Retirement Monitor - March 2022

In this issue: All in a Day's Work; Timely and Accurate Employer Reporting; LGERS Contribution Rate Changes; Local System Court Cost Offset; Changes to Monthly Pension Spiking Watch List; Employer Scorecard; Payroll Reporting Questions; Hold time; MARS Coming Soon

Table of Contents

horizontal blue line

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 5 p.m. This schedule information is also located on our website.

Local Governmental Employees' Retirement System Contribution Rate Changes

The Board of Trustees has established “base” employer contribution rates July 1, 2022. These rates will increase from the currently applicable rates in an amount equal to 1.00% of reported compensation for Law Enforcement Officers (LEOs), and 0.75% of all other employee compensation, as follows:

Effective Date Non-LEO "Base Rate" LEO "Base Rate"
July 1, 2021 11.35% 12.10%
July 1, 2022 12.10% 13.10%

 

These are employer contribution rates, and do not include the 6% of compensation contributed by employees.

The specific rate(s) paid by each employing unit will include the “base rate” from the table above, and other adjustments that are specific to the unit. Each unit will receive a letter from the Retirement Systems by April confirming the employer contribution rate(s) applicable to that unit for the upcoming fiscal year.

Local System Court Cost Offset to Employer Contribution Rate for Law Enforcement Officers

Pursuant to N.C. General Statutes §143-166.50(d), the Department of State Treasurer is required to use certain funds derived from court costs to offset employer contribution rates paid for Law Enforcement Officers participating in the Local Governmental Employees’ Retirement System (LGERS). The department reviews receipts of these funds and updates the offset periodically.

The Executive Director of the Retirement Systems Division has maintained the rate of the Court Cost Offset on the LGERS Employer Contribution Rate at 0.20% of Law Enforcement Officer payroll for the fiscal year beginning July 1, 2022.

decorative image

Changes to Methodology for Generating Monthly "Pension Spiking Watch List"

Each month, the Retirement System sends reports to employers identifying employees who are most likely to require an additional employer contribution should they retire in the next year. This is sometimes called the “pension spiking watch list.”

Beginning in or around February 2022, many employers will see increased numbers of employees identified on this monthly report. This is because of improvements to the way the list is generated, with a goal of helping employers identify potential situations farther in advance.

A common example of someone who was not on the report before, but will be on the report starting in February, would be an employee who is age 49 with 19 years of service. This employee would generally be eligible for early reduced retirement in one year, upon reaching age 50 with 20 years of service. Under the previous criteria, they would not have appeared on the monthly report until reaching age 50. Under the new criteria, they will appear on the report earlier, giving the employer more notice of a potential liability.

Some employees may appear on the monthly report even though it will be more than one year before they are eligible to retire. This could occur because of rounding or other details. Exact retirement eligibility depends on factors, such as the amount of unused sick leave, or service purchased in the time leading up to retirement, that are not fully known to the Retirement System until the retirement application process gets underway. The monthly reports are designed with a goal of identifying more, rather than fewer, potential situations for employers.

As a result of these changes, the total number of employees listed on the monthly reports is expected to increase by about one-third, although the exact number will vary from employer to employer, and some employers may even see a decrease.

Whether an employee is listed on the monthly report has no bearing on the amount of the liability that the employer may ultimately owe, if any. As stated in the cover letter that accompanies the monthly reports, the Retirement System modifies the criteria used in the liability calculation, to allow for a broader list of potential employees who appear on the monthly reports. Accordingly, employees included on the list may or may not lead to an employer liability upon retirement. Employers are encouraged to learn more about anti-pension spiking liability calculations at the Retirement Systems’ website and may contact our office with any questions about particular situations.  

 

horizontal blue line

 

decorative image

decorative image

This web-based tool provides you with full access to your employer reporting information and is designed to improve your access to payroll accounting information. It is displayed on the home screen, as soon as you have logged into Orbit Employer Self-Service. The tool operates like a dashboard, displaying the latest status of your Agency’s CSI and Details for the past few months.

For questions regarding the status of your agencies report please contact Retirement Systems Employer Reporting by phone (919-814-4590, Option 4) or by email (OER@nctreasurer.com).

Payroll Reporting questions must be routed correctly for quickest responses

Please email your questions about File Rejection Reports (problems preventing your payroll report being submitted acceptably) to Orbit Employer Reporting OER@nctreasurer.com.

Questions and correspondence about Error Correction Reports (resolving errors after the payroll report has been submitted acceptably) can be emailed to your assigned Employer Reporting Specialist.

Note: Failure to clear errors for a member’s account can result in incorrect service accrual, incorrect retirement calculation, impact benefit eligibility, and will prevent MARS (Member Annual Retirement Statement) from being created for the employees affected.

Long Hold Time?

We have received some reports of Employers experiencing long hold times waiting to reach Employer Reporting for Payroll Reporting questions, however we have adequate coverage and there should not be long wait times if you are using the proper phone prompts.

To reach Employer Reporting for Payroll Reporting questions during hours of operation 8:30am-4:30pm; please phone 919-814-4590 (please wait and listen to each of the prompts and at the correct times select) Option 4, 6, 4, 2.

decorative image

The annual MARS (Member Annual Retirement Statement) will be in ORBIT soon. We will keep you updated on its release for active members.

MARS will be available for active members with complete, error-free data and at least one full calendar year of service and contributions for the year ending December 31, 2021.

MARS, available exclusively in ORBIT, will focus on the foundation of retirement for each public servant in the state of North Carolina – the pension benefit. This statement provides members with a tool that provides the most accurate data and information about their potential retirement.

Each eligible member will be able to view:

  • Personal information like address, phone, email.
  • Retirement Systems in which the member has been or is a member.
  • Principal beneficiaries.
  • Estimated potential retirement benefit from the North Carolina Retirement Systems.
  • Links to the NC Supplemental Plans (NC 401(k) and NC 457 Plans so members can enroll, increase savings and/or view statements for the plans in which they are a participant.
  • Link to mySocialSecurity so members can create an account and receive a real-time estimate from the Social Security Administration based on their work history and contributions.
  • We will keep you updated on the release of MARS for active members.

This blog is related to: