H.B. 203
GENERAL ASSEMBLY OF NORTH CAROLINA
Feb 23, 2023
SESSION 2023 HOUSE PRINCIPAL CLERK
H D
HOUSE BILL DRH10103-NJ-45
Short Title: DST Technical Corrections.-AB (Public)
Sponsors: Representative Wheatley.
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT MAKING TECHNICAL CORRECTIONS AND OTHER CONFORMING AND
3 CLARIFYING CHANGES TO THE LAWS GOVERNING THE TEACHERS' AND
4 STATE EMPLOYEES' RETIREMENT SYSTEM, THE LOCAL GOVERNMENTAL
5 EMPLOYEES' RETIREMENT SYSTEM, AND TO OTHER RELATED STATUTES, AS
6 RECOMMENDED BY THE DEPARTMENT OF STATE TREASURER.
7 The General Assembly of North Carolina enacts:
8
9 PART I. CHANGES TO THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT
10 SYSTEM
11 SECTION 1.1. G.S. 135-3(8)f. reads as rewritten:
12 "f. Should a beneficiary who retired on an early or service retirement
13 allowance under this Chapter be reemployed by, or otherwise engaged
14 to perform services for, an employer participating in the Retirement
15 System on a part-time, temporary, interim, or on a fee for service basis,
16 whether contractual or otherwise at any time during the six months
17 immediately following the effective date of retirement, then the option
18 of the two listed below that has the lesser financial impact on the
19 member, as determined by the Retirement System, shall be applied:
20 1. The member's retirement shall be deemed effective the month
21 after the last month the member performed services for a
22 participating employer, and the member shall repay all
23 retirement benefits paid up to the deemed effective date,
24 provided the member thereafter has satisfied the six-month
25 separation required by G.S. 135-1(20).
26 2. The member shall make a lump-sum payment to the
27 Retirement System equal to three times the amount of
28 compensation earned during the six months immediately
29 following the effective date of retirement. If the member is
30 unable to make a lump-sum payment, the member can elect to
31 have the entirety of their monthly retirement benefit withheld
32 until the Retirement System has recovered three times the
33 amount of compensation earned during the six months
34 immediately following the effective date of retirement."
35 SECTION 1.2. G.S. 135-4 reads as rewritten:
36 "§ 135-4. Creditable service.
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 General Assembly Of North Carolina Session 2023
1 …
2 (h) During periods when a member is on an approved leave of absence and is receiving
3 less than the member's full compensation, the member will be deemed to be in service only if the
4 member is contributing to the Retirement System as provided in G.S. 135-8(b)(5). If the member
5 is so contributing, the annual rate of compensation paid to such employee immediately before
6 the approved leave of absence began will be deemed to be the actual compensation rate of the
7 employee during the leave of absence.
8 …
9 (ff) Retroactive Membership Service. – A member who is reinstated to service as an
10 employee as defined in G.S. 135-1(10) or as a teacher as defined in G.S. 135-1(25) retroactively
11 to the date of prior involuntary termination with back pay, as defined by the State Human
12 Resources Commission, and associated benefits may be allowed membership service, after
13 submitting clear and convincing evidence of the reinstatement, payment of back pay, and
14 restoration of associated benefits, as follows:
15 (1) When the reinstatement to service is by court order, final decision of an
16 Administrative Law Judge, or with the approval of the Office of State Human
17 Resources Director, and is:
18 a. Within 90 days of the involuntary termination, by the payment of
19 employee and employer contributions that would have been paid; or
20 b. After 90 days of the involuntary termination, by the payment of the
21 employee and employer contributions that would have been paid plus
22 interest compounded annually at a rate equal to the greater of the
23 average yield on the pension accumulation fund for the preceding
24 calendar year or the actuarial investment rate-of-return assumption, as
25 adopted by the Board of Trustees.
26 (2) When the reinstatement to service is by settlement agreement voluntarily
27 entered into by the affected parties, by the payment of a lump-sum amount.
