Identical to H 1126, filed on 4/29/26.

Part I. Retirement Systems

Amends GS 135-4, applicable to the Retirement System for Teachers and State Employees, by adding to the provisions that apply to State employees who served in the uniformed services who were not dishonorably discharged and returned to service of the State within two years, that if a member forfeited services previously credited by electing to receive a return of accumulated contributions, and subsequently purchases the maximum amount of service allowed, then that member must have the serve previously credited restored. Effective January 1, 2027, and applies to members of the Teachers’ and State Employees’ Retirement System with forfeited service that was previously credited under GS 135-4(g) who subsequently purchase the maximum amount of service allowed on or after January 1, 2027.

Amends GS 128-26, applicable to the Local Governmental Employee’s Retirement System, to provide that if a member forfeited service previously credited uniformed service credit by electing to receive a return of accumulated contributions and subsequently purchases the maximum amount of service allowed, then that member must have the service previously credited restored. Effective January 1, 2027, and applies to members of the Local Governmental Employee’s Retirement System with forfeited service that was previously credited under GS 128-26(a1) who subsequently purchase the maximum amount of service allowed on or after January 1, 2027.

Amends GS 135-9(b) (applicable to the Retirement System for Teachers and State Employees), GS 128-31(b) (applicable to the Local Governmental Employee’s Retirement System), and GS 120-4.29 (Legislative Retirement System) by adding that the ability to offset any overpayment of benefits or erroneous payments to members in a State-administered retirement system, the Disability Salary Continuation Plan, or the Disability Income Plan of NC, including benefits to the State Health Plan, does not apply to the fully contributory death benefit for retired members.

Amends GS 135-5 and GS 128-27, concerning the anti-pension-spiking contribution-based benefit cap, by adding to the conditions that apply to the cap that for any member whose retirement allowance was: (1) initially restored to the pre-contribution-based benefit cap level, (2) subsequently suspended for at least three years because of being restored to service, and (3) recalculated based on becoming reemployed for at least three years on the basis of the member’s compensation and service before and after the prior retirement period without restrictions, the amount required to restore the member’s benefit to the pre-contribution-based benefit cap level must be reduced on a dollar-for-dollar basis by the amount required to restore the initial retirement allowance. Makes additional technical, organizational, and clarifying changes.

Amends GS 135-3 by making the following changes to the members of the Retirement System for Teachers and State Employees whose membership is terminated on or after July 1, 1963. Excludes service as a member of the Legislative Retirement System from the provisions that apply to: (1) beneficiaries who retired on an early or service retirement and is reemployed by or engaged to perform services for an employer participating in the System on a part time, temporary, interim, or fee for service basis and whose retirement allowance will be suspended upon meeting the specified income thresholds; or (2) beneficiaries who retired on an early or service retirement allowance and is restored to service as an employee or teacher and whose retirement allowance will cease. Sets GS 120-4.21(d), which prohibited a member from receiving a service retirement allowance greater than 75% of the member's "highest annual salary" or from receiving any service retirement allowance whatsoever while employed in a position that makes the member a contributing member of either the Teachers' and State Employees' Retirement System or the Consolidated Judicial Retirement System, to expire on July 1, 2026. Amends GS 120-4.21(c), which prohibits a member from receiving a service retirement allowance greater than 75% of his "highest annual salary" so that it is no longer limited members retiring before September 1, 2025. Effective July 1, 2026, and applies to all members of the Legislative Retirement system on or after that date, including those who retired after September 1, 2025. Provides that if the service retirement allowance of a member who retired on or after September 1, 2005, and before July 1, 2026, was suspended in accordance with GS 120-4.21(d) prior to its expiration on July 1, 2026, then that service retirement allowance must continue to be suspended until the member withdraws from membership in either the Teachers' and State Employees' Retirement System or the Consolidated Judicial Retirement System and the member is not entitled to any retroactive reinstatement of a service retirement allowance related to the expiration of GS 120-4.21(d).

Enacts new GS 58-86-41, providing as follows. Requires each eligible fire department and rescue or emergency medical services squad, under rules adopted by the Board of Trustees of the Local Governmental Employees' Retirement System, to certify on account of each eligible worker, any information necessary to administer the Firefighters’ and Rescue Squad Workers’ Pension Fund.

Amends GS 143-166.30 concerning the forfeiture of benefits from the Supplemental Retirement Income Plan for State Law-Enforcement Officers for certain felonies, by adding that pending the determination of whether GS 135-18.10A (Forfeiture of retirement benefits for certain felonies related to employment or holding office) applies to the conviction, that the administrator of the Plan may prohibit the withdrawal of contributions from the law enforcement officer’s account for up to 60 days from the date of conviction. Makes additional clarifying changes. Makes the same change to GS 143-166.50, applicable to participants in the Supplemental Retirement Income Plan for Local Government Law-Enforcement Officers.

