Retirement Monitor - September 2023

Changes to First Retirement Benefit Payments; Local Governmental Employees' Retirement System Rates Effective 7/1/23; Information Regarding TSERS Employer Contribution Rates for Fiscal Year Beginning July 1, 2023; All in A Day's Work; Supplemental Retirement Plans Information; Employer and Member Webinars; State Health Plan Open Enrollment

Table of Contents

 

A new law (S.L. 2023-105) enacted July 25, 2023, changes the process for finalizing new retirements and issuing the first payment under the Teachers’ and State Employees’ Retirement System (TSERS), Local Governmental Employees’ Retirement System (LGERS), Consolidated Judicial Retirement System (CJRS), and Legislative Retirement System (LRS). 

The changes relate to retirements effective on or after January 1, 2024. They do not relate to retirements effective 2023 or earlier. The effective retirement date is chosen by the retiree, and always falls on the first day of the month.  The retiree must apply for retirement between 1 and 120 days before the effective retirement date, though applying at least 60 days prior to retirement ensures timely processing of the request.      

Key Changes of S.L. 2023-105, Part V 

  “Previous Law” 
Effective Retirement Date: 
On or Before Dec. 1, 2023 
“New Law” 
Effective Retirement Date: 
On or After Jan. 1, 2023 
First retirement payment:  Always mailed by paper check. No direct deposits. Direct deposit, if instructions are received and acknowledged by the Retirement System before effective retirement date. Otherwise, the first payment will be by check. 
Date after which retirement cannot be cancelled, payment option cannot be changed, and survivorship beneficiary cannot be changed:  Cashing of first check or the 25th of month following month, whichever comes first .  First Regular Payday or First Recorded Payment, whichever is later. See “Date Definitions.” This date is the same whether first payment is by direct deposit or paper check. If by paper check, what matters is when the check is issued — not when it is cashed. 

 

Date Definitions Used in This Guidance for Retirements Effective on or After January 1, 2024 

First Regular Payday  Generally, the 25th of the month of the effective retirement date. If the 25th is on a weekend or holiday, it is the last State government business day before the 25th. 
First Recorded Payment  The date the first retirement payment is recorded as issued by the Retirement System. For paper checks, this will be before the check is cashed. Often the same as First Regular Payday, but could differ, as in Example #1 below. 

Examples for Retirements Effective on or After January 1, 2024 

Example #1. Member applies on December 29, 2023, for retirement effective January 1, 2024. The first payment would normally be issued on January 25, 2024. Because of the time needed to complete the retirement process, the first retirement payment is issued by paper check on February 8, 2024.  

  • The Effective Retirement Date is January 1, 2024.
  • The First Regular Payday is January 25, 2024, even though no payment was made on that date.
  • The First Recorded Payment is February 8, 2024.  
  • The later of the First Regular Payday and the First Recorded Payment is February 8, 2024. The retiree would not be able to cancel retirement, change the payment option, or change the survivorship beneficiary after February 8, 2024.
  • On or after February 8, 2024, the retirement would be final, with the payment option and beneficiary settled, even if the retiree has not yet cashed the first check.
  • The regular monthly payment on February 23, 2024 (since February 25, 2024, is a Sunday) would be a direct deposit if the retiree’s direct deposit instructions are received and acknowledged by the Retirement System on or before January 31, 2024. Otherwise, it will be a paper check. 

Example #2. Member applies on October 3, 2023, for retirement effective February 1, 2024. The first payment is made on schedule on February 23, 2024, since February 25 is a Sunday.  

  • The Effective Retirement Date is February 1, 2024.
  • The First Regular Payday and First Recorded Payment are both February 23, 2024. The retiree would not be able to cancel the retirement request, change the payment option, or change the survivorship beneficiary on or after February 23, 2024.
  • The payment on February 23, 2024, would be a direct deposit if the retiree’s direct deposit instructions are received and acknowledged by the Retirement System on or before January 31, 2024 (the day before the effective retirement date). Otherwise, it will be a paper check. 

Resources During “Transition Period”                     
RSD has handbooks, counseling materials, training presentations for members and employers, website pages, and other documents that describe the requirements under the “previous law.” By the time the “new law” is fully effective in January 2024, RSD will update the documents most often used as reference material.  

