Bill Summary – FastDemocracy

FILED SENATE
                                                                                          May 13, 2020
                          GENERAL ASSEMBLY OF NORTH CAROLINA
                                                                 S.B. 719
                                      SESSION 2019           PRINCIPAL CLERK
     S                                                                    D
                              SENATE BILL DRS45416-MRp-166A
     Short Title:   Retirement Protection Act.                                                   (Public)
     Sponsors:      Senators Wells, Edwards, and Perry (Primary Sponsors).
     Referred to:
                                     A BILL TO BE ENTITLED
 AN ACT TO MAKE CERTAIN CHANGES TO PRESERVE THE INTEGRITY OF AND
     CLARIFY THE POLICY OBJECTIVES OF THE GENERAL ASSEMBLY FOR THE
     TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM, THE LOCAL
     GOVERNMENTAL EMPLOYEES' RETIREMENT SYSTEM, THE CONSOLIDATED
     JUDICIAL RETIREMENT SYSTEM, AND THE LEGISLATIVE RETIREMENT
     SYSTEM.
 The General Assembly of North Carolina enacts:
             SECTION 1.1.(a) G.S. 135-6(l) reads as rewritten:
     "(l)    Duties of Actuary. – The Board of Trustees shall designate an actuary who shall be
 the technical adviser of the Board of Trustees on matters regarding the operation of the funds
 created by the provisions of this Chapter and shall perform such other duties as are required in
 connection therewith. For purposes of the annual valuation of System assets, the The experience
 studies, and studies and all other actuarial calculations required by this Chapter, and all the
 assumptions used by the System's actuary, including mortality tables, interest rates, annuity
 factors, the contribution-based benefit cap factor, and employer contribution rates, shall be set
 out in the actuary's periodic reports reports, annual valuations of System assets, or other materials
 provided to the Board of Trustees. These Notwithstanding Article 2A of Chapter 150B of the
 General Statutes, these materials, once accepted by the Board, shall be considered part of the
 Plan documentation governing this Retirement System; similarly, the System and shall be
 effective the first day of the month following adoption unless a different date is specified in the
 adopting resolution. The effective date shall not retroactively affect a contribution rate. The
 Board's minutes relative to all actuarial assumptions used by the System shall also be considered
 part of the Plan documentation governing this Retirement System, with the result of precluding
 any employer discretion in the determination of benefits payable hereunder, consistent with
 Section 401(a)(25) of the Internal Revenue Code."
             SECTION 1.1.(b) G.S. 128-28(m) reads as rewritten:
     "(m) Duties of Actuary. – The Board of Trustees shall designate an actuary who shall be
 the technical adviser of the Board of Trustees on matters regarding the operation of the funds
 created by the provisions of this Chapter and shall perform such other duties as are required in
 connection therewith. For purposes of the annual valuation of System assets, the The experience
 studies, and studies and all other actuarial calculations required by this Chapter, and all the
 assumptions used by the System's actuary, including mortality tables, interest rates, annuity
 factors, the contribution-based benefit cap factor, and employer contribution rates, shall be set
 out in the actuary's periodic reports reports, annual valuations of System assets, or other materials
 provided to the Board of Trustees. These Notwithstanding Article 2A of Chapter 150B of the
                                 *DRS45416-MRp-166A*
     General Assembly Of North Carolina                                                    Session 2019
 General Statutes, these materials, once accepted by the Board, shall be considered part of the
 Plan documentation governing this Retirement System; similarly, the System and shall be
 effective the first day of the month following adoption unless a different date is specified in the
 adopting resolution. The effective date shall not retroactively affect a contribution rate. The
 Board's minutes relative to all actuarial assumptions used by the System shall also be considered
 part of the Plan documentation governing this Retirement System, with the result of precluding
 any employer discretion in the determination of benefits payable hereunder, consistent with
 Section 401(a)(25) of the Internal Revenue Code."
              SECTION 1.1.(c) G.S. 150B-1(d) reads as rewritten:
     "(d) Exemptions from Rule Making. – Article 2A of this Chapter does not apply to the
 following:
              …
              (30) The Retirement System Boards of Trustees established under G.S. 128-28 and
                      G.S. 135-6 when adopting actuarial tables, assumptions, and
                      contribution-based benefit cap factors after presentation of recommendations
                      from the actuary. This exemption includes, but is not limited to, the following
                      actuarial tables, assumptions, methods, and factors:
                      a.      Joint and survivor tables.
                      b.      Reserve transfer tables.
                      c.      Interest rate assumptions.
                      d.      Salary increase assumptions.
                      e.      Mortality assumptions.
                      f.      Separation and retirement assumptions.
                      g.      Asset smoothing methods.
                      h.      Actuarial cost methods.
                      i.      Contribution-based benefit cap factors.
                      j.      Required contribution rates.
                      k.      Amortization policies."