Amends GS 135-6, and GS 128-8 to allow the State Treasurer and the Board of Trustees to appoint employees as they deem advisable to carry out the terms and conditions of the Retirement System, removing the requirement that the relevant Board engage actuarial and other services required to transact the Retirement System’s business. Requires the Board of Trustees to allow the State Treasurer to establish compensation plans for employees with specialized skills or knowledge necessary for the proper administration of the System. Makes these employees exempt from the Office of State Human Resources’ classification and compensation rules, and limits the total number of these employees across the two systems to no more than 40% of the employees of the Retirement Systems Division. Makes conforming changes to GS 126-5.

Makes organizational changes to GS 135-6. Amends GS 135-6 and GS 128-28 by removing the Attorney General from acting as the legal adviser to the Boards of Trustees and instead requires the State Treasurer to designate a licensed attorney employed by the Department of State Treasurer to act as the legal adviser. Also allows the State Treasurer to designate legal counsel to represent the interests of the administration of benefit programs under the relevant Articles. Makes the same applicable to the Legislative Retirement System under GS 120-4.10.

Amends GS 135-6 and GS 128-28 by changing the compensation for trustees so that during Board session, trustees receive $100/per day, except for any trustee whose salary is paid from State funds. Makes these same provisions applicable to the Supplemental Retirement Income Act of 1984 under GS 135-96 and the Achieving a Better Life Experience Program Trust under GS 147-86.72.

Amends GS 135-5 and GS 128-27 by providing that if multiple beneficiaries are designated and living at the time of the member’s death and any beneficiary elects to renounce their part of the member’s contributions, the renunciation does not result in another beneficiary becoming eligible for benefits.

Amends GS 135-7, and GS 128-29, concerning the Legislative Enacting Implementation Arrangement (LEIA), as follows. Amends the purpose of the LEIA to include providing for ongoing administrative implementation of legislative provisions regarding the retirement of, or payment of retirement benefits to, public officers or public employees. Removes the prohibition on the Board of Trustees directing any employer contributions into the LEIA after January 1, 2035. Removes the listed restrictions on the allocation of LEIA funds to (1) the implementation of legislative provisions regarding the retirement of, or payment for retirement benefits to, public officers or public employees, or (2) be used for administrative or information technology purchases, and instead makes it subject to purposes that the Board determines are necessary to prevent an interruption to the System’s normal operations. Allows the Board to transfer assets of the LEIA to the Retirement System as an additional employer contribution (was, any assets of the LEIA not used to pay allowed administrative expenses for timely administrative implementation of legislative provisions were required to be transferred to the Retirement System as additional employer contribution). Effective July 1, 2026.

Part II. State Health Plan

Amends GS 135-48.43, setting out categories of coverage available under the State Health Plan for Teachers and State Employees (Plan), to no longer limit maternity benefits to employees and enrolled spouses. Effective 30 days after the act becomes law.

Amends GS 125-48.38 which requires benefits payable for covered expenses under the Plan be reduced by any benefits payment for the same expenses under Medicare, by allowing an additional exception to Medicare being the primary carrier for instances when the Treasurer has determined that the administrative costs of coordinating with Medicare is likely to exceed the financial benefit of the coordination to the Plan.

Amends GS 147-86.11 by adding an exception to the requirement that moneys deposited with the State Treasurer remain on deposit with the State Treasurer until final disbursement to the ultimate payee, for the purposes of operating the Plan.

Part III. NC Investment Authority

Amends GS 58-31-1 to require that the State Treasurer deposit the assets of the State Property Fire Insurance Fund with the North Carolina Investment Authority (Authority) to invest.

Amends GS 58-86-20 to require that the assets of the North Carolina Firefighters’ and Rescue Squad Workers’ Pension Fund be deposited with the Authority to invest. Makes additional technical and clarifying changes.

Amends GS 58-87-5 to require that the assets of the Volunteer Rescue/EMS Fund be deposited with the Authority to invest.

Amends GS 74C-30 to require that the assets of the Private Protective Services Education Fund be deposited with the Authority to invest.

Amends GS 74D-30 to require that the assets of the Security Systems Education Fund be deposited with the Authority to invest.

Amends GS 113-173.1 to require that the assets of the North Carolina Commercial Fishing Resources Fund be deposited with the Authority to invest. Makes a clarifying change.

Amends GS 113-175.1 to require that the assets of the Marine Resources Fund be deposited with the Authority to invest.

Amends GS 113-175.5 to require that the assets of the North Carolina Marine Resources Endowment Fund be deposited with the Authority to invest.

Amends GS 115C-546.10 to require that the assets of the Needs-Based Public School Capital Fund be deposited with the Authority to invest.