Meanwhile, for the remainder of 2023, some individuals will be applying for retirement under the “previous law” and some under the “new law.” It is essential that those applying with effective retirement dates in 2024 understand the requirements of the “new law,” even though guidance may be accessible to them describing the “previous law” that still applies to many people.  

For those applying for retirement online through November 2023, RSD will temporarily introduce a required step where they must read and acknowledge this guidance, regardless of whether their effective retirement date is in 2023 or 2024. For those applying for retirement using the paper form process, RSD will be including this guidance as an enclosure with  election option and other forms.

RSD requests the assistance of employers, who provide guidance to their employees throughout the retirement process, to ensure that new retirees understand the rules that apply to them.        
 

Governing Laws         
This information is intended as a reference to individuals planning their retirement, as well as their employers. The availability and amount of all benefits you might be eligible to receive is governed by North Carolina law. The information provided in this handbook cannot alter, modify, or otherwise change the controlling North Carolina law or other governing legal documents in any way, nor can any right accrue to you by reason of any information provided or omission of information provided herein. In the event of a conflict between this information and North Carolina law, North Carolina law governs.        
 

Local Governmental Employees' Retirement System Rates Effective 7/1/23                    
LGERS employer contribution rates effective July 1, 2023, are posted to the Retirement Systems’ website.

The table is ordered by five-digit employer code but is also searchable (by employer name) within a browser, or by downloading the PDF and using “Edit”->”Find” in Adobe.

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. 

Information Regarding TSERS Employer Contribution Rates for Fiscal Year Beginning July 1, 2023                    
For employee service rendered through June 30, 2023 (required to be submitted by early July 2023), the TSERS employer contribution rates are as specified in Section 39.19 of S.L. 2022-74. These contribution rates totaled 24.50% of compensation for general employees, and 29.50% for law enforcement officers (LEOs). They included employer contributions toward retirement, retiree health, disability, and death benefits, as well as contributions to the N.C. 401(k) Plan for LEOs. They did not include the employee contribution of 6% of compensation. 

For employee service rendered on or after July 1, 2023, the employer contribution rate will depend on the status of a Current Operations Appropriations Act for the fiscal biennium from July 1, 2023, to June 30, 2025 (“2023-2025 Budget”). 

If the 2023-2025 Budget becomes law by the time an employer is required to submit contributions, the employer contribution rates will be as specified in that law. 

If the 2023-2025 Budget has not become law by the time an employer is required to submit contributions, the employer contribution rates for that submission will be equal to the recurring funds portions of the rates that were in effect on June 30, 2023. These rates would total 22.94% of compensation for general employees, and 27.94% for State LEOs. The components of the rates would be 16.09% for retirement, 0.10% for the Disability Income Plan of North Carolina, 0.13% for active employee death benefits, 6.62% for retiree health benefits, and 5.00% (LEO compensation only) for 401(k) contributions. As always, different contribution rates would apply for members of the UNC Optional Retirement Program, Consolidated Judicial Retirement System, and Legislative Retirement System.

If the 2023-2025 Budget becomes law after an employer is required to submit contributions, and has a retroactive effective date of July 1, 2023, the Retirement Systems Division (RSD) will create retroactive rate adjustment invoices for any contributions that have already been submitted with respect to employee service rendered on or after July 1, 2023, where it is feasible to do so. Such invoices may be positive (requiring additional contributions) or negative (providing credits against future required contributions), depending on the contribution rates set in the 2023-2025 Budget relative to the rates already paid.

For example, suppose an employer has already reported on employee service for July 2023 and paid retirement contributions of 16.09% of compensation (the recurring-funds retirement component of the 22.94% total contribution in effect as of June 30, 2023), and the 2023-2025 Budget retroactively requires a contribution at the rate of 17.00% for retirement. Where it is feasible to do so, RSD will create a retroactive rate adjustment invoice for the remaining 0.91% of the compensation that the employer had reported for that pay period. Any additional contributions required from a retroactive rate change will be due by the regular contribution deadline for the payroll period during which the invoice is issued.

Depending on the ultimate timing and details of the 2023-2025 Budget, it may be necessary for RSD to implement retroactive changes through processes other than, or in addition to, issuing retroactive rate adjustment invoices. For example, in 2021, a different process was used after the budget law was enacted in November 2021. RSD will provide additional guidance to employers as needed. 

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 has been updated to include 2023 dates and is located on our website.  

myNCRetirement Tip:  Create a calendar reminder so you meet the required deadlines.                     
 

