-4(p2) and GS 128-26(p1), providing for members in service with five or more years of membership service to purchase service previously rendered as a part-time teacher or employee of an employer as specified. Exempts from purchase (1) part-time service rendered as a bus driver to a public school while a full-time high school student and (2) temporary or part-time service rendered while a full-time student in pursuit of a degree or diploma in a degree-granting program unless the service was rendered on a permanent part-time basis and required at least 20 years of service per week. Specifies the calculation of the lump sum amount to purchase the service and details assumptions specific to the calculation. Adds that the calculation must include an administrative fee set by the respective Board. Directs the respective Board of Trustees to adopt rules regarding how much service in any year, based on compensation, is equivalent to one year of service in proportion to earnable compensation, with the limitation that service in one year cannot be credited for more than one year of service. Establishes that service rendered for the regular school year in any district must be equivalent to one year of service. Authorizes an employer to pay all or part of the cost of a service purchase of a member in service, which cost must be credited to the pension accumulation fund, while costs paid by the member must be credited to the member's annuity savings account.

    Amends GS 134-4(p), limiting the existing service purchase provisions for prior temporary State employment to the period on or before December 31, 2018, applicable to members as specified.

    Amends GS 135-4(s) and GS 128-26(r), relating to the purchase of credit at full cost for temporary state employment as a temporary teacher (applicable to GS 135-4(s) only) or as an employee subject to the existing specified conditions in each subsection. Limits the option to members in service with five or more years of membership service. Adds a new provision to limit the amount of creditable service purchased under the subsection to a total of five years. Additionally, eliminates existing language concerning the calculation of the lump sum amount payable to purchase the credit. Instead, provides for the calculation in terms similar to new GS 135-4(k1) and GS 128-26(i1), GS 135-4(l2) and GS 128-26(j3) and GS 128-26(o), and provides assumptions specific to the calculation in the same manner. Adds that the calculation must include an administrative fee set by the respective Board. Authorizes an employer to pay all or part of the cost of a service purchase of a member in service, which cost must be credited to the pension accumulation fund, while costs paid by the member must be credited to the member's annuity savings account. Eliminates the provision extending the application of the subsection to the purchase of creditable service for State employment when classified as a permanent hourly employee. 

    Repeals GS 135-4(t), relating to credit purchase at full cost for local government employment. 

    Repeals GS 135-4(u), relating to credit purchase of forfeited service for members who are wildlife protectors who transferred contributions from the System to the Law Enforcement Officers' Retirement System and forfeited creditable service as a non-law enforcement officer as a result of the transfer.

    Amends GS 135-4(z), relating to credit purchase of credit at full cost for leave due to extended illness. Eliminates existing language concerning the calculation of the lump sum amount payable to purchase the credit. Instead, provides for the calculation in terms similar to new GS 135-4(k1) and GS 128-26(i1), GS 135-4(l2) and GS 128-26(j3), GS 128-26(o), and GS 135-4(s), and provides assumptions specific to the calculation in the same manner. Adds that the calculation must include an administrative fee set by the respective Board. Adds a new provision to limit the amount of creditable service purchased under the subsection to a total of five years. Authorizes an employer to pay all or part of the cost of a service purchase of a member in service, which cost must be credited to the pension accumulation fund, while costs paid by the member must be credited to the member's annuity savings account.

    Amends GS 135-4(aa), relating to credit purchase of credit at full cost for parental leave, pregnancy or childbirth-related leave, or certain involuntary furloughs (was, for maternity leave). Eliminates existing language concerning the calculation of the lump sum amount payable to purchase the credit. Instead, provides for the calculation in terms similar to new GS 135-4(k1) and GS 128-26(i1), GS 135-4(l2) and GS 128-26(j3), GS 128-26(o), GS 135-4(s), and GS 135-4(z), and provides assumptions specific to the calculation in the same manner. Adds that the calculation must include an administrative fee set by the respective Board. Adds a new provision to limit the amount of creditable service purchased under the subsection to a total of five years. Authorizes an employer to pay all or part of the cost of a service purchase of a member in service, which cost must be credited to the pension accumulation fund, while costs paid by the member must be credited to the member's annuity savings account.

    Amends GS 135-4(bb) and GS 128-26(q), limiting those existing provisions concerning service purchase for creditable service for specified probationary local government employment to the period on or before December 31, 2018.

    Enacts GS 135-4(bb1) and GS 128-26(q1), providing for members to purchase creditable service prior to retirement on and after January 1, 2019, for probationary local government employment, as specified, between the date of employment and the date of membership with the Local Governmental Employee's Retirement System. Provides for the calculation in terms similar to new GS 135-4(k1) and GS 128-26(i1), GS 135-4(l2) and GS 128-26(j3), GS 128-26(o), GS 135-4(s), GS 135-4(z), and GS 135-4(aa), and provides assumptions specific to the calculation in the same manner. Adds that the calculation must include an administrative fee set by the respective Board. Authorizes an employer to pay all or part of the cost of a service purchase of a member in service, which cost must be credited to the pension accumulation fund, while costs paid by the member must be credited to the member's annuity savings account. Adds to GS 128-26(q1) that the amount of creditable service purchased under the subsection cannot exceed five years. 

