H.B. 168
GENERAL ASSEMBLY OF NORTH CAROLINA
Feb 25, 2021
SESSION 2021 HOUSE PRINCIPAL CLERK
H D
HOUSE BILL DRH30092-MGp-11A
Short Title: Retirement Administrative Changes Act of 2021.-AB (Public)
Sponsors: Representative C. Smith.
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT MAKING ADMINISTRATIVE CHANGES RELATED TO
3 CONTRIBUTION-BASED BENEFIT CAP LIABILITIES UNDER THE LOCAL
4 GOVERNMENTAL EMPLOYEES' RETIREMENT SYSTEM (LGERS) AND THE
5 TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM (TSERS);
6 CLARIFYING WITHDRAWAL LIABILITIES UNDER LGERS AND TSERS;
7 CLARIFYING AND STANDARDIZING THE DEFINITION OF "ACTUARIAL
8 EQUIVALENT" UNDER LGERS AND TSERS; REQUIRING EMPLOYING UNITS TO
9 ADOPT WRITTEN POLICIES FOR SPECIAL SEPARATION BUYOUTS FOR LAW
10 ENFORCEMENT OFFICERS; GIVING THE DEPARTMENT OF STATE TREASURER
11 AND THE SUPPLEMENTAL RETIREMENT BOARD OF TRUSTEES LIMITED
12 AUTHORITY TO ADOPT ADMINISTRATIVE FEES UNDER CERTAIN PLANS; AND
13 CLAWING BACK DISABILITY INCOME PLAN OVERPAYMENTS UNDER THE
14 OPTIONAL RETIREMENT PROGRAM.
15 The General Assembly of North Carolina enacts:
16
17 PART I. ADMINISTRATIVE CHANGES RELATED TO CONTRIBUTION-BASED
18 BENEFIT CAP LIABILITIES UNDER THE LOCAL GOVERNMENTAL
19 EMPLOYEES' RETIREMENT SYSTEM AND THE TEACHERS' AND STATE
20 EMPLOYEES' RETIREMENT SYSTEM
21
22 AUTHORIZATION FOR LOCAL GOVERNMENT EMPLOYERS TO PRE-FUND
23 CONTRIBUTION-BASED BENEFIT CAP LIABILITIES TO THE LOCAL
24 GOVERNMENTAL EMPLOYEES' RETIREMENT SYSTEM
25 SECTION 1.1. G.S. 159-30.1(a) reads as rewritten:
26 "§ 159-30.1. Trust for other post-employment benefits.
27 (a) Trust. – A local government, a public authority, an entity eligible to participate in the
28 Local Government Employee's Employees' Retirement System, or a local school administrative
29 unit may establish and fund an irrevocable trust for the purpose of paying (i) post-employment
30 benefits for which the entity is liable. liable or (ii) contribution-based benefit cap liabilities to the
31 Local Governmental Employees' Retirement System. The irrevocable trust must be established
32 by resolution or ordinance of the entity's governing board. The resolution or ordinance must state
33 the purposes for which the trust is created and the method of determining and selecting the Fund's
34 trustees. The resolution or ordinance establishing the trust may be amended from time to time,
35 but an amendment may not authorize the use of monies in the trust for a purpose not stated in the
36 resolution or ordinance establishing the trust."
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 General Assembly Of North Carolina Session 2021
1
2 AUTHORIZATION TO COLLECT ADDITIONAL CONTRIBUTIONS FROM
3 EMPLOYING UNITS UNDER THE TEACHERS' AND STATE EMPLOYEES'
4 RETIREMENT SYSTEM AND THE LOCAL GOVERNMENTAL EMPLOYEES'
5 RETIREMENT SYSTEM FOR PENSION SPIKING LIABILITIES
6 SECTION 1.2.(a) G.S. 128-30(d) is amended by adding a new subdivision to read:
7 "(4a) Notwithstanding Chapter 150B of the General Statutes, as of the beginning of
8 the fiscal year following 90 days after the assessment of a contribution-based
9 benefit cap liability that is not paid as a lump-sum payment, the required
10 employer contribution rate for an employer shall be adjusted to include an
11 additional contribution amount equal to a rate per centum that is estimated to
12 extinguish the contribution-based benefit cap liability on an amortization
13 schedule selected by the Board that has been applied to unfunded liabilities in
14 the most recent actuarial valuation."
15 SECTION 1.2.(b) G.S. 135-8(f) is amended by adding a new subdivision to read:
16 "(5) Notwithstanding Chapter 150B of the General Statutes, as of the beginning of
17 the fiscal year following 90 days after the assessment of a contribution-based
18 benefit cap liability that is not paid as a lump-sum payment, the required
19 employer contribution rate for an employer shall be adjusted to include an
20 additional contribution amount equal to a rate per centum that is estimated to
21 extinguish the contribution-based benefit cap liability on an amortization
22 schedule selected by the Board that has been applied to unfunded liabilities in
23 the most recent actuarial valuation."
24 SECTION 1.2.(c) This section applies to assessments imposed on or after the
25 effective date of this act to reduce an employer's contribution-based benefit cap liability.
