GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2001
H	1
HOUSE BILL 1022
     

 
Short Title:	28-Year Retirement/Retention Incentive.	()	
Sponsors:	Representatives Goodwin; and Buchanan.	
Referred to:	Pensions and Retirement.	
April 9, 2001

A BILL TO BE ENTITLED
AN ACT to allow members of the teachers' and state employees' retirement system to retire with unreduced benefits after twenty-eight years of service and to establish a retention incentive program for members of the retirement system.

The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 135‑5(b18) reads as rewritten:
"(b18)	Service Retirement Allowance of Members Retiring on or After July 1, 2000, but Before July 1, 2001.– Upon retirement from service in accordance with subsection (a) or (a1) above, on or after July 1, 2000, but before July 1, 2001, a member shall receive the following service retirement  allowance:
(1)	A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows: 
a.	If the member's service retirement date occurs on or after his 55th birthday, and completion of five years of creditable service as a law enforcement officer, or after the completion of 30 years of creditable service, the allowance shall be equal to one and eighty‑one hundredths percent (1.81%) of his average final compensation, multiplied by the number of years of his creditable service.
b.	If the member's service retirement date occurs on or after his 50th birthday and before his 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 30 years of creditable service, his retirement allowance shall be equal to the greater of:
1.	The service retirement allowance payable under G.S. 135‑5(b18)(1)a. reduced by one‑third of one percent (1/3 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 55th birthday; or
2.	The service retirement allowance as computed under G.S. 135‑5(b18)(1)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement.
(2)	A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after his 65th birthday upon the completion of five years of membership service or after the completion of 30 years of creditable service or on or after his 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty‑one hundredths percent (1.81%) of his average final compensation, multiplied by the number of years of creditable service.
b.	If the member's service retirement date occurs after his 60th birthday and before his 65th birthday and prior to his completion of 25 years or more of creditable service, his retirement allowance shall be computed as in G.S. 135‑5(b18)(2)a. but shall be reduced by one‑quarter of one percent (1/4 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following his 65th birthday.
c.	If the member's early service retirement date occurs on or after his 50th birthday and before his 60th birthday and after completion of 20 years of creditable service but prior to the completion of 30 years of creditable service, his early service retirement allowance shall be equal to the greater of:
1.	The service retirement allowance as computed under G.S. 135‑5(b18)(2)a. but reduced by the sum of five‑twelfths of one percent (5/12 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 60th birthday, plus one‑quarter of one percent (1/4 of 1%) thereof for each month by which his 60th birthday precedes the first day of the month coincident with or next following his 65th birthday; or
2.	The service retirement allowance as computed under G.S. 135‑5(b18)(2)a. reduced by five percent (5%) times the difference between 30 years and his creditable service at retirement; or
3.	If the member's creditable service commenced prior to July 1, 1994, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 135‑5(b18)b. 
d.	Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1963, shall not receive less than the benefit provided by G.S. 135‑5(b)."
SECTION 2.  G.S. 135‑5 is amended by adding a new subsection to read:
"(b19)	Service Retirement Allowance of Members Retiring on or After July 1, 2001. – Upon retirement from service in accordance with subsection (a) or (a1) above, on or after July 1, 2001, a member shall receive the following service retirement allowance:
(1)	A member who is a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows: 
a.	If the member's service retirement date occurs on or after his 55th birthday, and completion of five years of creditable service as a law enforcement officer, or after the completion of 28 years of creditable service, the allowance shall be equal to one and eighty-one hundredths percent (1.81%) of his average final compensation, multiplied by the number of years of his creditable service. 
b.	If the member's service retirement date occurs on or after his 50th birthday and before his 55th birthday with 15 or more years of creditable service as a law enforcement officer and prior to the completion of 28 years of creditable service, his retirement allowance shall be equal to the greater of:
1.	The service retirement allowance payable under G.S. 135-5(b19)(1)a. reduced by one-third of one percent (1/3 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 55th birthday; or
2.	The service retirement allowance as computed under G.S. 135-5(b19)(1)a. reduced by five percent (5%) times the difference between 28 years and his creditable service at retirement.
(2)	A member who is not a law enforcement officer or an eligible former law enforcement officer shall receive a service retirement allowance computed as follows:
a.	If the member's service retirement date occurs on or after his 65th birthday upon the completion of five years of membership service or after the completion of 28 years of creditable service or on or after his 60th birthday upon the completion of 25 years of creditable service, the allowance shall be equal to one and eighty-one hundredths percent (1.81%) of his average final compensation, multiplied by the number of years of creditable service.
b.	If the member's service retirement date occurs after his 60th birthday and before his 65th birthday and prior to his completion of 25 years or more of creditable service, his retirement allowance shall be computed as in G.S. 135-5(b19)(2)a. but shall be reduced by one-quarter of one percent (1/4 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following his 65th birthday.
c.	If the member's early service retirement date occurs on or after his 50th birthday and before his 60th birthday and after completion of 20 years of creditable service but prior to the completion of 28 years of creditable service, his early service retirement allowance shall be equal to the greater of:
1.	The service retirement allowance as computed under G.S. 135-5(b19)(2)a. but reduced by the sum of five-twelfths of one percent (5/12 of 1%) thereof for each month by which his retirement date precedes the first day of the month coincident with or next following the month the member would have attained his 60th birthday, plus one-quarter of one percent (1/4 of 1%) thereof for each month by which his 60th birthday precedes the first day of the month coincident with or next following his 65th birthday; or
2.	The service retirement allowance as computed under G.S. 135-5(b19)(2)a. reduced by five percent (5%) times the difference between 28 years and his creditable service at retirement; or
