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LOCAL GOVERNMENTAL EMPLOYEES’
RETIREMENT SYSTEM
EMPLOYER MANUAL
Department of State Treasurer
Raleigh, NC
Revised January 2014
local governmental employees’ retirement system
NORTH CAROLINA
DEPARTMENT OF STATE TREASURER
RETIREMENT SYSTEMS DIVISION
STEVEN C. TOOLE
DIRECTOR
JANET COWELL
STATE TREASURER
Dear Human Resources and Benefits Professionals:
We are pleased to provide you with the North Carolina Local Governmental Employees’ Retirement System 2014 Employer Manual. We hope
this will be a valuable reference tool as you enroll new employees, report
monthly retirement contributions, and complete employer information
sections on retirement forms.
You have an important role in helping employees secure their retirement
benefits by providing necessary information to the Retirement System.
The information outlined in this manual is intended as a general guide
to retirement provisions and procedures. Please feel free to contact the Retirement System at
the numbers below if you have any questions or need assistance in understanding retirement
laws.
I also encourage you to visit the Government Employers section of our website, www.
myncretirement.com, for comprehensive retirement resources and important information
to help you assist your employees.
Thank you for your service to North Carolina. We appreciate your assistance in helping us
provide timely and accurate information to our members.
Sincerely,
Janet Cowell
1-877-627-3287 Toll-free
919-807-3050 (Raleigh area)
[email protected]
www.myncretirement.com
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Table of Contents
Page
History, Composition, and Organization of the System. . . . . . . . . . . . . . . . . . . 4
Responsibilities of the Retirement System and of Employers. . . . . . . . . . . . . . 6
Distribution of Publications and Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Retirement System Membership Requirements. . . . . . . . . . . . . . . . . . . . . . . . . 9
Enrolling a New Member. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Reporting Monthly Member and Employer Contributions to the System. . . . . 12
Changing a Member’s Social Security Number, Birthdate, or Beneficiary. . . . . 18
Reporting a Member’s Death. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Refund of Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Transferring Service and Contributions Between Systems. . . . . . . . . . . . . . . . 20
Creditable Service and Service Purchase Provisions . . . . . . . . . . . . . . . . . . . . 21
Retirement Benefit Eligibility Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Reciprocity Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Retirement Formula and How Benefits are Calculated. . . . . . . . . . . . . . . . . . . 29
Retirement Benefit Payment Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Retirement Application Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
NC 401(k) and NC 457 Transfer Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Disability Retirement Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Reemployment after Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Law Enforcement Officer Separate Insurance Benefits Plan. . . . . . . . . . . . . . . 46
NC 401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
NC 457 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
How to Contact the Retirement System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
DISCLAIMER: The availability and amount of all benefits you might be eligible to receive is governed by Retirement System law. The information provided in this handbook cannot alter, modify or otherwise change
the controlling Retirement System law or other governing legal documents in any way, nor can any right accrue to you by reason of any information provided or omission of information provided herein. In the event
of a conflict between this information and Retirement System law, Retirement System law governs.
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History, Composition, and Organization
of the System
History
The North Carolina Local Governmental Employees’ Retirement System (LGERS) was
created by the General Assembly, effective July 1, 1945. The System began operations
with a membership of 2,102 employees, an annual payroll of $3 million, and a total of
18 participating local governments. The assets amounted to approximately $178,000.
The membership of the Local System has grown over the years in proportion to the
growth in size and complexity of the cities, towns, counties, and other entities of local
government. As of December 31, 2012, the active membership of the Local System was
122,270. In addition, there were 47,663 inactive members, and 54,547 retired members
and beneficiaries of deceased retired members. Assets at December 31, 2012, totaled
$19.7 billion.
Composition
The LGERS membership is composed of general employees and local law enforcement
officers. The “general employee” group consists of persons regularly employed by any participating county, incorporated city or town, the board of alcohol control of any county or
incorporated city or town, the North Carolina League of Municipalities, the State Association of County Commissioners, and any other separate, local governmental entity.
LGERS membership does not consist of teachers in the public schools, employees who
hold office by popular election and are not required to devote a major portion of time to
the duties of the office, new Agricultural Extension Agents, or any part-time (see exception on page 10) or temporary employees.
The local law enforcement officer group comprises full-time paid employees who possess the power of arrest, who have taken the law enforcement oath administered under
the authority of the State as prescribed by G.S. 11-11, and are certified as law enforcement officers under the provisions of Chapter 17C of the General Statutes or certified as
deputy sheriffs under the provisions of Chapter 17E of the General Statutes. The local
law enforcement officer group also includes the sheriff of each county. The number of
paid personnel employed as law enforcement officers by a law enforcement agency may
not exceed the number of law enforcement positions approved by the applicable local
governing board.
In addition to the active members and retirees, there are a number of inactive members.