              SECTION 1.1.(d) This section is effective when it becomes law, and subsection (c)
 applies to actuarial tables, assumptions, and contribution-based benefit cap factors adopted or
 changed on or after that date.
              SECTION 1.2.(a) G.S. 135-6(n) reads as rewritten:
     "(n) In 1943, and at least once in each five-year period thereafter, the actuary shall make
 an actuarial investigation into the mortality, service and compensation experience of the members
 and beneficiaries of the Retirement System, and System and shall make a valuation of the assets
 and liabilities of the funds of the System, and taking System. Taking into account the result of
 such the actuarial investigation and valuation, the Board of Trustees shall:shall do all of the
 following:
              (1)     Adopt for the Retirement System such any necessary mortality, service and
                      service, or other tables as shall be deemed necessary; andtables, and any
                      necessary contribution-based benefit cap factors for the Retirement System.
              (2)     Certify the rates of contributions payable by the State of North Carolina on
                      account of new entrants at various ages.
     In order to pay for the administration of this section, the Retirement Systems Division of the
 Department of State Treasurer may increase receipts from the retirement assets of the Retirement
 System or may pay the costs directly from the retirement assets."
              SECTION 1.2.(b) G.S. 135-6(o) reads as rewritten:
     "(o) On the basis of such the tables and interest assumption rate as adopted by the Board
 of Trustees shall adopt, Trustees, the actuary shall make an annual valuation of the assets and
 liabilities of the funds of the System created by this Chapter. The annual valuation shall include
 a supplementary section that provides an analysis of assets on a market basis using the 30-year
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     General Assembly Of North Carolina                                                    Session 2019
 treasury rate as of December 31 of the year of the valuation as the discount rate. In order to pay
 for the administration of this section, the Retirement Systems Division of the Department of State
 Treasurer may increase receipts from the retirement assets of the Retirement System or may pay
 the costs directly from the retirement assets."
              SECTION 1.2.(c) G.S. 128-28(o) reads as rewritten:
      "(o) In the year 1945, and at least once in each five-year period thereafter, the actuary shall
 make an actuarial investigation into the mortality, service and compensation experience of the
 members and beneficiaries of the Retirement System, and System and shall make a valuation of
 the assets and liabilities of the funds of the System, and taking System. Taking into account the
 result of such investigation and valuation, the Board of Trustees shall:shall do all of the
 following:
              (1)     Adopt for the Retirement System such any necessary mortality, service and
                      service, or other tables as shall be deemed necessary; andtables, and any
                      necessary contribution-based benefit cap factors for the Retirement System.
              (2)     Certify the rates of contributions payable by the participating units on account
                      of new entrants at various ages.
      In order to pay for the administration of this section, the Retirement Systems Division of the
 Department of State Treasurer may increase receipts from the retirement assets of the Retirement
 System or may pay the costs directly from the retirement assets."
              SECTION 1.2.(d) G.S. 128-28(p) reads as rewritten:
      "(p) On the basis of such the tables and interest assumption rate as adopted by the Board
 of Trustees shall adopt, Trustees, the actuary shall make an annual valuation of the assets and
 liabilities of the funds of the System created by this Chapter. The annual valuation shall include
 a supplementary section that provides an analysis of assets on a market basis using the 30-year
 treasury rate as of December 31 of the year of the valuation as the discount rate. In order to pay
 for the administration of this section, the Retirement Systems Division of the Department of State
 Treasurer may increase receipts from the retirement assets of the Retirement System or may pay
 the costs directly from the retirement assets."
              SECTION 1.2.(e) This section is effective when it becomes law and applies to
 actuarial investigations and calculations made on or after that date.
              SECTION 2.1.(a) G.S. 135-18.10A(b) is repealed.
              SECTION 2.1.(b) G.S. 128-38.4A(b) is repealed.
              SECTION 2.1.(c) G.S. 135-75.1A(b) is repealed.
              SECTION 2.1.(d) G.S. 120-4.33A(b) is repealed.
              SECTION 3.1.(a) G.S. 135-4(gg) reads as rewritten:
      "(gg) If a member who is an elected government official and has not vested in this System
 on July 1, 2007, is convicted of an offense listed in G.S. 135-18.10 for acts committed after July
 1, 2007, then that member shall forfeit all benefits under this System, except for a return of
 member contributions plus interest. If a member who is an elected government official and has
 vested in this System on July 1, 2007, is convicted of an offense listed in G.S. 135-18.10 for acts
 committed after July 1, 2007, then that member is not entitled to any creditable service that
 accrued after July 1, 2007. 2007, regardless of whether that creditable service was earned by
 virtue of membership in the System, accrued by conversion of sick leave at the point of the
 member's retirement, accrued by transfer of service from another retirement system, purchased
 by the member in accordance with this Chapter, or accrued by any other means. No member shall
 forfeit any benefit or creditable service earned from a position not as an elected government
 official. For purposes of this subsection, creditable service attributable to the conversion of sick
 leave accrues in this System on the date of retirement, service transferred to this System from
 another system accrues in this System on the effective date of the transfer, and purchased service
 accrues in this System on the date of the purchase."
