Part I.

Enacts GS 135-5.8 allowing members of the Teachers' and State Employees' Retirement System (TSERS) to elect or continue to receive any retirement allowance for which the member is eligible if: (1) the member is in service as a law enforcement officer, has reached 59.5 years old, and has not separated from service as a law enforcement officer with the employer under which the member will begin receiving the retirement allowance; or (2) the member is a retired law enforcement officer, had a bona fide separation of at least six months, returns to service as a law enforcement officer and continue to receive that retirement allowance. Requires members making an election under (1) to also make any elections and creditable service purchases required by state law at or prior to retirement at the time of the election, as specified. Bars receiving additional membership service for any employment while the member is receiving the retirement allowance. Directs that the employer, rather than the member, must make employee contributions to TSERS in an amount calculated as described once a member elects to receive and begins receiving the retirement allowance. Provides for reduction of the member's gross salary or wage paid as if the member was making the employee contribution. Disqualifies members making an election under the statute from participating in the Disability Income Plan and instead continues the retirement allowance elected if the member becomes mentally or physically incapacitated and unable to further perform their duties of employment. Disqualifies members making an election under the statute from eligibility for State contributions to the Supplemental Retirement Income Plan and requires that contributions cease upon election. Continues eligibility for benefits under the Public Safety Employees' Death Benefits Act (Article 12A, GS Chapter 143) upon election. Provides for instances of death or separation from employment of a member receiving the retirement allowance; the effect of changes to retirement allowance of beneficiaries; and the criteria and effect of revoking the election.

Adds Justice Officer to the defined terms set forth in GS 128-21, applicable to the Local Governmental Employees' Retirement System (LGERS), defined by statutory cross-reference to GS Chapter 17E. Enacts GS 128-27.1, mirroring the provisions enacted in new GS 135-5.8, to allow members of LGERS who are employed or retired law enforcement or justice officers to elect to receive any retirement allowance for which the member is otherwise eligible while continuing or returning to service; requires the member to have separated from service for no less than one month (instead of six as required under GS 135-5.8). Provides identical requirements and limitations, substituting appropriate cross-references where necessary to make the provisions applicable to LGERS members and benefits. 

Makes conforming changes to GS 135-3 (TSERS membership) and GS 128-24 (LGERS membership). Changes the statutory provisions referenced in the "Notwithstanding" clauses of current GS 135-3(b) and subdivision (5a), GS 128-24 (recodified as subsection (b)). Specifies that a bona fide separation occurs when a member has severed the employment relationship with the employers and the respective System's Board of Trustees has received all applicable termination notifications. Requires the employer and beneficiary to file original sworn affidavits with the respective Board that include two described attestations within 60 days from the date a beneficiary is reemployed with an employer to preserve the bona fide separation presumption. Makes technical changes and language gender neutral. 

Amends GS 143-166.41 and GS 143-166.42 governing separation allowances for law enforcement officers who are members of TSERS and LGERS. Except as otherwise described, replaces existing provisions to provide an annual special separation allowance for State and local law enforcement officers to begin the month the officer either retires on a basic service retirement or elects to begin receiving the retirement allowance while still in service pursuant to new GS 135-5.8 or GS 128-27. Sets forth four qualifying criteria for the allowance, including that the officer has completed 30 or more years of creditable service or is 55 or older and has completed five or more years of creditable service. Includes four defined terms. Establishes a formula to calculate the allowance amount and four events which trigger cessation of allowance payments. Maintains existing provisions of each statute relating to the impact of payments on other benefits and actions, eligibility determinations, and responsibility for payments, and for GS 143-166.41, the provision regarding the transfer of funds. Adds a new requirement for allowances to be paid in equal installments on the payroll frequency used by the employer. Adds captions to the statutes' subsections. 

