Retirement Monitor - February 2022

In this issue: All in a Day's Work; Legislative Updates; Peak Retirement Season; Join Us for Employer Training; Updates; SHP Webinars

Table of Contents

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Graphic with the words "All in a Day's Work and the NC Total Retirement Plans logo

Timely and Accurate Employer Reporting

Employee and Employer contributions are due via the monthly Contribution Summary Instructions (CSI) by 5:00 p.m. on the 5th business day of the month along with the Monthly ORBIT payroll report. If the 5th falls on a weekend, contributions are due the following business day by 5pm. This schedule information is also located on our website.

 

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2021 Legislation

In 2021, the General Assembly made several changes that affect the Retirement Systems. Below is a brief explanation of some of the changes with a link to the passed legislation. A list of all legislation that impacts the Retirement Systems Division, including minor technical corrections and member-related changes, can be found here.

Calculations of Withdrawn Service Purchase in ORBIT

Some of your employees may be reporting Error messages they are receiving when calculating a Withdrawn Service Purchase in ORBIT. This is not an error with the calculator but a reflection of changes that became effective on January 1, 2022, as required in Session Law 2020-29. A Withdrawn Service Purchase is now limited to a maximum of five years. The member must be in service when purchasing withdrawn service and the cost of such purchases is equal to a lump sum amount equal to the full liability increase based on certain actuarial assumptions specific to the calculation.

No Waiting Period Under LGERS/VFDF Grants (Senate Bill 311/Session Law 2021-178)  

Senate Bill 311 was signed into law on November 10, 2021, as S.L. 2021-178. Section 1 of this new law adds a new subdivision to the LGERS statute, G.S. 128-24(1b), which provides: “A participating employer is prohibited from imposing a waiting period on any employees who are otherwise eligible to become members of the Retirement System.” The new provision is effective December 1, 2021.

This means that effective December 1, 2021, any “probationary” or “waiting period” policy of a local government employer (or any other policy with similar effect) cannot prevent the employer from reporting an employee’s service and compensation and paying related contributions to LGERS. All individuals meeting the definition of “employee” under G.S. 128-21(10) must be reported for their service beginning December 1, 2021. This definition includes being “regularly employed” (G.S. 128-21(18a)), which generally means working in a position for which the duties require 1,000 or more hours of work in a calendar year. Click here for more information.

Contribution Rates for TSERS, CJRS, LRS and ORP

The State budget law for the 2021-2023 biennium, Senate Bill 105 (“2021 Appropriations Act”), was signed into law November 18, 2021, as S.L. 2021-180. Following are the rates that will be collected from January 1 through June 30, 2022. Click here for information.

Earnings Allowance Increase for Re-Employed Retirees

The amount of compensation a re-employed retiree may earn in 2022 has increased. This change is for any retiree who has returned to work with an employer participating in the same retirement system from which the employee retired, but in a position that does not require retirement system membership. Employees must have a complete separation from active service with no intent or agreement, express or implied, to return to service. The increase to $37,240 became effective January 1, 2022.

As provided under North Carolina law, the retiree’s retirement benefit will be suspended on the first day of the month following the month in which the retiree exceeds the limit, for the remainder of the calendar year.

For calendar year 2022, the earnable allowance limit is the greater of:

  • 50% of the member’s compensation during the 12 months of service before retirement, excluding any termination payments, as increased by the equivalent CPI increase above the 2022 limit, or
  • $ 37,240

These earnings restrictions apply for the 12 months immediately following the effective date of retirement and for each calendar year following the year of retirement.

Return to Work Laws

 

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Peak Retirement Season

Don’t wait until the last minute! Do you have employees gearing up for retirement? Retirement Processing is first-in, first out. We recommend applying as early as possible to ensure the application is processed for that first retirement pay day. A prospective retiree can apply for retirement up to 120 days prior to their scheduled retirement date. For more information, click here.

Join us for Employer Training

Virtual and on-demand training options are available to help you understand employer roles, responsibilities and assist employees with retirement related matters. Click here for information and registration.

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NC 403(b) Program Discontinuance

As a valued employer offering the NC 403(b) Program among your retirement plan options, we want to inform you that, after an in-depth analysis and recognizing extremely low participation by employees, the North Carolina Supplemental Retirement Board of Trustees decided to discontinue the NC 403(b) Program, which had less than $33 million in assets as of December 31, 2021.

The NC Plans will focus on the larger, low-cost,* and more popular NC 401(k) and NC 457 Plans that have combined assets of over $16 billion.

We will provide more information on the transition of the NC 403(b) Program in the coming weeks, including option(s) you have as an employer and options for the money in participant accounts.

In the meantime, you can review our FAQs:

  • If the NC 403(b) Program is the only investment provider you currently offer participants in your 403(b), click here;

OR

  • If the NC 403(b) Program is one of several investment providers you currently offer participants in your 403(b), click here.

If you have immediate questions, please reach out to your Prudential Retirement Education Counselor or call 866-627-5267. We also encourage you to attend these informational webinars:

  • NC 403(b) Discontinuance Ins and Outs, February 22 from 11am-12pm EST (click here to register).
  • NC 403(b) Discontinuance Ins and Outs, March 1 from 3-4pm EST (click here to register).

There will be additional communications and education opportunities on this important initiative throughout 2022.

* Source: BenchmarkDC Executive Summary for North Carolina Supplemental Retirement Plans (for the 5 years ending December 31, 2020), CEM Benchmarking, Inc., located at myNCRetirement.com > Governance > Boards of Trustees and Committees > Boards and Committees Meeting Archives > Supplemental Retirement Board of Trustees Meeting—08/26/2021.

 

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Understanding Your Medical Plan Options When You Become Medicare-Eligible Webinars Begin This Month!

The State Health Plan is offering online webinars with important information on “Understanding Your Medical Plan Options When You Become Medicare-Eligible.”

These popular, free webinars are designed for active employees who will soon be 65, are already 65 or older, and retirees getting ready to turn 65. Each webinar lasts approximately 2 hours and will explain important information regarding Medicare, your retirement health benefit options and offer the opportunity to ask questions.

Current webinars are planned through February. More webinars will be offered later this year, so watch upcoming Member Focus newsletters for updates. Visit the Plan's website to register for one of the online events or click below. Register soon, as these webinars are expected to fill quickly!

February 23, 2022: 2:00 PM - 4:00 PM

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