Bill Summary for H 381 (2013-2014)

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Summary date: 

Mar 21 2013

Bill Information:

View NCGA Bill Details2013-2014 Session
House Bill 381 (Public) Filed Wednesday, March 20, 2013
A BILL TO BE ENTITLED AN ACT TO PROVIDE FOR THE FISCAL INTEGRITY OF THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM, THE LOCAL GOVERNMENTAL EMPLOYEES' RETIREMENT SYSTEM, AND THE CONSOLIDATED JUDICIAL RETIREMENT SYSTEM, TO DIRECT THE DEPARTMENT OF STATE TREASURER TO PROPOSE A TEACHERS' AND STATE EMPLOYEES' OPTIONAL RETIREMENT SYSTEM, AND TO APPROPRIATE FUNDS FOR THAT SYSTEM.
Intro. by Collins.

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Bill summary

Under current law, the Teachers' and State Employees' RetirementSystem (TSERS) and the Local Governmental Employees' Retirement System (LGERS), applicable to employees of counties, cities, and towns, specifies the types of payments by employers to employees that are included or excluded as compensation.

Amends GS 135-1(7a) (TSERS) and GS 128-21(7a) (LGERS) to provide that any remuneration, including salary, that is determined by therespectiveRetirement Systems Divisionstaff, upon conducting a fraud investigation as provided under GS 135-1(11b) (TSERS) or GS 128-1(11c) (LGERS), to have been paid to a memberfor the principal purpose of enhancing the member's benefits under the retirement plan is presumed not to be compensation for retirement purposes. Provides that the presumption may be rebutted by themember or by the employer on the member's behalf, and that with receipt of sufficient evidence, the presumption may be reversed.Provides that the decision lies solely within the respectiveBoard of Trustees' discretion as to whether the presumption by the administrative staff has been rebutted by sufficient evidence.

Amends GS 135-5 (TSERS) and GS 128-027 (LGERS) to direct the respective Board of Trustees to establish a contribution-based benefit cap factor upon the advice of a consulting actuary. Provides that every service retirement allowance provided under the respective statutes, for employees who became members on or after July 1, 2013, is subject to adjustment under a contribution-based benefit cap. Specifiesprocess in which the respective Boards must engagebefore establishing a service allowance undereach section and identifies the formula for calculating a member's contribution-based benefit cap.

Amends GS 135-4 (TSERS) and GS 128-26(v) (LGERS) regarding retroactive membership service to provide that a member who is retroactivelyreinstated as an employee to the date of the prior involuntary termination must provide certification and any agreement between the member and the employer as to back pay and benefits as a condition of being allowed retroactive membership service. Provides that in the event that the service purchase provision in these sections is invoked in a dispute settlement between an employee and an employer, the average final compensation used for recalculating a retirement benefit cannot be based on hypothetical compensation for any months after the date of the prior involuntary termination that triggered the use of the service purchase provision.

Amends the following provisions, regarding TSERS, to deleterestriction that the provisions apply only to an employeewho became amember before August 1, 2011: GS 135-3(8) and GS 135-5. Also deletes provisions under GS 135-3(8)b4.(regarding members who are not law enforcement officers) and GS 135-3(8)b5. (regarding members who are law enforcement officers) concerning those becoming members after August 1, 2011, andwho separate from service upon attaining a certain age withspecified years of service and their eligibility for a reduced or unreduced retirement allowance. Amends GS 135-5 to delete provision (a)(1a)regarding retirement by membersbecoming members after August 1, 2011, who meetspecified age and creditable servicerequirements. Also deletes subsubsection (a)(4a) regarding retirement of a member who is a law enforcement officer meeting the specified retirement requirements for age and years of service for those becoming members after August 1, 2011.Deletes subsection (a2) regarding early service retirement benefits for those becoming members after August 1, 2011. Makes conforming changes to subsection (b19) as amended by this act. Deletes subsection (b20) regarding service retirement allowance for employees who became members on or after August 1, 2011, and subsection (m3) regarding survivor's alternate benefits.

Deletes subsection (a1) of GS 135-57 (regarding the service retirement provisions of the Consolidated Judicial Retirement Act), which providesretirement guidelines for amember whose membership began on or after August 1, 2011, who is at least 50 years old, and has 10 years of membership service. Makesa conforming change, deleting subsection (c1). Also deletesrestriction that the provisions apply only to an employeewho became amember before August 1, 2011.

Amends GS 143-166.41, special separation allowance for law enforcement officers, to deleterestriction that the provisions apply only to a law enforcement officer employed by a state department, agency, or institution prior toAugust 1, 2011. Provides that the law enforcement officer mayretire under the provisions of either GS 135-5(a) or GS 143-166.30 (was, under GS 135-5(a)). Deletes subsection (a1).

Directs the Department of the State Treasurer (Department)to propose to the General Assembly, by May 1, 2014, a framework for an optional retirement plan that may be elected in lieu of participating in TSERS. Declares that the plan is to be titled the Teachers' and State Employees' Optional Retirement System of North Carolina.

Appropriates $1 million for the 2013-14 fiscal year and $3 million for the 2014-15 fiscal year from the General Fund to the Department to provide the start-up costs for establishing the optional retirement system. Provides that fundsremain available to the Department to provide the start-up costs anddo not revert at the end of the fiscal year. Directs that the Department hold the funds in an account until they are expended for the exclusive benefit of future participants in the optional retirement system.

Appropriates $310,000 for the 2013-14 fiscal year and $615,000 for the 2014-15 fiscal year from the General Fund to the Department for use to staff the start-up of the optional retirement system with seven positions.

Effective July 1, 2013.