Employer-Implemented New Systems and Testing

Are you updating or implementing a new payroll system? Once you have finalized writing your business requirements and the new system is in place, the Retirement Systems Division is here to help with testing. If you intend to use a vendor for your system changes, you should still plan on being part of that process as the key contact for reporting.

We request that you notify us as soon as possible if you are making a change or upgrade so we can schedule testing that aligns with your planned start date. You should expect testing to take at least 90 days. 

Local Government 1,000 Hour Rule Reminder

North Carolina Retirement Systems law requires an employee to become a contributing member of the Local Governmental Employees’ Retirement System (LGERS), if the employee is employed by a participating LGERS employer in a regular position that requires at least 1,000 hours of work in a calendar year. The employee will not be a contributing member of LGERS if his or her work is considered “temporary employment,” meaning employment for a limited term which does not exceed 12 consecutive months on a non-recurring basis for an LGERS employer, or “statutorily required interim employment,” meaning employment as an interim city or county manager for a period that does not exceed 12 months on a non-recurring basis.

To determine if an employee is required to be an LGERS member and if contributions must be submitted to LGERS on his or her behalf, examine the requirements of the position. The hours required of the position determine membership in LGERS, not the actual number of hours an LGERS employee works in a calendar year. 

Employer Requirements for Return-to-Work

Effective in 2009, the General Assembly authorized House Bill 642, requiring employers to report all rehired retirees to the Retirement System each month. To assist employers in reporting all rehired retirees and therefore avoiding penalties, the Retirement System offers an online user-friendly procedure to certify employee status under the retirement reemployment laws. To use this tool, you should:

  1. Access the ORBIT Employer Self-Service page.
  2. Under “Reporting” click “Check Retired Status.”
  3. Here you are able to upload a list of employee social security numbers which will be run against the Retirement System retiree list to generate a report of members who are actively receiving a benefit from TSERS or LGERS.

Important Points to Remember:

  • Rehired retirees should be reported in ORBIT monthly.
  • Reports should include the appropriate pay period, pay type, plan code and all other applicable fields.
  • Reports must be received by the Retirement System within 90 days of the end of each month in which a beneficiary is reemployed, otherwise the Retirement System is required to assess a 10% penalty of the compensation of the unreported reemployed retirees during the months the employer did not report the reemployed retirees, with a minimum penalty of $25.

The Retirement Systems appreciate your important role in helping us provide accurate information to active members and retirees. 

 

Maintain Agency Level Information Security                   
Due to the nature of sensitive information handled at the N.C. Retirement Systems, it is                   
highly recommended that all agencies participating and reporting through the ORBIT                   
system do not share ORBIT User ID and Password. It is also highly recommended that                   
CPA firms, Payroll Vendors, and other Third-Party Vendors should not be designated as                   
the Agency Administrator SUPERUSER.                   

Each Agency should create one SUPERUSER. Only users with the role of SUPERUSER will                   
have access to the Agency Administration function. The SUPERUSER is solely responsible                   
for creating and administering additional user id/passwords for others to log into the                   
ORBIT Employer Self-Service page on our website.                   

Additional users can be assigned with defining roles, such as Agency Administration,                   
Employer Reporting and Human Resources. Each role has a restricted access and                   
function.                   

Because ORBIT is a web-based program, it is also the responsibility of each employer to                   
immediately remove a user when the employee leaves the agency; otherwise, the                   
departing employee will continue to have access to employer reporting information.                   

It is required that each agency send updates to add or remove Agency contact                   
information with all the necessary authorization (Full Name, Title, Phone, Fax and email                   
for each) in writing on Employer Letterhead (which can be faxed to 919-855-5801 or                   
emailed to oer@nctreasurer.com) whenever staffing changes occur.                   

This requirement will be changing, be on the lookout for new forms available to you                   
soon to update your Agency Contact.

 

Removed: First-Day-of-the-Month Requirement for 457 Plans   
As a participating employer in the NC 401(k) Plan and/or NC 457 Plans, part of your responsibility is to implement your employees’ contribution elections. It is important to note that the SECURE 2.0 Act removed the First-Day-of-the-Month requirement for 457(b) plans. In support of this, the NC Supplemental Retirement Board of Trustees voted on August 24th to remove this requirement from the NC 457 Plan.