              SECTION 3.1.(b) G.S. 135-4(ii) reads as rewritten:
     DRS45416-MRp-166A                                                                            Page 3
     General Assembly Of North Carolina                                                    Session 2019
      "(ii) If a member who is in service and has not vested in this System on December 1, 2012,
 is convicted of an offense listed in G.S. 135-18.10A for acts committed after December 1, 2012,
 then that member shall forfeit all benefits under this System, except for a return of member
 contributions plus interest. If a member who is in service and has vested in this System on
 December 1, 2012, is convicted of an offense listed in G.S. 135-18.10A for acts committed after
 December 1, 2012, then that member is not entitled to any creditable service that accrued after
 December 1, 2012.2012, regardless of whether that creditable service was earned by virtue of
 membership in the System, accrued by conversion of sick leave at the point of the member's
 retirement, accrued by transfer of service from another retirement system, purchased by the
 member in accordance with this Chapter, or accrued by any other means. For purposes of this
 subsection, creditable service attributable to the conversion of sick leave accrues in this System
 on the date of retirement, service transferred to this System from another system accrues in this
 System on the effective date of the transfer, and purchased service accrues in this System on the
 date of the purchase."
              SECTION 3.1.(c) G.S. 128-26(w) reads as rewritten:
      "(w) If a member who is an elected government official and has not vested in this System
 on July 1, 2007, is convicted of an offense listed in G.S. 128-38.4 for acts committed after July
 1, 2007, then that member shall forfeit all benefits under this System, except for a return of
 member contributions plus interest. If a member who is an elected government official and has
 vested in this System on July 1, 2007, is convicted of an offense listed in G.S. 128-38.4 for acts
 committed after July 1, 2007, then that member is not entitled to any creditable service that
 accrued after July 1, 2007. 2007, regardless of whether that creditable service was earned by
 virtue of membership in the System, accrued by conversion of sick leave at the point of the
 member's retirement, accrued by transfer of service from another retirement system, purchased
 by the member in accordance with this Article, or accrued by any other means. No member shall
 forfeit any benefit or creditable service earned from a position not as an elected government
 official. For purposes of this subsection, creditable service attributable to the conversion of sick
 leave accrues in this System on the date of retirement, service transferred to this System from
 another system accrues in this System on the effective date of the transfer, and purchased service
 accrues in this System on the date of the purchase."
              SECTION 3.1.(d) G.S. 128-26(x) reads as rewritten:
      "(x) If a member who is in service and has not vested in this System on December 1, 2012,
 is convicted of an offense listed in G.S. 128-38.4A for acts committed after December 1, 2012,
 then that member shall forfeit all benefits under this System, except for a return of member
 contributions plus interest. If a member who is in service and has vested in this System on
 December 1, 2012, is convicted of an offense listed in G.S. 128-38.4A for acts committed after
 December 1, 2012, then that member is not entitled to any creditable service that accrued after
 December 1, 2012.2012, regardless of whether that creditable service was earned by virtue of
 membership in the System, accrued by conversion of sick leave at the point of the member's
 retirement, accrued by transfer of service from another retirement system, purchased by the
 member in accordance with this Article, or accrued by any other means. For purposes of this
 subsection, creditable service attributable to the conversion of sick leave accrues in this System
 on the date of retirement, service transferred to this System from another system accrues in this
 System on the effective date of the transfer, and purchased service accrues in this System on the
 date of the purchase."
              SECTION 3.1.(e) G.S. 135-56(g) reads as rewritten:
      "(g) If a member who has not vested in this System on July 1, 2007, is convicted of an
 offense listed in G.S. 135-75.1 for acts committed after July 1, 2007, then that member shall
 forfeit all benefits under this System. If a member who has vested in this System on July 1, 2007,
 is convicted of an offense listed in G.S. 135-75.1 for acts committed after July 1, 2007, then that
 member is not entitled to any creditable service that accrued after July 1, 2007. 2007, regardless
     Page 4                                                                     DRS45416-MRp-166A
     General Assembly Of North Carolina                                                    Session 2019
 of whether that creditable service was earned by virtue of membership in the System, accrued by
 conversion of sick leave at the point of the member's retirement, accrued by transfer of service
 from another retirement system, purchased by the member in accordance with this Chapter, or
 accrued by any other means. No member shall forfeit any benefit or creditable service earned
 from a position not as a justice, judge, district attorney, or