These are persons who are no longer employed with local government but who have left
funds in the System, thereby retaining their membership.
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Organization of the System
Member Services Section
This section is responsible for written, electronic, and telephone communications with
members and employers participating in the Retirement System and other benefit programs and responds to all questions regarding retirement and related benefits. In addition, this section prepares and conducts pre-retirement seminars across the state and
conducts conferences at the request of employer and employee associations. All visitors
to the division requiring counseling about their benefits are referred to this section.
Retirement Processing Section
This section is responsible for the calculation of retirement estimates and for the calculation and payment of monthly retirement allowances to members. This section also
handles the calculation of cost statements for members who wish to purchase additional eligible retirement service credits.
Benefits Processing Section
This Section is responsible for the calculation and payment of refunds of accumulated
contributions to terminated members. This section also handles the payment of death
claims and lump-sum death benefits. Responsibility for determination of eligibility for
disability retirement benefits from the several retirement systems through the System’s
Medical Review Board, rests with this section.
Accounting/Payroll Section
This section is responsible for receipt of monthly retirement reports and contributions,
as well as maintenance of the accounting records for the division, including depositing and reporting revenues, preparation of vouchers/warrants, budget reports, and all
external financial reporting. This section is also responsible for the receipt and transmittal of all data and verification of reports submitted to the Departmental Information
Technology Division. Employers may contact this Section if they have questions about a
retirement report or related matters concerning ORBIT payroll reporting.
Administration/Director’s Office
The director and his immediate staff are responsible for the overall general operation of
the Retirement Division and carry out the policies and directives of the State Treasurer
and various governing boards.
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Responsibilities of the Retirement System
and of Employers
Responsibilities of the Retirement System
The Board of Trustees is the Administrator of the Retirement System. It is the responsibility of the Retirement Systems Division to:
■■ Manage LGERS for all public employees of the local government units;
■■ Manage three other retirement systems in addition to LGERS. These include the
Teachers’ and State Employees’ Retirement System, the Consolidated Judicial Retirement System, and the Legislative Retirement System;
■■ Manage the following programs:
• Disability Income Plan
• Legislative Retirement Fund
• Firefighters’ and Rescue Squad Workers’ Pension Fund
• National Guard Pension Plan
• Registers of Deeds’ Supplemental Pension Fund
• Teachers’ and State Employees’ Benefit Trust
• Supplemental Retirement Income Plan (NC 401(k) Plan)
• Contributory Death Benefit for Retired Members
• Separate Insurance Benefits Plan for Law Enforcement Officers
• Public Employee Deferred Compensation Plan (NC 457(b) Plan)
• Public School Teachers’ and Professional Educators’ Investment Plan (NC 403(b)
Plan)
■■ Assist agencies desiring Social Security coverage with their application for coverage.
The Retirement Systems Division is not responsible for:
■■ Matters relating to Social Security, other than those listed above (NOTE: Members
with questions about Social Security benefits should contact the nearest Social Security district office);
■■ Administering other insurance plans for which money may be deducted from employees’ or retirees’ paychecks;
■■ Matters concerning personnel policies such as annual leave or sick leave;
■■ State or federal income tax matters (except for withholding); or
■■ Matters related to credit unions, banks, savings and loan, and other financial institutions. (We are not connected with the State Employees’ Credit Union or the Local
Government Federal Credit Union.)
The above list is not all-inclusive.
Recent changes to North Carolina public records laws limit the release of certain types
of information. However, employers may request any information from the Retirement
System about their own employees, except for medical information.
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Responsibilities of Employer
Please remember that employers are not agents of the Retirement System, and that
personnel and payroll officers are representatives of their employees only and do not
represent LGERS. While it is desirable that the personnel and payroll officers have some
knowledge about the Retirement System, they are reminded that the answers they give
members may not reflect nor represent the correct laws, regulations, policies, and procedures of LGERS. LGERS advises all personnel and payroll offices to contact LGERS
when they are in doubt about a specific question or set of circumstances.
It is the responsibility of the employer to ensure that all eligible members are reported
to LGERS, as required by state law, and to remit monthly contributions in an accurate
and timely manner.
It will also be helpful to the employee for the employer to do the following:
1. Direct employees to LGERS publications and forms on our website at www.myncretirement.
com;
2. Validate the service and salary paid to a member in the year of retirement or death
in service;
3. Certify previously uncredited service of members desiring to purchase allowable service credit;
4. Inform the LGERS concerning deaths of members in service;
5. Direct members with questions about their accounts to visit our ORBIT System located at www.myncretirement.com to view their individual account information. Members can also contact the LGERS Member Services Section by calling toll-free 1-877627-3287 or 1-919-807-3050 (in Raleigh area), by emailing us at nc.retirement@
nctreasurer.com, or by writing to:
North Carolina Retirement Systems
Member Services Section
325 North Salisbury Street
Raleigh, North Carolina 27603-1385
If the contact person handling retirement matters in your agency changes, be sure to
notify the Retirement System in writing or by email of such personnel changes. Also,
employers are requested to inform the Retirement System of changes in other related
matters such as the employer’s mailing address, email address, or telephone number.