    Amends GS 128-26(s), relating to credit purchase for credit at full cost for employment not otherwise creditable. Limits the option to members in service with five or more years of membership service. Modifies existing language to require that the employer for which the member wishes to purchases service is a participating employer in the System at the time of purchase, but was not a participating employer in the System at the time the service was rendered by the member. Eliminates existing language concerning the calculation of the lump sum amount payable to purchase the credit. Instead, provides for the calculation in terms similar to new GS 135-4(k1) and GS 128-26(i1), GS 135-4(l2) and GS 128-26(j3), GS 128-26(o), GS 135-4(s), GS 135-4(z), GS 135-4(bb1) and GS 128-26(q1), and provides assumptions specific to the calculation in the same manner. Adds that the calculation must include an administrative fee set by the respective Board. Authorizes an employer to pay all or part of the cost of a service purchase of a member in service, which cost must be credited to the pension accumulation fund, while costs paid by the member must be credited to the member's annuity savings account.

    Amends GS 135-4(hh), relating to credit purchase for credit at full cost for service with UNC during which a member participated in the Optional Retirement Program. Modifies existing language to require the member be in service with five or more years of membership service to purchase credit under the subsection. Adds new provision to limit the amount of creditable service purchased under the subsection to a total of five years. Eliminates existing language concerning the calculation of the lump sum amount payable to purchase the credit. Instead, provides for the calculation in terms similar to new GS 135-4(k1) and GS 128-26(i1), GS 135-4(l2) and GS 128-26(j3), GS 128-26(o), GS 135-4(s), GS 135-4(z), GS 135-4(bb1), GS 128-26(q1), and GS 128-26(s), and provides assumptions specific to the calculation in the same manner. Adds that the calculation must include an administrative fee set by the respective Board. Authorizes an employer to pay all or part of the cost of a service purchase of a member in service, which cost must be credited to the pension accumulation fund, while costs paid by the member must be credited to the member's annuity savings account.

    Amends GS 135-1.1 to provide that system contribution rates are as fixed under GS 135-8, the Current Operations Appropriations Act, or any other applicable law (was, fixed by law and by the rules of the Board of Trustees of the Retirement System). Allows any person who was an employee of the board on the date the board makes an irrevocable election to participate in the Retirement System to purchase creditable service for periods of employment with the board before the election if (1) the person is a member in service and (2) the purchase is made on or before December 31, 2018. Limits the amount of creditable service that can be purchased to an amount not to exceed five years. Sets out a new formula for the calculation of the amount that must be paid. Makes additional calcifying changes.

    Amends GS 135-56 by adding that on and after January 1, 2019, when membership ceases because a member withdraws his accumulated contributions, the prior service and previous membership service is no longer considered to be creditable service. If a member whose creditable service has been cancelled subsequently returns to membership service and completes five years of membership service after returning, then allows the member to purchase creditable service in an amount corresponding to the total of the membership service associated with the withdrawn contributions, not to exceed five years. Sets out new provisions for calculating the amount that must be paid. Allows an employer to pay all or part of the cost of a service purchase of a member in service and requires that the cost paid by the employer be credited to the pension accumulation fund while the cost paid by the member must be credited to the members’ annuity savings account. Makes conforming changes to make existing law applicable on or before December 31, 2018.

    Amends GS 120-4.15 (Article 1 of GS Chapter 120 concerns the Legislative Retirement System) to add that on and after January 1, 2019, repayment of contributions withdrawn from the Legislative Retirement Fund and System must be in an amount equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the Retirement System’s liabilities. Excludes the following assumptions specific to this calculation: (1) the allowance must be assumed to start at the earliest age at which the member could retire on an unreduced retirement allowance and (2) assumed annual postretirement allowance increases as set by the Board of Trustees of the Teachers' and State Employees' Retirement System upon the advice of the consulting actuary. Requires that the calculation of the amount payable also include an administrative fee. Allows an employer to pay all or part of the cost of a service purchase of a member in service and requires that the cost paid by the employer be credited to the pension accumulation fund while the cost paid by the member must be credited to the members’ annuity savings account.

    Amends GS 120-4.16, concerning the repayments and purchase of service credit, to require that repayments and purchases that are not made within two years after the member becomes eligible be equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the Retirement System’s liabilities (was, equal to the full actuarial cost of the additional service credit as defined in GS 135-4). Excludes the following assumptions specific to this calculation: (1) the allowance must be assumed to start at the earliest age at which the member could retire on an unreduced retirement allowance and (2) assumed annual postretirement allowance increases as set by the Board of Trustees of the Teachers' and State Employees' Retirement System upon the advice of the consulting actuary. Requires that the calculation of the amount payable also include an administrative fee.