26
27 CLARIFICATION OF WHEN CONTRIBUTION-BASED BENEFIT CAP LIABILITY
28 PAYMENTS ARE DUE FOR PURPOSES OF TRIGGERING INTERCEPTIONS OF
29 STATE APPROPRIATIONS FROM EMPLOYING UNITS UNDER THE LOCAL
30 GOVERNMENTAL EMPLOYEES' RETIREMENT SYSTEM AND THE TEACHERS'
31 AND STATE EMPLOYEES' RETIREMENT SYSTEM
32 SECTION 1.3.(a) G.S. 128-30(g)(3) reads as rewritten:
33 "(3) In the event the employee or employer contributions required under this
34 section are not received by the date set by the Board of Trustees and provided
35 that a one-time exception has not been agreed upon in advance due to exigent
36 circumstances, the Board shall assess the employer with a penalty, in lieu of
37 interest, of 1% per month with a minimum penalty of twenty-five dollars
38 ($25.00). The Board may waive one penalty per employer every five years if
39 the Board finds that the employer has consistently demonstrated good-faith
40 efforts to comply with the set deadline. If within 90 days after request therefor
41 by the Board any employer shall not have provided the System with the
42 records and other information required hereunder or if the full accrued amount
43 of the contributions provided for under this section due from members
44 employed by an employer or from an employer shall not have been received
45 by the System from the chief fiscal officer of such employer within 30 days
46 after the last due date as herein provided, then, notwithstanding anything
47 herein or in the provisions of any other law to the contrary, upon notification
48 by the Board to the State Treasurer as to the default of such employer as herein
49 provided, any distributions which might otherwise be made to such employer,
50 or the municipality or county of which such employer is an integral part, from
51 any funds of the State or any funds collected by the State shall be withheld
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1 from such employer until notice from the Board to the State Treasurer that
2 such employer is no longer in default.
3 In the event that an employer fails to submit payment of any required
4 contributions or payments to the Retirement Systems Division, other than the
5 one percent (1%) payment provided for in the first paragraph of this
6 subdivision, within 90 days after the date set by the Board of Trustees, the
7 Board shall notify the State Treasurer of its intent to collect the delinquent
8 contributions and other payments due to the Retirement Systems Division and
9 request an interception of State appropriations due to the participating
10 employer.
11 Except as provided in this subdivision, upon notification by the Board of
12 Trustees to the State Treasurer and the Office of State Budget and
13 Management as to the default of the employer, the Office of State Budget and
14 Management shall withhold from any State appropriation due to that employer
15 an amount equal to the sum of all delinquent contributions and other debts due
16 to the Retirement Systems Division and shall transmit that amount to the
17 Retirement Systems Division. For the purposes of this subsection, the date set
18 by the Board of Trustees for payment of the contribution-based benefit cap
19 liability shall be 12 months after the member's effective date of
20 retirement.retirement, or the first day of the month coincident with or next
21 following six months after the date of the invoice, whichever is later."
22 SECTION 1.3.(b) G.S. 135-8(f)(3) reads as rewritten:
23 "(3) In the event the employee or employer contributions required under this
24 section are not received by the date set by the Board of Trustees and provided
25 that a one-time exception has not been agreed upon in advance due to exigent
26 circumstances, the Board shall assess the employer with a penalty, in lieu of
27 interest, of 1% per month with a minimum penalty of twenty-five dollars
28 ($25.00). The Board may waive one penalty per employer every five years if
29 the Board finds that the employer has consistently demonstrated good-faith
30 efforts to comply with the set deadline. If within 90 days after request therefor
31 by the Board any employer shall not have provided the System with the
32 records and other information required hereunder or if the full accrued amount
33 of the contributions provided for under this section due from members
34 employed by an employer or from an employer other than the State shall not
35 have been received by the System from the chief fiscal officer of such
36 employer within 30 days after the last due date as herein provided, then,
37 notwithstanding anything herein or in the provisions of any other law to the
38 contrary, upon notification by the Board to the State Treasurer as to the default
39 of such employer as herein provided, any distributions which might otherwise
40 be made to such employer from any funds of the State shall be withheld from
41 such employer until notice from the Board to the State Treasurer that such
42 employer is no longer in default.
43 In the event that an employer fails to submit payment of any required
44 contributions or payments to the Retirement Systems Division, other than the
45 one percent (1%) payment provided for in the first paragraph of this
46 subdivision, within 90 days after the date set by the Board of Trustees, the
47 Board shall notify the State Treasurer of its intent to collect the delinquent
48 contributions and other payments due to the Retirement Systems Division and
49 request an interception of State appropriations due to the participating
50 employer.
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1 Except as provided in this subdivision, upon notification by the Board of
2 Trustees to the State Treasurer and the Office of State Budget and
3 Management as to the default of the employer, the Office of State Budget and
4 Management shall withhold from any State appropriation due to that employer
5 an amount equal to the sum of all delinquent contributions and other debts due
6 to the Retirement Systems Division and shall transmit that amount to the
7 Retirement Systems Division. For the purposes of this subsection, the date set
8 by the Board of Trustees for payment of the contribution-based benefit cap
9 liability shall be 12 months after the member's effective date of
10 retirement.retirement, or the first day of the month coincident with or next
11 following six months after the date of the invoice, whichever is later."