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Distribution of Publications and Forms
The Retirement System produces several types of information to keep you and members
informed.
Your Retirement Benefits Handbook
Your Retirement Benefits handbook is designed to give members general information
about their benefits. Whenever there are significant legislative changes that need to be
communicated, a new edition of the handbook is completed and updated to our website
at www.myncretirement.com.
Annual Benefits Statement
This is a statement prepared for each member annually that shows the amount of the member’s accumulated contributions, years of creditable service with the Retirement System,
and the names of the member’s designated beneficiaries for return of contributions and the
death benefit, if applicable. Estimates of monthly benefits are included on statements for
members of LGERS who had one or more years of service in LGERS as of December 31 of
the previous year. Beginning in 2010, these statements were no longer mailed and are made
available to members only through their personal ORBIT account. Reminders will be sent
about the availability of the statement in ORBIT.
To access the Annual Benefits Statement through ORBIT, the member should visit www.
myncretirement.com and select the “ORBIT” link from the menu. The member will be directed to the log-in page to register, or log-in if already registered. Once logged on to his or
her personal ORBIT account, the member may view, save or print out his or her statement.
Forms
The LGERS maintains and periodically updates the forms that personnel and payroll officers will need in connection with the Retirement System. Most of the forms are located in
ORBIT, which can be found through our website at www.myncretirement.com. Samples of
the forms referenced in each section of this manual are also located in ORBIT. Personalized forms are available by logging into ORBIT.
Law Books
The 2013 edition of North Carolina Retirement System Laws, which contains a reprint of the
North Carolina General Statutes including the 2013 Cumulative Supplement to the Statutes,
contains laws currently in effect governing the retirement systems and benefit plans administered through the Department of State Treasurer. It is available to employers as a resource
and reference tool on the “Employer” page on our website at www.myncretirement.com.
Retirement Monitor
The Retirement Monitor is an electronic newsletter that the Retirement Systems Division periodically sends by email to employers to provide news, best practices, and updates regarding law and policy changes, and other retirement-related issues. An archive of all Retirement
Monitor articles is available on our website at www.myncretirement.com.
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Retirement System Membership Requirements
Required Membership
Newly hired persons are required to become contributing members of the Local Governmental Employees’ Retirement System, as a condition of employment, on the date they
are hired (or after a required local unit waiting period), if they are:
■■ employed by a participating unit in a regular position that requires 1,000 hours or
more of service per year, or
■■ a retired member of the Local Governmental Employees’ Retirement System who is
later reemployed by a participating unit on the same basis as stated above.
See LGERS “1,000 Hours” Membership Requirement section under Frequently Asked
Questions on our website at www.myncretirement.com for additional information.
Any newly hired employee should be enrolled as a member of the Retirement System
using the enrollment process described on page 10 under “Enrolling a New Member.”
Membership is effective on the first day of employment.
Law Enforcement Officer Membership
The law provides the criteria which must be met in order for
an employee to be eligible for the additional benefits that are
provided for law enforcement officers.
The statutory definition of an officer reads as follows: “a fulltime paid employee of an employer, who possesses the power of
arrest, who has taken the law enforcement oath administered
under the authority of the State as prescribed by G.S. 11-11,
and who is certified as a law enforcement officer under the
provisions of Chapter 17C of the General Statutes or certified
as a deputy sheriff under the provisions of Chapter 17E of the
General Statutes.” “Law enforcement officer” also includes the
sheriff of the county. The number of paid personnel employed
as law enforcement officers by a law enforcement agency may not exceed the number of
law enforcement positions approved by the applicable local governing board.
The statutes provide several criteria which must be met. The most important is that the
employee must possess the power of arrest by virtue of an oath administered under the
authority of the State. This alone, however, does not qualify an employee for benefits as
an officer.
In many cases, an employee may perform ancillary duties which fall within the boundaries of the definition of a law enforcement officer. However, it is the employee’s primary
duties that qualify him or her for law enforcement officer benefits. In order for employees
to be correctly advised of the benefits to which they are entitled, it is very important that
the employees be properly reported to the Retirement System.
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Employees Not Eligible for Membership
A new employee is NOT eligible to become a contributing member if he or she is:
■■ An agricultural extension service employee who is a member of the Federal Employees’ Retirement System; or
■■ Any other person whose employment requires less service than described under “Required Membership” on page 9.