Prior to this change, a participant’s contribution to the NC 457 Plan could be made no sooner than the first of the month following the participant’s election to defer compensation into the plan. Now, a participant’s contribution to the NC 457 Plan will be effective as soon as administratively practicable following the election or change. Therefore, you should continue to check the Plan Sponsor Website before each payroll cycle, but you should implement a new or changed contribution amount for the    
NC 457 Plan in the next payroll. This is the same process for the NC 401(k) Plan.

If you have any questions this change, or the general administration of the NC 401(k) Plan and/or NC 457 Plan, please contact the NC Plans Service Team by calling 866NCPlans (866-627-5267), or by email at NCPlans@empower.com.

Important Migration Reminders for the NC 457 and NC 401(k) Plans

The migration of the NC 401(k) and NC 457 Plans to Empower’s recordkeeping platform is targeted to take place in February 2024.

Starting this fall, the focus will shift to education and training for employers. The first topic is payroll, and you will receive an email which includes a payroll overview.

In the meantime, print the migration checklist, which outlines your roles and responsibilities. Keep this on hand and track your progress by checking off “action items.”

Valuable migration resources:

 

Virtual and on-demand training options help you understand employer roles, responsibilities and assist employees with retirement related matters. EmployerTraining is available throughout the year.          

There are ongoing retirement planning and information sessions available for new members, mid-career and those nearing retirement. We encourage member participation so they can learn about their benefits and plan for their financial future.

Employer Webinars

MyNCRetirement Employer Training Webinars

Empower Retirement Benefits Webinars

Member Webinars

Retirement Planning Webinars

Empower Retirement Benefits Webinars 

State Health Plan Open Enrollment is Next Month!

Open Enrollment will be held Oct. 9-27, 2023, for the 2024 benefit year.  All members will be automatically enrolled in the Base PPO Plan (70/30), which will have an $85 subscriber-only premium. Subscribers can reduce this premium by $60 to a $25 subscriber-only premium by completing the tobacco attestation.

Members who wish to enroll in the Enhanced PPO Plan (80/20) or who wish to reduce their monthly premium in either the Enhanced PPO Plan (80/20) or the Base PPO Plan (70/30) by completing the tobacco attestation MUST TAKE ACTION during Open Enrollment.

Important Highlights:

  1. No premium increases for the 6th year in a row with no increase in copays or deductibles!
  2. Members who select a Clear Pricing Project Provider as their Primary Care Provider will continue to enjoy a $0 copay!
  3. Members will continue to enjoy a reduced copay when visiting a Clear Pricing Project Specialist!
  4. Preferred and non-preferred insulin continues to have a $0 copay for a 30-day supply!
  5. Preventive Services remain covered at 100% – no copay or deductible – on either plan!
  6. Members will not receive a new ID card unless they make a change their plans. They will continue to use your 2023 ID card in 2024.

Active members who are tobacco users and want to earn their monthly premium credit for 2024 don’t have to wait until Open Enrollment. They can take action now to save money throughout 2024!

Tobacco users can attend a tobacco cessation counseling session at any provider’s office that offers the service for FREE to earn a lower premium for 2024. They have until November 30, 2023, to take action. (Note: If members combine their tobacco cessation visit with another service, there may be a copay.)

How it works:

  1. After members visit a provider for their tobacco cessation session, the provider will submit a claim on their behalf. To ensure they receive credit for their visit, members can upload their office visit summary to the “Document Center” located in eBenefits, the State Health Plan’s enrollment system. They should make sure to request a copy of their summary during their visit.
  2. This action is ONLY for tobacco users who want to reduce their monthly premium by $60 per month in 2024.
  3. If members are NOT tobacco users, they will simply attest to that online during Open Enrollment, October 9-27, 2023.
  4. During Open Enrollment, they will need to attest during the online enrollment process. This step is critical to ensure members receive the lower premium for 2024.

Open Enrollment Member Webinars

Webinars are scheduled from Sept. 26 through Oct. 25. These brief webinars designed to ensure your employees understand their health plan options for 2024.  

Below is a list of webinars. To register, members can click on the links below.  

 WEBINAR DATES WEBINAR TIMES
Sept. 26  4:00pm 
Sept. 28  3:30pm 
Oct. 4  12:30pm 
Oct. 10  3:30pm
Oct. 12 10:30am 
Oct. 17 12:30pm
Oct. 19 4:00pm
Oct. 25 12:30pm

 

 

 

 

 

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