In 2020, 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.
Effective June 19, 2020, except for certain provisions that do not become effective until December 31, 2021, this law changes a number of provisions for purchases of creditable service in the Retirement Systems. including:
- Changing the cost calculation for certain service purchases;
- Limiting the amount of service that can be purchased:
- Allowing the employer to pay all or part of the cost of certain purchases: and
- Requiring some purchases to be made while still in service.
The basic rules for a defined benefit plan require a member to begin receiving pension benefits or a return of contributions once the required beginning age is reached. The age for the RMD increases for members of TSERS, LGERS, CJRS, and LRS from 70 12 to age 72 for anyone who turns 70 12 after January 1, 2020.
The process remains the same and action must be taken by the member to receive either a pension benefit. if eligible, or a return of contributions prior to April 1 of the calendar year following attainment of the RMD age. If the member is vested in a retirement allowance and the Retirement Systems Division does not receive a completed retirement application or a completed Form 5 (Withdrawing Your Retirement Service Credit and Contributions). a monthly retirement benefit based on the Maximum Allowance will be initiated. If the member is not vested in a retirement allowance and the Retirement Systems Division does not receive a completed Form 5, a refund of retirement contributions will be initiated.
The barriers in place for individuals who retired from TSERS or LGERS were temporarily removed for those returning to work on a part-time, temporary or interim basis during the state of emergency related to COVID-19.
- TSERS retirees who retired during the six months from October 2019 through March 2020, and who the employer certifies were rehired on or before August 31, 2020 under the COVID-19-related return-to-work exemption, must satisfy a one-month waiting period rather than a six-month waiting period in order for their retirement to take effect.
- For TSERS and LGERS retirees who retired before April 1, 2020 and returned in a position that the employer certifies was needed due to COVID-19, earnings received from March 10, 2020 through August 31, 2020 do not count toward the re-employment earnings limit under G.S. 128-24(5)c. (LGERS) or 135-3(8)c. (TSERS).
Certain retired teachers under TSERS are allowed to return to work in certain high-need schools and still receive full retirement benefits. The act became effective on July 1, 2019 and expires on June 30, 2021. In order to qualify, certain requirements must be met:
- The individual must have retired on or before February 1, 2019 after attaining one of the following:
- The age of 65 with 5 years of creditable service:
- The age of 60 with 25 years of creditable service: or
- 30 years of creditable service.
- The individual must be re-employed by a local board of education to teach at a high need school or schools.
The Department of Public Instruction must certify to TSERS that the retiree is employed as a high-need retired teacher.
The Department of State Treasurer (DST) is required to seek a Private Letter Ruling from the Internal Revenue Service (IRS) regarding the provisions. The Department of State Treasurer has requested, but not yet received the Private Letter Ruling from the IRS. Once DST receives a Private Letter Ruling, the State Treasurer will notify Local Education Agencies of the findings and take action, if required.
Please note: School Systems are allowed to proceed using this new law if they choose, however they are responsible for all negative repercussions and penalties that could stem from a finding by the IRS that the new law constitutes an unallowable scheme under federal tax law.
School systems are also free to rehire retirees under the older law that allows retirees who have met the separation of service requirement to work part-time up to the earnable allowance. while still receiving their full pension benefit.
Conner's Law increases the Line-of-Duty Death Benefit to the beneficiary of a covered public safety worker from $100,000 to $200,000 when the covered person is "murdered in the line of duty" as determined by the North Carolina Industrial Commission. This provision is effective retroactively to July 1, 2016, and applies to qualifying deaths on or after that date.
Effective October 1, 2020, this law makes permanent the provision that if an eligible sheriff has accrued sick leave as a member of LGERS. after the member and the Department of Justice notify the Retirement Systems Division, the member can elect to have all of that sick leave applied to service under the SSPF. The same sick leave cannot be used for both plans.
TSERS or LGERS may require an employing agency to pay all or part of a return-to-work overpayment assessed to a retiree if the actions by the employer are found to have caused the overpayment.
Effective July 1, 2021, any or all of the following may apply:
- Employer penalty of 10% of the compensation of the unreported re-employed beneficiary (minimum penalty of $25):
- Employer to reimburse the Retirement System for any retirement allowance paid to the beneficiary during an unreported period when the allowance would have been suspended had the required report been received:
- Employer to pay the amount the beneficiary would have been required to pay to the Retirement Systems had the required report been received.
Effective June 26, 2020, the information contained in monthly reports ("watch reports") provided to employers, indicating employees most likely to require additional employer contributions under the CBBC provisions should they elect to retire in the next 12 months, is not public record, and employers or former employers receiving this information should treat it as confidential.
Effective June 26, 2020, the definition of "duly acknowledged" in the TSERS and LGERS statutes includes notarization, electronic notarization or verification through an identity authentication service.
The Retirement Systems Division is evaluating how processes may change in the future. But. as of now, requirements have not changed.
Effective July 1, 2020, before undertaking a new five-year actuarial experience study, the TSERS Board of Trustees must report to the General Assembly and the Governor on the "stress-testing" of TSERS in various possible economic scenarios. The legislation outlines required elements of the report.