Enrolling a New Member
Effective October 1, 2007, all newly eligible members must be enrolled in the Local
Governmental Employees’ Retirement System as part of the ORBIT (Online Retirement
Benefits through Integrated Technology) System employer reporting process (see page
12 for more information about the monthly reporting process). By enrolling an eligible
employee as soon as possible, you will enable the Retirement System to update salary
and contribution information in a timely manner. Enrollment delays generate additional
correspondence from the Retirement System, which can be avoided by enrolling a new
employee immediately.
The Retirement System has created the “Welcome” packet process described below for
newly hired, first-time employees to provide a quick and easy way for these new Retirement System members to complete their Retirement System beneficiary designations,
and to learn about the Retirement System to which they belong and the benefits available to them.
How the Process Works
■■ After the ORBIT payroll deadline, each employer should obtain a list of new employees by performing the following steps:
1. Click on “Download Member ID” and select the option to “Retrieve Only New
Members.” (Note: It is best to save the report to your work computer for future
reference.)
2. The employer should then communicate the Member Identification (ID) number
to each newly hired employee, and instruct the employee to log on to ORBIT to
activate his or her personal account and designate a beneficiary(ies).
■■ If the employer has not saved the report and wishes to retrieve the list of new employees, the employer must perform the following steps:
1. Click on “Download Member ID” and select the option to “Retrieve Members
By Date.” (Note: Once you run the report, it is best to save the report to your
work computer.)
2. The employer should then communicate the Member ID number to each newly hired employee, and instruct the employee to log on to ORBIT to activate his
or her personal account and designate a beneficiary(ies).
■■ When the member designates his or her beneficiary(ies), and enters an email address in ORBIT, an email notification will be sent to the member and will include
a “Welcome” packet and an electronic acknowledgement letter listing a designated
beneficiary(ies). There is no need to send a paper form to the Retirement Systems
Division after designating beneficiaries online.
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■■ If the member does not enter an email address in ORBIT, he or she will not receive
a confirmation notice. The information will be updated in the member’s personal
ORBIT account.
■■ If the member chooses to complete the beneficiary designation process by completing
a paper form, he or she should complete Form 2RC, “Designating Beneficiary(ies) for
Retirement System Return of Contributions,” and, if applicable, Form 2DB, “Designating Beneficiary(ies) for the Death Benefit,” or Form 276, “Designating Beneficiary(ies)
for the Separate Insurance Benefit Plan for Law Enforcement,” and mail the form(s)
to the Retirement System. Shortly after receipt of the form(s), the Retirement System
will mail an acknowledgement letter to the member.
■■ Employers may assist members who choose not to log on to ORBIT by providing a
paper copy of the “Welcome” packet to new members. PDF copies of the “Welcome”
packet are available on our website at www.myncretirement.com. Just click on the
“Welcome Packets” link for the appropriate retirement system and print the packet
materials.
Welcome packet materials include:
• a letter from the Treasurer,
• a fact sheet about the Retirement System to which the member belongs, and
• a fact sheet on the supplemental retirement plans.
Please remember, only a member with less than 10 years of service may designate or
make changes to his or her beneficiaries in ORBIT. Employees with 10 years or more of
service must use the Form 2RC and Form 2DB, available on the ORBIT website.
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Reporting Monthly Member and Employer
Contributions to the System
Member Contributions
The member contributes 6% of his or her annual compensation which is deducted pro-rata
each payday. “Compensation” includes all salaries and wages (except terminal payments
for unused sick leave) derived from public funds which are earned by a member for service
as an employee in the unit of the Retirement System for which he or she is performing fulltime work. “Compensation” also includes longevity payments. Not included are payments,
as determined by the Board of Trustees, for the reimbursement of expenses or payments for
housing or any other allowances, whether or not classified as salary or wages.
In addition to salaries and wages earned by a member for service as an employee or teacher, the
following items also meet the statutory definition of “compensation” for retirement purposes:
■■ Performance-based compensation (regardless of whether paid in a lump-sum, periodic installments, or on a monthly basis);
■■ Conversion of additional benefits to salary (such as health, life, or disability plans),
as long as the benefits are other than mandated by State law or regulation;
■■ Payment of tax consequences for benefits provided by the employer so long as they
constitute an adjustment or increase in salary, and not a “reimbursement of expenses;”
■■ Pay out of vacation leave so long as such pay outs are permitted by applicable law
and regulation; and
■■ Employee contributions to eligible deferred compensation plans.
■■ Effective July 1, 2009, payment of military differential wages.
