Table of Contents
- Retirement Applications
- Retirement Supplemental Plans Recognized Nationally
- Defining the Terms
- It's All in a Day's Work-Reporting Pay Periods Correctly
- Educational Resources for Your Employees
- Upcoming Training
- Short-term Disability Changes
- Kudos!
Retirement Applications
When your employees are ready to retire, please emphasize the need for them to submit their retirement paperwork to the NC Retirement Systems (or use our Online Retirement tool) 90-120 days before their requested retirement date.
This will help ensure their first retirement benefit check will arrive the first month of their retirement.
During the last 12 months, the Retirement Systems received almost a quarter of retirement applications 30 days before the requested retirement date. A 30-day turnaround reduces the time for our staff to gather all requested information and process the retirement.
If your employees' first retirement benefit check is delayed, they may not be able to meet their expenses for that month. Please help us help your employees receive their first retirement payment in a timely manner.
Click here for information on the Online Retirement Application process.
Retirement Supplemental Plans Recognized Nationally
Treasurer Folwell, the Supplemental Retirement Board of Trustees and staff have been recognized by the National Association of Government Defined Contribution Administrators (NAGDCA) as a Leadership Award recipient for outstanding achievement in Plan Design and Administration.
NAGDCA’s annual Leadership Awards recognize the brightest ideas and most innovative solutions from across the public sector defined contribution industry.
The State of North Carolina took on a substantial undertaking, impacting 260K+ participant accounts, optimizing the investment lineup and saving NC 401(k) and NC 457 Plan participants over $4M in investment management fees. The Department of State Treasurer increased its plans’ asset allocation models in GoalMaker® providing participants greater choice and a new glidepath that takes them not just to their first day of retirement, but all the way through their retirement years.
For more information about this innovative tool, GoalMaker®, visit the Prudential website today.
Defining the Terms
A public employees’ lifetime monthly retirement benefit is based on a defined benefit formula. That defined benefit formula is the employee’s average final compensation, multiplied by an accrual factor, multiplied by the employee’s years and months of creditable service -- this produces the maximum annual allowance. Divide this total by 12 to get the maximum payment option. Keep in mind that reduction factors will be applied for early retirements.
Here is what that calculation looks like:
Average Final Compensation X Accrual Factor X Creditable Service ÷ 12 = monthly maximum
Average Final Compensation (AFC) is average of an employee's salary during their four highest-paid years in a row. If the four highest-paid years in a row include a final payment for unused vacation leave and/or prorated longevity, the employee's AFC may be increased by the extra payment(s). Final payments, if any, for unused sick leave or reimbursements for expenses are not included in the AFC.
Accrual Factor is determined by the General Assembly, and it represents the percentage of the AFC a member receives for each year of creditable service (i.e., 1.82% for Teachers and State Employees and 1.85% for Local Governmental Employees).
Creditable Years of Service is the total of all service credit that counts toward retirement. It includes membership service for any period the employee contributed to their retirement system, provided they have not withdrawn their contributions. It also includes credit for eligible purchased service and eligible unused sick leave that is converted to creditable service at retirement.
Reporting Pay Periods Correctly
When employees retire, we rely on an employer supplying the correct information for that employee’s service to the state or local government. Please keep the following in mind, when reporting your employees’ pay period dates.
ORBIT equates the term “Pay Period Date” with the span of time that the employee actually worked to earn this amount of money. Pay Period does not represent the date when the employee was paid.
It is important to report the correct pay period dates to prevent incorrect service credit.
The pay period dates are critical to the process of determining service for a member.
- Pay Period Dates MUST fall within the Retirement Service Period.
- Pay Period Begin and End dates CANNOT be the same day.
- Pay Period Begin date CANNOT be more than 90 days prior to the report date.
- Pay Period Begin date CANNOT be prior to the member’s hire date (for new hires).
- Pay Period End date CANNOT go past the last day of the report month.
- Pay Period End date CANNOT occur before the Pay Period Begin date.
- Pay Period End date CANNOT extend beyond the termination date.
Beneficiary Updates
Remind your employees the importance of keeping their information up to date, including beneficiaries. Any benefits that are payable must be paid to the beneficiaries that employees have designated for each retirement account. Making sure complete beneficiary information is available ensures that employee assets go to the right people. If there is a life change (divorce, remarriage, death, children or grandchildren), it is important to make sure beneficiaries are reviewed and updated, if necessary. Retirement accounts are often a person's largest asset and leaving your legacy to the right people requires complete and accurate information. We have made this process simple by offering additions and changes to beneficiaries online. Click here for information about how to designate or change your beneficiaries in ORBIT.
Employee Resources
Your employees have a wide range of educational tools and resources online at our newly-redesigned website, MyNCRetirement.com. This includes a full rundown on:
- Benefits
- Information for those nearing retirement
- How to manage their retirement accounts online
- Information on the supplement retirement plans offered to help them meet their retirement financial goals
Call Back Assist
The Call Back Assist (CBA) feature provided by the Retirement Systems Division's Member Services allows callers to be called back while maintaining their "in line" priority or to schedule a call-back appointment at a time that is more convenient. This is offered when the wait time exceeds three minutes. If you are a member in need of assistance, be sure to take advantage of the Call Back Assist!
Short-term Disability Changes
Amended Short-term Disability Employer Reimbursement Law
In the 2018 Financial Accountability, Integrity, and Recovery Act, the General Assembly amended the state law regarding short-term disability employer reimbursement. For any short-term disability benefits that began before July 1, 2019, employers are responsible for administering and paying for disability income payments and health insurance premiums and are then reimbursed those costs for eligible employees during the second six months of the short-term disability benefit period. These costs are paid out of the Disability Income Plan of North Carolina (DIPNC) trust fund. Employers continue to be responsible for administering and paying for short-term disability benefits and health insurance premiums, but based on this legislative change, employers cannot be reimbursed for any short-term disability benefits that begin on or after July 1, 2019.
Please see this DIPNC Employer Reimbursements page for an analysis of the DIPNC employer reimbursements for costs incurred during the second six months of the short-term disability benefit period as provided for in G.S. 135-105(d). This analysis is unaudited and provided for informational and budget planning purposes only and is based solely on data transmitted by employing agencies to the Retirement Systems Division during fiscal years 2014 through 2018.
New Law in Effect for Short-term Disability Filing Period
Members wishing to file an application for short-term disability through DIPNC must do so no later than 365 days following the first day of the 60-day waiting period.
To avoid missing the short-term filing period, employees should apply for short-term disability as soon as possible, even if they are receiving Worker’s Compensation benefits, taking a Family Medical Leave of Absence, receiving salary continuation payments or exhausting leave.
What would you like to see in the Monitor? Email chris.frazier@nctreasurer.com and let us know!
Kudos!