Amends GS 143-166.84 regarding eligibility for the Sheriffs' Supplemental Pension, Article 12H. Adds a new subsection expanding eligibility to county sheriffs who have completed 10 years of eligible service as a sheriff, are at least 55 or have attained at least 30 years of creditable service regardless of age, and have elected to receive a retirement allowance while in service under new GS 128-27.1 and not revoked that election. Directs that monthly payments for sheriffs eligible under the new provision begin with the month in which the officer elects to begin receiving the retirement allowance under new GS 128-27.1. Makes conforming and clarifying changes. 

Amends GS 143-166.85 regarding supplemental pension benefits under Article 12H. Adds a new subsection directing a sheriff who is still in service and entitled to receive a supplemental pension benefit to receive an annual pension benefit, payable in monthly installments. Details calculation of the benefit. Excepts from the events mandating the cessation of benefits pensioners reemployed as a sheriff or another public safety position under state law or who have elected to receive distributions while in service under new GS 128-27. Adds revocation of a pensioner's election to receive a retirement allowance under new GS 128-27.1 to the events mandating cessation of benefits, and provides for benefits upon a sheriff's later subsequent retirement. Makes technical and clarifying changes.

Effective October 1, 2025.

Part II.

Makes conforming changes to GS 135-103 (Disability Income Plan eligibility) and GS 143-166.60 (statutory cross-references to definitions).

Repeals GS 143-166.81(a), defining the scope of Article 12H to retired county sheriffs.

Amends GS 143-166.30, replacing eligibility provisions of the Supplemental Retirement Income Plan (Plan) to now encompass all law enforcement officers employed by the State as provided by GS Chapter 135, Article 5 (governing the Plan). Eliminates directives to the Board of Trustees' administration of the Plan. Defines "Plan". Allows Plan participants that have elected to receive a retirement allowance under new GS 135-5.8 to transfer eligible accumulated contributions to TSERS and receive a special retirement allowance based on their accumulated account balance at the date of transfer. No longer specifies that State contributions to the Plan under the statute are in addition to contributions on account of court assessments provided by the statute. Adds that State contributions cease upon an officer electing to receive a retirement allowance under new GS 135-5.8(a)(1). Makes technical changes.

Amends GS 143-166.50, regarding the Supplemental Income Plan for local law enforcement officers (Plan for local officers). Deletes outdated language. Adds that employer contributions to the Plan for local officers cease upon the officer's election to receive a retirement allowance under new GS 128-27.1. Allows local officer Plan participants that have elected to receive a retirement allowance under new GS 128-27.1 to transfer eligible accumulated contributions to LGERS and receive a special retirement allowance based on their accumulated account balance at the date of transfer. 

Effective October 1, 2025.

Part III.

Appropriates $10 million from the General Fund in recurring funds to the Department of State Treasurer for each year of 2025-27 to implement the act. Effective July 1, 2025.

Part IV.

Includes a severability clause. Sunsets any provision of Part I when the IRS notifies the State Treasurer is noncompliant with federal law at 30 days from receipt of a notification. Requires the State Treasurer to notify the Revisor of Statutes of any IRS notification requiring expiration.

Sunsets specified sections and subsections of GS Chapters 135, 128, and 143, as enacted by the act, effective December 31, 2029, as follows:

• GS 135-5.8;
• GS 135-3(b1);
• GS 128-27.1;
• GS 128-24(b2);
• GS 143-166.41(a)(2), (b2)(2), (c)(3)c., (c)(4);
• GS 143-166.42 (a)(2), (b1)(2), (c)(3)c., (c)(4);
• GS 143-166.85 (a3) and (b2);
• GS 143-166.85(a1), (d)(1)b., (d)(2); and
• GS 135-103(c).

Allows a law enforcement officer in service and in receipt of a retirement allowance under GS 135-5.8 or GS 128-27.1 on the date of the expiration of the statutes above, to continue that service and to receive the retirement allowance. Makes the provisions of GS 135-3 and GS 128-24 apply to any subsequent return to work.