    Amends GS 126-8.5, concerning discontinued service retirement allowances or severance wages that are to be paid when a job is eliminated due to a reduction in force or a State institution is closed and reemployment is not available. Adds that when a discontinued service retirement allowance is approved, in addition to the amount that the employing agency is required to pay to the Administrator of the State Retirement Systems, the employing agency must also add in an amount to be deposited in the Retiree Health Benefit Fund. Sets out the formula for calculating how much must be deposited into the fund. Makes additional clarifying changes and makes language gender neutral.

    Amends GS 135-3 and GS 128-24, setting out membership of the relevant system, by deleting the provisions that remove a member who is absent from service for a specified amount of time within a specified time after becoming a member; still provides that a member ceases to be a member only if the member withdraws his accumulated contributions or becomes a beneficiary or dies. Makes conforming changes. Makes language gender neutral.

    Requires the Retirement Systems Division of the Department of State Treasurer to accept and process all service purchase request forms, for all service purchases that are required to have been made by December 31, 2018, that are received by the Division on or before that date. 

    Section 6

    Amends GS 135-5(g) and GS 128-27(g), which set out optional benefit payment allowances, by limiting the following options to only members retiring on or before December 1, 2018: (1) option four, concerning the adjustment of the retirement allowance for social security and (2) option six, which allows a member who has also elected option two (100% reduced retirement benefit paid to named beneficiary) or option three (50% reduced retirement paid to named beneficiary) to add that if the beneficiary dies before the member, the allowance payable to the member after the beneficiary’s death is equal to the allowance that would have been paid had the member not elected the option. Makes additional clarifying and conforming changes.

    Section 7

    Except as otherwise provided, effective when the act becomes law.


  • Summary date: Jun 6 2018 - More information

    House committee substitute to the 1st edition is to be summarized.


  • Summary date: May 31 2018 - More information

    Amends GS 135-6(l) (concerning the Retirement System for Teachers and State Employees) and GS 128-28(m) (concerning the Retirement System for Counties, Cities, and Towns) with identical changes, requiring that the contribution-based benefit cap factor be included in the actuary of the retirement systems' periodic reports to the Board of Trustees. Clarifies that the actuary is to include experience studies, all other actuarial calculations, and all assumptions used by the actuary in the annual valuations of System assets provided to the Board of Trustees. Provides that the materials provided by the actuary to the Board of Trustees will become effective the first day of the month following adoption unless a different date is specified in the adopting resolution. Makes other clarifying changes.

    Amends GS 150B-1(d), adding subsection (29), exempting from the Rules of GS Chapter 150B, Article 2A, the Retirement System Board of Trustees established under GS 128-28 and GS 135-6 when adopting actuarial tables, assumptions, and contribution-based benefit cap factors after presentation of recommendations from the actuary. This exemption includes, but is not limited to, 11 specified actuarial tables, assumptions, methods, and factors.

    Amends GS 135-6(n) and GS 128-28(o) with identical changes, requiring the Board of Trustees to adopt any necessary contribution-based benefit cap factors for the Retirement System, at least once in every five year period. Makes other clarifying changes.

    The above changes are effective when they become law and apply to actuarial investigations and calculations mode on or after that date.

    Amends GS 135-6.1 and GS 128-33.1, adding new subsection (e1), permitting the Retirement Systems Division of the Department of State Treasurer to disclose to employers who made a contribution for an employee to the Retirement System any information regarding that employee necessary to conduct the business of the Retirement System. Requires employers who receive this information to treat the information as confidential. Requires that the information not be made public record.

    Amends GS 135-8(f)(2)f, GS 135-8(j), GS 128-30(g)(2)b., and GS 128-30(j), requiring that reports received under these statutes are not to be made public record, and employers who receive this information are to treat the information as confidential as if it were still held by the Retirement System.

    Amends GS 135-48.47, making a local government unit’s election to participate in a State Health Plan irrevocable unless notice of withdrawal was provided by September 15, 2016.

    Amends GS Chapter 147, Article 6, adding new section GS 147-75.1, titled Criminal record checks for the Department of State Treasurer. Permits the Department of State Treasurer (Department) to obtain from the State and National Repositories of Criminal Histories or from any other lawful source the criminal history of any: current or prospective employee of the Department, contractor with the Department and their employees and agents, volunteers of the Department, and any other individual engaged by the Department who will have access to health or financial information maintained by the Department that is otherwise confidential. Permits the Department to terminate or refuse employment for any of the above individuals who refuse to consent to a criminal record check or refuse to provide fingerprints or any other necessary identifying information. Such refusal constitutes just cause to terminate or refuse employment. Allows the Department to extend a conditional offer of employment pending the results of this criminal background check.


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