3.	If the member's creditable service commenced prior to July 1, 1994, the service retirement allowance equal to the actuarial equivalent of the allowance payable at the age of 60 years as computed in G.S. 135-5(b19)b.
d.	Notwithstanding the foregoing provisions, any member whose creditable service commenced prior to July 1, 1963, shall not receive less than the benefit provided by G.S. 135-5(b)."
SECTION 3.  G.S. 135‑5(m) reads as rewritten:
"(m)	Survivor's Alternate Benefit. – Upon the death of a member in service, the principal beneficiary designated to receive a return of accumulated contributions shall have the right to elect to receive in lieu thereof the reduced retirement allowance provided by Option 2 of subsection (g) above computed by assuming that the member had retired on the first day of the month following the date of his death, provided that the following conditions apply:
(1)	a.	The member had attained such age and/or creditable service to be eligible to commence retirement with an early or service retirement allowance, or
b.	The member had obtained 20 years of creditable service in which case the retirement allowance shall be computed in accordance with  G.S. 135-5(b19)(1)b. or  G.S. 135-5(b19)(2)c., notwithstanding the requirement of obtaining age 50.
(2)	The member had designated as the principal beneficiary to receive a return of his accumulated contributions one and only one person who was living at the time of his death.
(3)	The member had not instructed the Board of Trustees in writing that he did not wish the provisions of this subsection to apply.
For the purpose of this benefit, a member is considered to be in service at the date of his death if his death occurs within 180 days from the last day of his actual service. The last day of actual service shall be determined as provided in subsection (l) of this section. Upon the death of a member in service, the surviving spouse may make all purchases for creditable service as provided for under this Chapter for which the member had made application in writing prior to the date of death, provided that the date of death occurred prior to or within 60 days after notification of the cost to make the purchase. The term "in service" as used in this subsection includes a member in receipt of a benefit under the Disability Income Plan as provided in Article 6 of this Chapter."
SECTION 4.  Article 1 of Chapter 135 of the General Statutes is amended by adding a new section to read:
"§ 135-18.9. Retention Incentive Program.
(a)	A member who is eligible for service retirement under this Chapter and complies with the requirements of this section may elect to participate in the Teacher and State Employee Retention Incentive Program. A member electing to participate in the program retires for purposes of the System, and the member's normal retirement benefit is calculated on the basis of the member's average final compensation and service credit at the time the program period begins. The program participant shall agree to continue employment with an employer participating in the System for a program period, not to exceed five years. The member shall notify the System before the beginning of the program period. Participation in the program does not guarantee employment for the specified program period.
(b)	During the specified program period, receipt of the member's normal retirement benefit is deferred. The member's deferred monthly payment shall be placed in the System's trust fund on behalf of the member. No interest shall be paid on the member's deferred monthly benefit placed in the trust fund during the specified program period.
(c)	During the specified program period, the employer shall pay to the System the employer contribution for active members prescribed by law with respect to any program participant it employs, regardless of whether the program participant is a part-time employee, a temporary employee, or a full-time employee. If an employer who is obligated to the System pursuant to this subsection fails to pay the amount due, as determined by the System, the amount shall be deducted from any funds payable to the employer by the State.
(d)	A program participant is retired from the System as of the beginning of the program period. A program participant makes no further employee contributions to the System, accrues no service credit during the program period, and is not eligible to receive group life insurance benefits or disability retirement benefits. Accrued annual leave and sick leave used in any manner in the calculation of the program participant's retirement benefits is deducted from the amount of that leave accrued by the participant.
(e)	A program participant is retired for retirement purposes only. For employment purposes, a program participant is considered to be an active employee, retaining all other rights and benefits of an active employee and is not subject to the earnings limitation of G.S. 135-3(8)c. during the program period.
(f)	Upon termination of employment either during or at the end of the program period, the member shall receive the balance in the member's program account by electing one of the following distribution alternatives:
(1)	A lump-sum distribution, paying appropriate taxes; or
(2)	To the extent permitted by law, a tax-sheltered rollover into an eligible plan;
The member also shall receive the previously determined normal retirement benefits based upon the member's average final compensation and service credit at the time the program period began, plus any applicable cost-of-living increases declared during the program period. The program participant is thereafter subject to the earning limitation of G.S. 135-3(8)c.
(g)	If a program participant dies during the specified program period, the member's designated beneficiary shall receive the balance in the member's program account by electing one of the distribution alternatives set forth in subsection (f) of this section. In accordance with the form of System benefit selected by the member at the time the program commenced, the member's designated beneficiary shall receive either a survivor benefit or a refund of contributions from the member's System account.
(h)	 If a program participant fails to terminate employment with an employer participating in the System within one month after the end of the specified program period, the member shall receive the previously determined normal retirement benefits based upon the member's average final compensation and service credit at the time the program began, plus any applicable cost-of-living increases declared during the program period. The program participant is thereafter subject to the earning limitation of G.S. 135-3(8)c. The program participant also shall receive the balance in the member's program account by selecting one of the distribution alternatives set forth in subsection (f) of this section.
(i)	A member is not eligible to participate in the program if the member has participated previously in and received a benefit under this program or any other state retirement system."
SECTION 5.  Section 4 of this act becomes effective July 1, 2001, and applies to persons eligible to retire from the Teachers' and State Employees' Retirement System on or after that date. The remainder of this act becomes effective July 1, 2001.