Amends GS 116-209 to require that the assets of the Reserve Trust Fund be deposited with the Authority to invest. Makes additional technical and clarifying changes.

Amends GS 116-209.25 to require that the assets of Parental Savings Trust Fund be deposited with the Authority to invest. Makes conforming changes.

Amends GS 120-4.18 to make the State Treasurer the custodian of the assets of the Legislative Retirement System and requires that the assets be deposited with the Authority to invest.

Amends GS 122E-3 to require that the assets of the North Carolina Housing Trust Fund be deposited with the Authority to invest. Requires the Authority, instead of the Treasurer, to provide the quarterly and annual reports of Fund revenues and interest earnings.

Amends GS 127A-40.1 by making the State Treasurer the custodian of assets of the North Carolina National Guard Pension Fund and requires that the Fund’s assets be deposited with the Authority to invest. Makes additional organizational and technical changes.

Amend GS 131A-32 to require that the assets of the Rural Health Care Stabilization Fund be deposited with the Authority to invest.

Amends GS 135-66 to require that the assets of the Consolidated Judicial Retirement System be deposited with the Authority to invest.

Amends GS 135-1110 to require that the assets of the Disability Income Plan of North Carolina be deposited with the Authority to invest.

Amends GS 143-58.5 to require that the assets of the Alternative Fuel Revolving Fund be deposited with the Authority to invest.

Amends GS 143-166.82 to require that the assets of the Sheriffs’ Supplemental Pension Fund be deposited with the Authority to invest.

Amends GS 143-250.1 to require that the assets of the Wildlife Endowment Fund be deposited with the Authority to invest.

Amends GS 143-719 to require that the assets of the Tobacco Trust Fund be deposited with the Authority to invest.

Amends GS 143B-135.236 to require that the assets of the North Carolina Conservation Easement Endowment Fund be deposited with the Authority to invest.

Amends GS 143C-9-2 to require that the assets of the Trust Fund for Mental Health, Developmental Disabilities, and Substance Abuse Services and Bridge Funding be deposited with the Authority to invest.

Amend GS 147-54.5 to require that the assets of the Investor Protection and Education Trust Fund be deposited with the Authority to invest.

Amends GS 147-69.6 to require that the assets of the Swain County Settlement Trust Fund be invested according to Article 6 of GS Chapter 147 instead of in the specified investments.

Amends GS 161-50.2 to require that the assets of the Registers of Deeds’ Supplemental Pension Fund be deposited with the Authority to invest.

Amends GS 147-86.57 which sets out the definition of terms that apply to the Iran Divestment Act by adding that Investment Authority means the North Carolina Investment Authority. Amends GS 147-86.58 by making the Board of Directors of the Investment Authority, rather than the State Treasurer, responsible for adopting a policy prohibiting investing funds with a company engaging in investment activities with Iran and expands upon who the prohibition applies to by including the Investment Authority. Makes conforming changes. Also changes responsibility from the State Treasurer to the Board of Directors of the Investment Authority for developing the list of restricted companies. Makes conforming changes to GS 147-86.60, and GS 147-86.61. Makes these same changes to the statutes concerning divestment from companies boycotting Israel in GS 147-86.80 and GS 147-86.81. Specifies that the policies previously adopted by the State Treasurer under GS 147-86.58 and GS 147-86.81 remain in effect until the applicable policy is adopted by the Board of Directors of the North Carolina Investment Authority.

Amends GS 135-1 by amending the definition of compensation for the Retirement System for Teachers and State Employees by amending the definition of compensation to include all special pay contribution of annual leave made to a 401(a) Special Pay Plan for the benefit of an employee; excludes from compensation any payment for the reimbursement of expenses or payments for housing or any other allowances, and performance-related bonuses paid to employees of the Investment Authority. Amends GS 128-21 Local Governmental Employee’s Retirement System by excluding from compensation any payment for the reimbursement of expenses or payments for housing or any other allowances. Effective retroactively to July 1, 2025, and applies to any performance-related bonuses paid to employees of the Investment Authority on or after that date.

Part IV. Technical and Clarifying Changes

Amends GS 135-5, by amending conditions that apply when determining the special retirement allowance for law enforcement officers by specifying that the specified requirements apply to transfers of eligible accumulated contributions from the Supplemental Retirement Income Plan of North Carolina made on or after July 1, 2022. Makes additional organizational, clarifying, and technical changes and makes language gender neutral.

