TSERS Discontinued Service Retirement Frequently Asked Questions

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Discontinued Service Retirement allows an eligible employee who is separated from service due to a reduction in force to: 

  1. .receive an unreduced discontinued service retirement benefit if he/she is at least 55 years of age with 20 or more years (but less than 30 years) of creditable service, or
  2. receive a reduced benefit* if he/she is at least age 50 (but less than 55 years of age) with 20 or more years of creditable service.
    *Reduced by ¼ of 1% for each month that a retirement precedes a member's 55th birthday.

DSR is contingent upon approval by the employer, the State Budget Officer and State Personnel Director. 

If you separated from service for any reason other than retirement or death, then you may either leave your contributions in the System and retain all of the creditable service earned to date, or receive a refund of contributions. If you are vested (have five or more years of Retirement System membership service credit (10 years if you became a TSERS member on or after August 1, 2011)), and you leave the System before you are eligible to receive a service or early retirement, you may receive a deferred benefit at a later date provided you have not received a refund of contributions. You waive rights to any monthly benefits and State Health Plan benefits if you receive a refund of contributions.

If you are no longer working in a position covered by the Retirement System, as a general rule you should apply for your monthly benefit as soon as you become eligible, whether you will be in receipt of an unreduced service retirement allowance or early, reduced benefits. Historically, post-retirement benefit increases have significantly reduced, or completely eliminated, the difference between the amount of your benefit should you begin reduced benefits as soon as possible as opposed to delaying the payment of your benefits until a later date.

Also, when you begin receiving a monthly benefit from the Teachers’ and State Employees’ Retirement System, you will be eligible to enroll in the State Health Plan if you have contributed to the Teachers’ and State Employees’ Retirement System for at least five years while employed as a teacher or State employee. If you are a local governmental employee or retiree, you should consult your employer for information about possible health insurance coverage as a retiree. 

No. Your retirement benefit cannot begin until the first day of the month after your severance payments/salary continuation payments have ended.

Yes. TSERS return-to-work laws apply to anyone who has retired and then returns to work with a TSERS employer. For TSERS members, a 6-month break from any type of service with a TSERS employer is required and certain earning limits apply. Refer to the TSERS Handbook for detailed information.

If you retire, then you are eligible for coverage under the State Health Plan if you have at least five years of contributing membership service earned as a teacher or state employee. (Credit for unused sick leave or credit transferred from the Local Governmental Employees’ Retirement System does not count toward this five-year requirement.) The cost, if any, is based on when you began eligible state employment and which coverage you select. Please see "Guidance on State Health Plan Changes Effective October 1, 2006" for additional information.

No. Short-term disability payments are offset by any severance pay received.

You should contact Prudential Retirement, the NC 401(k) and NC 457 plans’ administrator, for information about leaving contributions in the account, transfers/rollovers, distributions, and tax implications. 

Website: www.ncplans.prudential.com 
E-mail: NCPlans@prudential.com 
Phone: 1-866-627-5267 (1-866-NCPLANS) 

You may want to refer to TSERS handbook for information on the NC 401(k) and NC 457 Transfer Benefit web page, or Prudential Retirement's "Plan Comparison Document" which outlines options for supplemental retirement account(s).

If you are enrolled in an employer-sponsored insurance plan, you should consult your employer/insurance carrier regarding continuation of coverage following separation from service. 

Supplemental insurance is available to benefit recipients from the Teachers’ and State Employees’ Retirement System, Local Governmental Employees’ Retirement System, Legislative Retirement System, and Consolidated Judicial Retirement System through Pierce Insurance Agency Inc. 

Pierce Insurance 
Website: www.ncretiree.com 
Phone: 1-855-NCRETIR (1-855-627-3847)

No. Retirement contributions are not deducted from severance pay.

Unused vacation/bonus leave may be paid out in accordance with your agency's existing personnel policies. If you retire and your four highest-paid years in a row include a final payment for unused vacation leave and/or bonus leave, your average final compensation may be increased by the extra payment(s).

It depends on your agency's existing personnel policies. If your agency is governed by the Office of Personnel sick leave policy and you return to State employment within five years of your separation date, your sick leave will be reinstated. Your sick leave may be transferred from one agency to another agency, subject to the receiving agency’s approval. 

If you are eligible for retirement, sick leave can be used to increase your creditable retirement service if you retire within five years of leaving State employment. However, it cannot be used to meet the minimum qualifications for a deferred benefit or the Survivor’s Alternate Benefit. (Refer to the Teachers' and State Employees' Retirement System handbook for information about the Survivor's Alternate Benefit.)

The State Employees’ Credit Union provides a variety of products and services for members who may be facing financial hardship. Membership is available to all state employees. As a reminder, you are eligible to join the State Employees Credit Union until your last official day of employment with the state. If you're not already a member, you may become one simply by opening a $25 Share Account (savings account).