28 The amount, the member shall purchase this service by paying a lump sum
29 amount to the annuity savings fund equal to the full liability increase due to
30 the additional service credits on the basis of the assumptions used for the
31 purposes of the actuarial valuation of the liabilities of the Retirement System,
32 except for the following assumptions specific to this calculation: (i) the
33 allowance shall be assumed to commence at the earliest age at which the
34 member could retire on an unreduced retirement allowance and (ii) assumed
35 annual postretirement allowance increases as set by the Board of Trustees
36 upon the advice of the consulting actuary. The calculation of the amount
37 payable shall also include an administrative fee to be set by the Board.
38 …."
39 SECTION 1.3. G.S. 135-5(l) reads as rewritten:
40 "(l) Death Benefit Plan. – There is hereby created a Group Life Insurance Plan (hereinafter
41 called the "Plan") which is established as an employee welfare benefit plan that is separate and
42 apart from the Retirement System and under which the members of the Retirement System shall
43 participate and be eligible for group life insurance benefits. The Plan shall be part of the North
44 Carolina Teachers' and State Employees' Benefit Trust, as established under G.S. 135-7(g). All
45 receipts, transfers, appropriations, contributions, investment earnings, and other income
46 belonging to the Plan shall be deposited in the Benefit Trust. All benefits and expenses against
47 the Plan shall be disbursed from the Benefit Trust. Employer and non-employer contributions to
48 the Benefit Trust and earnings on those contributions are irrevocable. The assets of the Benefit
49 Trust are dedicated to providing benefits to participants, surviving spouses, and the members'
50 estates in accordance with the Plan's benefit terms. The assets of the Benefit Trust are not subject
51 to the claims of creditors of the employees and non-employees making contributions to the
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1 Benefit Trust, are not subject to the claims of any creditors of the Benefit Trust's trustees and
2 administrators, and are not subject to the claims of creditors of members and beneficiaries.
3 Benefit Trust assets may be used for reasonable expenses to administer benefits provided by the
4 Fund as approved by the Board of Trustees.
5 …
6 Notwithstanding the above provisions, the Board of Trustees may and is specifically
7 authorized to provide the death benefit according to the terms and conditions otherwise appearing
8 in this Plan in the form of group life insurance, either (i) by purchasing a contract or contracts of
9 group life insurance with any life insurance company or companies licensed and authorized to
10 transact business in this State for the purpose of insuring the lives of members in service, or (ii)
11 by establishing a separate trust for such purpose. To that end the Board of Trustees is authorized,
12 empowered and directed to investigate the desirability of utilizing group life insurance by either
13 of the foregoing methods for the purpose of providing the death benefit. If a separate trust fund
14 is established, it shall be operated in accordance with rules and regulations adopted by the Board
15 of Trustees and all investment earnings on the trust fund shall be credited to such fund.
16 In administration of the death benefit the following shall apply:
17 (1) For the purpose of determining eligibility only, in this subsection "calendar
18 year" shall mean any period of 12 consecutive months or, if less, the period
19 covered by an annual contract of employment. For all other purposes in this
20 subsection "calendar year" shall mean the 12 months beginning January 1 and
21 ending December 31.
22 (2) Last day of actual service shall be:
23 a. When employment When the employee has been terminated, the last
24 day the member actually worked.
25 b. When employment When the employee has not been terminated, the
26 date on which an absent member's sick and annual leave expire, unless
27 he the member is on approved leave of absence and is in service under
28 the provisions of G.S. 135-4(h).
29 c. When a participant's employment When the member's service is
30 interrupted by reason of service in the Uniformed Services, as that
31 term is defined in section 4303(16) of the Uniformed Services
32 Employment and Reemployment Rights Act, Public Law 103-353, and
33 the participant does not return immediately after that service to
34 employment with a covered employer in this System, the date on
35 which the participant was first eligible to be separated or released from
36 his or her involuntary military service.
37 …."
38 SECTION 1.4. G.S. 135-8(b)(5) reads as rewritten:
39 "(b) Annuity Savings Fund. – The annuity savings fund shall be a fund in which shall be
40 accumulated contributions from the compensation of members to provide for their annuities.