The following items do not meet the statutory definition of “compensation” for retirement purposes:
■■ Supplement/allowance provided to employee to purchase additional benefits such
as health, life, or disability plans;
■■ Travel supplement/allowance (non–accountable allowance plans);
■■ Employer contributions to eligible deferred compensation plans;
■■ Employer provided fringe benefits (additional benefits such as health, life, or disability plans);
■■ Reimbursement of uninsured medical expenses;
■■ Reimbursement of business expenses;
■■ Reimbursement of moving expenses;
■■ Reimbursement/payment of personal expenses;
■■ Incentive payments for early retirement;
■■ Bonuses paid incident to retirement;
■■ Contract buy out/severance payments; and
■■ Pay outs for unused sick leave.
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Employer Contributions
There are also employer contributions to LGERS. These contributions are not credited to
a member’s individual account but are placed in a trust fund for the payment of lifetime
benefits to retirees.
The employer contribution rates differ among the more than 890 local governmental units.
The minimum amount allocated to the Retirement System Pension Fund, currently 7.07%
(for fiscal year 2013-2014) of payroll for general employees and 7.55% for law enforcement
officers, is the same for each unit. However, the accrued liability portion and death benefit
portions of the employer rates vary based on factors, unique to each employer, such as age,
past service liability, number of employees, payroll, etc. At the present time, the employer
contribution rates are allocated as follows:
Local Employer Contribution Rate for
General Employees for fiscal year 2013-2014
Retirement System Pension Fund
Accrued Liability
Death Benefit Trust Fund
Total
7.07%
Variable
Variable
Variable
Local Employer Contribution Rate for
Local Law Enforcement Officers for fiscal year 2013-2014
Retirement System Pension Fund
Accrued Liability
Death Benefit Trust Fund
Total
Less Court Costs
Net Payable
7.55%
Variable
Variable
7.55%
(0.27)%
Variable
In the spring of each year, the Retirement System will notify each employer of the amount
of the employer rates which are to become effective on July 1. A sample of the “Notice of
Employer Contribution Rates” follows on page 15.
Required Monthly Contributions Reporting
Effective October 1, 2007, employers must report and submit monthly member and employer
contributions, which are based on each member’s salary, to the Retirement System through
the ORBIT (Online Retirement Benefits through Integrated Technology) System employer reporting process.
All reporting and funds must be transmitted electronically through the ORBIT System. Both
data and funds should be submitted by the close of business on the fourth day of the month
to ensure that they are received by the Retirement Systems Division by the fifth State government working day of each month. If contributions are received after the fifth State government working day of the month, a penalty of 1% of the contributions due, with a minimum of
$25.00 per month, must be paid by the employer due to delinquent employee and employer
contributions.
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Employers must submit detail data, summary information, and contributions through the
ORBIT System each month. Employers must submit retirement payroll to the Retirement
Systems Division through one of the following methods:
■■ ESS – Enter Report – Through the secure Employer Self Service (ESS) website, the
employer keys the data into ORBIT.
■■ ESS – Submit Report – Through the secure Employer Self Service (ESS) website, the
employer uploads the data file to the Retirement Systems Division for processing
■■ FTP (File Transfer Protocol) – The employer must FTP the data file to the Retirement
Systems Division for processing if the employer chooses not to use ESS.
Detailed information about all of these methods and all reporting requirements can be found
on the “Government Employers” page at www.myncretirement.com.
In accordance with Rule .0401, Chapter 2B, Title 20, of the North Carolina Administrative
Code, the Retirement System cannot make refunds of employer contributions in cases of erroneous employee deductions, except those which are corrected by the employing unit on a
subsequent payroll within the calendar year in which the errors occur. The only exception
to this rule is that an error occurring in December may be corrected (without loss of the employer contribution) by submission of a revised payroll for the correct amount before January
31 of the following year.
If you have any questions or need assistance regarding monthly contributions reporting,
please contact our Employer Reporting Unit by email at [email protected] or by phone
toll-free at 1-877-626-7248. If you are in the Raleigh local calling area, you can call 919-8073055.
In addition, employers of law enforcement officers must submit monthly to the Supplemental
Retirement Income [NC 401(k)] Plan an additional 5% of each law enforcement officer’s compensation. See page 17 for information regarding reporting NC 401(k) Plan contributions to
Prudential Retirement.
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SAMPLE
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Reporting Rehired Retirees
Effective July 1, 2009, employers must report all rehired retirees to the Retirement System each month. These rehired retirees should be reported in ORBIT with the appropriate pay period, pay type, plan code, salary and all other applicable fields as defined by
the ORBIT file format requirements, via the monthly ORBIT payroll report. For detailed
information regarding ORBIT requirements, see the “Government Employers” page on
our website at www.myncretirement.com.
If the report is not received by the Retirement System within 90 days of the end of each
month in which a retiree is reemployed, the Retirement System is required to assess
a penalty of 10% of the compensation of the unreported reemployed retiree during the
months the employer did not report the reemployed retiree, with a minimum penalty of
$25.00.
The Retirement System developed Form ESRR, “Certifying Employee Status Under Retirement Reemployment Laws,” to assist employers in determining who is a rehired retiree. This form is located on the ORBIT site.
In order to avoid a potential penalty, we ask that employers take the following steps:
■■ Obtain signed documentation (Form ESRR) from the employee, stating he/she is or
is not currently receiving a monthly benefit from the Retirement System.
■■ Report any known rehired retirees who may be subject to the earnable allowance to
the Retirement System through ORBIT.
Please keep each completed Form ESRR in your employee files. If a member falsifies
Form ESRR by not reporting himself/herself as a benefit recipient, you will not be penalized if you provide the Retirement System with the member’s falsified Form ESRR.
However, if the employee exceeds his/her earnable allowance, or violates other returnto-work laws, the employee will be held fully responsible for repaying any overpayment
to the Retirement System.
To help employers report all rehired retirees and avoid a potential penalty, the Retirement System created a tool via ORBIT Employer Self-Service to help employers track
employees who are returning to work. This tool was designed to assist you in verifying
which of your employees are retired and have returned to work, so you will know which
rehired retirees to report to the Retirement System. To use this tool, you should:
■■ Access the ORBIT Employer Self Service page and under “Reporting,” click on “Check
Retired Status”
■■ On a monthly basis, upload a list of employee Social Security numbers
■■ Make adjustments, if needed, under the “Check Retired Status” heading
Your employee list will be run against the Retirement System retiree list to generate
a report of members who are actively receiving a benefit from the Local Governmental
Employees’ Retirement System. This rehired retiree list should be reported to the Retirement System via your monthly ORBIT payroll report.
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Reporting NC 401(k) Plan and NC 457 Plan Contributions to Prudential
Retirement
For your convenience, Prudential Retirement offers three main NC 401(k) Plan and NC
457 Plan contribution remittance methods to employers:
■■ Web-based application (Internet Contribution Center), which is ideal for up to 50
participants.
■■ Excel-based application (VDES) remitted through a secure transmission program,
which is suited for mid-sized employers with up to 500 participants.
■■ Custom file remitted through a secure transmission program, which is ideal for employers with 500 or more participants.
A preferred standard layout is used for remitting NC 401(k) Plan and NC 457 Plan contributions to Prudential Retirement. All methods allow remittance of contributions via
bankwire or ACH debit (automated clearing house).
Prudential Retirement will work with individual employers to determine which method
will best work for your entity. A Prudential Retirement NC 401(k) Plan and NC 457 Plan
payroll representative will also review the layout, process, and procedures. For more
information regarding contribution remittance for the NC 401(k) Plan and NC 457 Plan,
please email the NC Production Support Department at [email protected].
Please be sure to include your employer name, contact person, and phone number.
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Changing a Member’s Social Security Number,
Birthdate, or Beneficiary
Changing a Social Security Number
If the employer finds that a member’s Social Security number
is incorrect, or if there is any type of discrepancy in his or her
records between the number and the number LGERS is using,
the employer needs to send to LGERS a copy of the member’s
Social Security card. Once LGERS receives this information,
the correction will be made. Also, the employer should change
its records and future reporting forms should show the correct
number.
Changing a Birthdate
If the employer finds that the member’s date of birth has been
listed incorrectly, or if the date of birth of a beneficiary has
been listed incorrectly, the employer will need to send a copy
of one of the following items that show the date of birth before LGERS can change the
date of birth:
■■ Driver’s License,
■■ Birth Certificate,
■■ Passport, or
■■ State, federal or military identification.
If none of the above items can be provided, the Retirement System may accept a letter from the Social Security Administration that states the date it has accepted as the
member’s date of birth.
Once this information is received, LGERS will make the necessary corrections.
Changing a Beneficiary
Effective July 1, 2009, an active Retirement System member with less than 10 years of
service may designate beneficiaries online for the employee death benefit (if applicable),
or for a return of contributions in the event of the member’s death.
To add or change a beneficiary online:
■■ The member should visit www.myncretirement.com and log-in after clicking the
“ORBIT” link.
■■ The member should then click on “View Account Summary.” There, the member will
see a current list of beneficiary designations.
■■ Members with less than 10 years of service should click on the “Change Beneficiaries” link underneath the list of beneficiaries and add or change the names of the
person(s) to be designated.
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■■ Members with 10 or more years of service should follow the instructions on ORBIT
to open a personalized copy of the Form 2RC, “Designating Beneficiary(ies) for Retirement System Return of Contributions,” and, if applicable, Form 2DB, “Designating Beneficiary(ies) for the Death Benefit.” The member should complete, print out,
and mail the form(s) to the Retirement System.
An email confirmation will be sent to the email address provided during the member’s
ORBIT registration.