12 SECTION 1.3.(c) This section applies to contribution-based benefit cap liability
13 payments due from an employer on or after the effective date of this act.
14
15 PART II. CLARIFICATION OF WITHDRAWAL LIABILITIES UNDER THE LOCAL
16 GOVERNMENTAL EMPLOYEES' RETIREMENT SYSTEM AND THE TEACHERS'
17 AND STATE EMPLOYEES' RETIREMENT SYSTEM
18 SECTION 2.1.(a) G.S. 128-30(i) reads as rewritten:
19 "(i) Procedure and Payment to Cease Participation. – Any employing unit that is allowed
20 to cease participation in the Retirement System by the General Assembly or by sale, dissolution,
21 or otherwise changing to a business or legal form not eligible for participation as an employer in
22 the Retirement System under federal law shall do the following:
23 …."
24 SECTION 2.1.(b) G.S. 135-8(i) reads as rewritten:
25 "(i) Procedure and Payment to Cease Participation. – Any employing unit that is allowed
26 to cease participation in the Retirement System by the General Assembly Assembly; by sale,
27 dissolution, or otherwise changing to a business or legal form not eligible for participation as an
28 employer in the Retirement System under federal law; or as otherwise provided in this Chapter,
29 through its governing body, may declare its intent to withdraw completely from the Retirement
30 System as follows:
31 …."
32 SECTION 2.1.(c) This section applies to a participation withdrawal by an employing
33 unit on or after the effective date of this act.
34
35 PART III. CLARIFICATION AND STANDARDIZATION OF THE DEFINITION OF
36 "ACTUARIAL EQUIVALENT" UNDER THE LOCAL GOVERNMENTAL
37 EMPLOYEES' RETIREMENT SYSTEM AND THE TEACHERS' AND STATE
38 EMPLOYEES' RETIREMENT SYSTEM
39 SECTION 3.1.(a) G.S. 128-21(2) reads as rewritten:
40 "(2) "Actuarial equivalent" shall mean a benefit of equal value when computed at
41 regular interest upon the basis of such mortality tables actuarial assumptions
42 as shall be adopted by the Board of Trustees."
43 SECTION 3.1.(b) G.S. 135-1(2) reads as rewritten:
44 "(2) "Actuarial equivalent" shall mean a benefit of equal value when computed
45 upon the basis of such mortality tables actuarial assumptions as shall be
46 adopted by the Board of Trustees, and regular interest.Trustees."
47 SECTION 3.1.(c) This section applies to benefit calculations performed on or after
48 the effective date of this act.
49
50 PART IV. MANDATORY ADOPTION OF WRITTEN POLICIES FOR CERTAIN
51 SPECIAL SEPARATION BUYOUTS FOR LAW ENFORCEMENT OFFICERS
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 General Assembly Of North Carolina Session 2021
1 SECTION 4.1.(a) G.S. 143-166.43 reads as rewritten:
2 "§ 143-166.43. Separation buyouts for law enforcement officers.
3 (a) Any State department, agency, or institution, or any local government employer, may,
4 in its discretion, offer a lump sum separation buyout to a law enforcement officer who leaves
5 employment prior to reaching the officer's eligibility for a separation allowance under this
6 Article. The lump sum separation buyout shall be paid from funds available and shall not exceed
7 the total that would otherwise be paid in separation allowance payments under G.S. 143-166.41
8 or G.S. 143-166.42.
9 (b) Prior to the transfer by a State department, agency, or institution, or any local
10 government employer, of a lump sum separation buyout described in subsection (a) of this section
11 to the Teachers' and State Employees' Retirement System (TSERS) pursuant to G.S. 135-5(m2)
12 or to the Local Governmental Employees' Retirement System (LGERS) pursuant to
13 G.S. 128-27(m2), the State department, agency, or institution, or the local government employer,
14 shall have in place a written policy duly adopted by the employing unit that does not allow
15 employees to choose between accepting the lump sum separation buyout as a cash payment or
16 transferring the lump sum separation buyout to TSERS or LGERS."
17 SECTION 4.1.(b) This section applies to lump sum separation buyouts offered to
18 law enforcement officers on or after the effective date of this act by a State department, agency,
19 or institution, or any local government employer.
20
21 PART V. AUTHORIZATION FOR THE DEPARTMENT OF STATE TREASURER
22 AND THE SUPPLEMENTAL RETIREMENT BOARD OF TRUSTEES TO ADOPT
23 ADMINISTRATIVE FEES UNDER THE SUPPLEMENTAL RETIREMENT PLAN OF
24 NORTH CAROLINA, THE NORTH CAROLINA DEFERRED COMPENSATION
25 PLAN, AND THE NORTH CAROLINA PUBLIC SCHOOL TEACHERS' AND
26 PROFESSIONAL EDUCATORS'