Repeals the following and provides that any inchoate or accrued rights of any member on January 1, 207, must not be diminished: (1) 135-5(c) through (d4) (Disability Retirement Benefits of Members Leaving Service Prior to January 1, 1988, Allowance on Disability Retirement of Persons Retiring on or after July 1, 1959, but prior to July 1, 1963, Allowance on Disability Retirement of Persons Retiring on or after July 1, 1963, but prior to July 1, 1969, Allowance on Disability Retirement of Persons Retiring on or after July 1, 1969, but prior to July 1, 1971, Allowance on Disability Retirement of Persons Retiring on or after July 1, 1971, but prior to July 1, 1982, Allowance on Disability Retirement of Persons Retiring on or after July 1, 1982, Who Left Service prior to January 1, 1988), (j) (provisions effective July 1, 1959, with respect to any retirement allowance payments due after such date to any retired member who was retired prior to July 1, 1959, on a service or disability retirement allowance), (s) (Increases in Benefits to Those Persons on Disability Retirement Who Were Retired prior to July 1, 1971), and (x) (Increases in Benefits to Those Persons on Disability Retirement Who Were Retired prior to July 1, 1971); (2) GS 135-10.1(b) (If an applicant for disability retirement fails to furnish requested additional medical information within 90 days following the request for that information, then the application shall be declared null and void, unless the applicant is eligible for early or service retirement), and (3) GS 135-28.1(e) (applicable a judge of a district court who made made application for disability retirement prior to January 1, 1974). Makes conforming and technical changes to GS 135-3, and GS 105-259.

Amends GS 128-27 as follows. Removes the requirement that the board of Trustees require each employee enrolling in the retirement system provide information on the application concerning any mental or physical incapacities. Amends the conditions that apply when the surviving designated beneficiary may elect or receive the reduced retirement allowance provide by a 100% joint and survivor payment option instead of a return of accumulated contributions by adding that if multiple beneficiaries are designated and living at the time of the member’s death and any beneficiary elects to renounce their portion of the accumulated contributions, the renunciation does not result in another beneficiary becoming eligible for benefits. Makes additional organizational, technical, and clarifying changes.

Amends GS 135-4, GS 128-26, and GS 135-6 by making organizational, technical, and clarifying changes.

Amends GS 135-48.41(d) to specify that the provision applies to former employees who are receiving retirement benefits under Article 1A of GS Chapter 120 or Article 4 of GS Chapter 135. Makes conforming and clarifying changes.

Repeals the following and specifies that any inchoate or accrued rights of any member on January 1, 2027, are not diminished: (1) GS 120-4.11(2) (making former members of the General Assembly who served prior to June 15, 1983 eligible for the retirement system), (2) GS 120-4.12(c)(2) (defining prior service to mean the number of years served by former members of the General Assembly who were vested in the Legislative Retirement Fund); (3) GS 120-4.13(a) (requiring the Board of Trustees to set up procedures to transfer membership from the Legislative Retirement Fund to the Retirement System and to recompute benefits paid to retirees of the Legislative Retirement Fund who elect to transfer to the Retirement System), and (4) GS 120-4.15(a) and (b) (concerning certain repayment of contributions withdrawn from the Legislative Retirement Fund and System).

Recodifies and repeals portions of GS 135-5(e). Recodified portions are now in GS 120-4.23; makes additional conforming, and clarifying changes. Effective January 1, 2027.

Amends GS 135-109 to allow the Department of State Treasurer and Board of Trustees to require beneficiaries to annually provide a statement of the beneficiary’s monthly income. Makes additional clarifying changes.

Amends GS 135-3 by providing that if a member is unable to make a lump-sum payment, they can have the entirety of their net monthly (was, their monthly) retirement benefit withheld until three times the amount of compensation earned during the six months following retirement has been recovered.

Amends GS 120-4.11 to specify that the listed members and former members of the NCGA are members in the retirement system (was, are eligible for membership in the system).

Amend GS 135-106 by clarifying that listed conditions apply if the member has been approved and is in receipt of primary Social Security disability benefits. Makes additional organizational, clarifying, and technical changes.

Amends GS 135-108 by updating statutory cross-references.

Directs the Revisor of Statutes to replace the phrase "(Form 6-E or 26 Form 7-E)" with the phrase "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" in GS 135-5(g) and GS 128-27(g). Makes conforming changes to GS 135-10.1 and GS 128-32.1.

Amends GS 143-166.60 by making a technical change.

Requires the Revisor of Statutes to replace the reference to "GS 135-4" with "GS 135-4.5" in GS 135-5(f) and reference to "GS 128-26" with "GS 128-26.5" in GS 128-27(f).

Amends GS 120-4.25, concerning the return of accumulated contributions once a person is no longer a member of the NCGA, to provide that if they become a member afterwards, credit can be allowed as provided in GS 120-4.15, in addition to GS 120-4.14.

Corrects a statutory cross reference in GS 120-4.21.

Makes a technical change to GS 147-69.2A.

Corrects statutory cross-references in GS 128-38.40 and GS 147-65.1.