A beneficiary designation must be properly completed and be received by the Retirement
System before a change in beneficiary becomes effective. Please refer to the Guides on
Form 2RC and 2DB for detailed information regarding the rules and regulations applicable to the designation of beneficiaries. The Guides should contain most of the information needed in order to complete the form. However, should the member have any
further questions, he or she should contact the Member Services section at 1-877-6273287 (toll-free) or 1-919-807-3050 (within local calling distance of Raleigh).
Reporting a Member’s Death
The Local Governmental Employees’ Retirement System should be contacted immediately in the event of an active member’s death so the necessary information can be
provided to the beneficiary(ies). Upon notification of the death of the member, the Retirement System will forward to the employer Form 253, “Reporting an Employee’s Work
Record in the Event of Death.” Form 253 is located on the ORBIT website.
If the survivor(s) of a retired member in receipt of a monthly LGERS benefit contacts
you regarding the death of a retired member, please ask the survivor(s) to contact the
Retirement System immediately. We will need to be provided with the deceased retiree’s
name, Social Security number, and a copy of the death certificate. In addition, if the
retiree elected to provide survivor benefits after his or her death, we will need to be provided with the Social Security number and current mailing address of the survivor. The
monthly benefit that is payable in the month of death belongs to the retiree and can be
kept. Any benefits made payable to the retiree after the month of his or her death must
be returned to the Retirement System.
Effective December 1, 2013, it is a Class 1 Misdemeanor to fraudulently receive the
retirement benefit of a deceased retiree or beneficiary for 2 months or longer after the
recipient’s death.
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Refund of Contributions
To receive a refund, the member must complete Form 5, “Withdrawing Your Retirement
Service Credit and Contributions,” have it properly notarized, and file it with the Retirement System. State law does not permit the Local Governmental Employees’ Retirement
System to make a refund earlier than 60 days after termination from covered employment.
A member should not complete and sign Form 5 until the approximate date of his or
her termination. The Employer Certification section (Section G) of Form 5 must be completed only if the member left employment within three months immediately prior to
the application date, or if termination was by the employer. After the form is completed,
the member should not submit it to the Retirement System before the effective date of
termination. He or she should submit the form within three or four days after the effective date of termination. The observance of this timetable will help to reduce the number
of inquiries from withdrawing members while allowing sufficient processing time for a
punctual refund. Form 5 is located on the ORBIT website. Guide A on Form 5 includes
instructions to help the member expedite the accurate payment of his or her retirement
refund.
Transferring Service and Contributions
Between Systems
If a member terminates employment covered by the Teachers’ and State Employees’ Retirement System (TSERS) and is later employed in a position covered by this Retirement
System, the member can transfer his or her contributions and creditable service in TSERS
to LGERS as long as the member:
■■ Is an eligible member of the System to which he or she is transferring;
■■ Has not received a refund from the System from which he or she is transferring; and
■■ Files Form 5TR, “Transferring Service and Contributions Between Systems,” with the
Retirement Systems Division.
A member who terminates employment covered by this System who is later employed
in a position covered by TSERS may transfer his or her contributions and creditable
service in LGERS to TSERS under the same conditions listed above. (Transfer of service from this System to the Consolidated Judicial Retirement System is allowed after
completion of 5 years of membership service in the Consolidated Judicial Retirement
System.) Overlapping transferred service cannot be counted twice for the same period
of time.
The election to transfer may be made on Form 5TR at any time before retirement. Form
5TR, which after completion must be signed by the member and notarized, should not
be submitted to the Retirement System until after the member’s first retirement contributions have been submitted to the Retirement System. The employer portion of the
form (Section F) must be completed by the former employer only if the member’s termination was within three months immediately prior to the application date. A sample
copy of Form 5TR is located on the ORBIT website.
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The member should allow the Retirement System approximately 60 days to process
Form 5TR.
Since a transfer can affect eligibility for TSERS retiree health coverage, a member who
has 5 or more years of membership service in TSERS who is considering a transfer of
his or her service from TSERS to LGERS should carefully read Guide B on Form 5TR
for further information on the effect of a transfer on his or her individual benefits before
completing Form 5TR.
Creditable Service and Service Purchase Provisions
Creditable service means any service for which retirement credit has been allowed. An
employee earns membership credit for each month for which he or she makes a contribution to LGERS. In addition to the years and months a member contributes, some
members may have rendered service to a local governmental agency prior to the time
they became a participating employer in the Retirement System. Since such service may
be creditable, the Retirement System should be contacted about specific cases to determine eligibility for credit.