41 Contributions to any payments from the annuity savings fund shall be made as follows:
42 …
43 (5) The Board of Trustees may approve the purchase of creditable service by any
44 member for leaves of absence or for interrupted service to an employer only
45 for the purpose of acquiring knowledge, talents, or abilities and to increase the
46 efficiency of service to the employer, subject to the provisions of this
47 subdivision. A leave of absence or interrupted service may be approved for
48 purchase under this subdivision for a period of employment as a teacher in a
49 charter school. Any other leave of absence or interrupted service shall qualify
50 for purchase under this subdivision only if (i) during the time of the leave or
51 interrupted service the member is enrolled and participates in a full time
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1 degree program at an accredited institution of higher education, (ii) the
2 member is not paid compensation, other than a stipend resulting from
3 participation in a full-time degree program, for the activity in which he or she
4 is acquiring knowledge, talents, or abilities, and (iii) the service is not
5 purchased for any month in which the member performed any services for any
6 of the organizations listed in G.S. 135 27(a) or G.S. 135 27(f), G.S. 135-27(a)
7 or G.S. 135-27(f), or a successor to any of those organizations. Approval by
8 the Board under this subdivision shall be made prior to the purchase of the
9 creditable service, is limited to a career total of six years for each member,
10 and may be obtained in the following manner:
11 …."
12
13 PART II. CHANGES PERTAINING TO THE LOCAL GOVERNMENTAL
14 EMPLOYEES' RETIREMENT SYSTEM
15 SECTION 2.1. G.S. 128-26(v)(2) reads as rewritten:
16 "(2) When the reinstatement to service is by settlement agreement voluntarily
17 entered into by the affected parties, by the payment of a lump-sum amount.
18 The amount, the member shall purchase this service by paying a lump sum
19 amount to the annuity savings fund equal to the full liability increase due to
20 the additional service credits on the basis of the assumptions used for the
21 purposes of the actuarial valuation of the liabilities of the Retirement System,
22 except for the following assumptions specific to this calculation: (i) the
23 allowance shall be assumed to commence at the earliest age at which the
24 member could retire on an unreduced retirement allowance and (ii) assumed
25 annual postretirement allowance increases as set by the Board of Trustees
26 upon the advice of the consulting actuary. The calculation of the amount
27 payable shall also include an administrative fee to be set by the Board."
28 SECTION 2.2. G.S. 128-26(y)(3) reads as rewritten:
29 "(3) Option three. – An adjustment to the required employer contribution rate for
30 the employer as provided in G.S. 128-30(d)(4b).G.S. 128-30(d)(4a)."
31 SECTION 2.3. G.S. 128-27(e)(6) reads as rewritten:
32 "(6) Notwithstanding any other provision to the contrary, a beneficiary in receipt
33 of a disability retirement allowance until the earliest date on which he would
34 have qualified for an unreduced service retirement allowance shall thereafter
35 (i) not be subject to further reexaminations as to disability, (ii) not be subject
36 to any reduction in allowance on account of being engaged in a gainful
37 occupation other than with an employer participating in the Retirement
38 System, and (iii) be considered a beneficiary in receipt of a service retirement
39 allowance. Provided, however, a beneficiary in receipt of a disability
40 retirement allowance whose allowance is reduced on account of
41 reexamination as to disability or to or the ability to engage in a gainful
42 occupation prior to the date on which he would have qualified for an
43 unreduced service retirement allowance shall have only the right to elect to
44 convert to an early or service retirement allowance as permitted under
45 subdivision (1) above."
46 SECTION 2.4. G.S. 128-26(g) reads as rewritten:
47 "(g) During periods when a member is on an approved leave of absence and is receiving
48 less than his full compensation, he will be deemed to be in service only if he is contributing to
49 the Retirement System as provided in G.S. 128-30(b)(4). If he is so contributing, the annual rate
50 of compensation paid to such employee immediately before the leave of absence began will be
51 deemed to be the actual compensation rate of the employee during the leave of absence."
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1 SECTION 2.5. G.S. 128-27(l) reads as rewritten:
2 "(l) Death Benefit Plan. – The provisions of this subsection shall become effective for any
3 employer only after an agreement to that effect has been executed by the employer and the
4 Director of the Retirement System. There is hereby created a Group Life Insurance Plan
5 (hereinafter called the "Plan") which is established as an employee welfare benefit plan that is
6 separate and apart from the Retirement System and under which the members of the Retirement
7 System shall participate and be eligible for group life insurance b