Other types of service that may also be counted or purchased as additional retirement
service credit are listed below. If a member wishes to request an official cost calculation
from the Retirement System for purchasing retirement credit for any of the available
service purchase types, the member should download the appropriate purchase form,
located on the ORBIT website and follow all instructions on the form before sending it
to the Retirement System. The requirements and guidelines for purchasing additional
retirement service credit are found on each form to assist the member. Please note that
all types of purchases are not available in all Systems. A summary of available purchase
types for LGERS is located in the “Creditable Service and Service Purchase Provisions”
section of Your Retirement Benefits Handbook for LGERS members. This handbook is
located on our website at www.myncretirement.com.
Sick Leave. Unused sick leave can be converted to additional retirement service credit
at the time of retirement if:
■■ the member earned the sick leave under a duly adopted sick leave policy,
■■ the member would receive full salary when using the sick leave if absent from work
due to sickness,
■■ the member has not and will not receive any compensation for this sick leave, and
■■ the member’s last day of service with his or her last participating LGERS employer is
within 365 days prior to his or her LGERS effective date of retirement
One month of credit is allowed for each 20 days of unused sick leave when a member
retires. One more month is allowed for any part of 20 days left over, provided the remaining portion is at least one hour.
NOTE: A sick leave “day” is determined by the employer’s sick leave accrual policy and
may or may not be equal to 8 hours. For example, an employee who earns 1 day of sick
leave per month under the employer’s sick leave accrual policy may work an extended
shift of 12 hours per day and accrue 12 hours of sick leave each month. When the employer certifies unused sick leave on the employee’s retirement application (Form 6), if
that employee has 12 hours of eligible unused sick leave, the employer should report 1
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day of unused sick leave, rather than 1.5 days. In another example, an employee who
earns 1 day of sick leave per month under the employer’s sick leave accrual policy may
work 7.5 hours per day and accrue 7.5 hours of sick leave each month. When the employer certifies unused sick leave on the employee’s Form 6, if that employee has 7.5
hours of eligible unused sick leave, the employer should report 1 day of unused sick
leave.
Sick leave cannot be used to meet the minimum eligibility requirements for disability
retirement, a vested deferred benefit, or the Survivor’s Alternate Benefit.
Sick leave can be used to increase a member’s creditable service so as to complete:
■■ 30 years of service, regardless of age
■■ 25 years of service after age 60
■■ 20 years of service after age 50 (15 years of service as an officer after age 50 for law
enforcement officers)
■■ 5 years of service after age 60 (five years after age 55 for a firefighter, or 5 years of
service as a law enforcement officer after age 50)
■■ 5 years of service after age 65
The employer should certify to the Local Governmental Employees’ Retirement System the
amount of unused sick leave on Form 6, “Claiming Your Monthly Retirement Benefit,” when a
member is retiring if the member contributed to the Retirement System during the six months
before the member’s effective date of retirement (or if the member is currently out of service,
but the member’s last day of service with his or her last participating LGERS employer was
within 365 days prior to his or her effective date of retirement, and the member had unused
sick leave). The employer should not certify any sick leave, unless a member could be paid for
it, in the event he or she was absent due to illness.
Educational Leave - If the member had a period of interrupted service or approved leave of
absence for educational purposes, credit may be purchased for such period if regular employee and employer contributions are paid by the 15th of the month following the month
for which service credit is allowed. If contributions are not made by the 15th of the following
month, a penalty of 1% per month shall be assessed to the total costs. In addition, unless
he or she returns to service as a contributing member within 12 months after completion of
the educational program and contributes to the Retirement System for at least 3 more years
(except in the event of disability), the contributions will be refunded and the service credits
cancelled. The member may make the employer contributions in addition to the employee
contributions in the event the employer will not make the contributions.
The maximum allowable credit for educational leave or interrupted service for educational
purposes that can be purchased is 4 years. See Form 463, “Purchasing Retirement Credit
for a Period of Interrupted Service For Educational Purposes,” and Form 463F, “Requesting
Continuation of Contributions and Credit for Planned Educational Leave,” located on the
ORBIT website for additional information and detailed instructions.
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Free Military Service – The member may receive retirement credit for up to 5 years of qualifying military
service at no cost if the member was an eligible LGERS
member when he or she entered the military, and:
■■ the member returns to employment for 10 or
more years with the same LGERS employer after
discharge from the military, or
■■ the member returns to Local System membership
service within the time limit mandated by federal
law for reporting back to work, and meets all of
the following requirements:
• the member did not provide written notice of intent not to return to work after military
service,
• the member is not eligible for benefits from any other retirement plan based on this
service, and
• the member has purchased his or her LGERS withdrawn service credit, if any.
The LGERS employer is required to pay the employer contributions to the Retirement System
for the full period of the member’s military service under the above provisions if the member
returns to work within 2 years after his or her earliest military discharge date.
In order for the Retirement System to grant free military service credit, the member should
complete Form 462, “Purchasing Retirement System Credit for Military Service,” and attach
a copy of his or her military discharge papers (Form DD-214), and send them together to the
Retirement System. The employer should also send a letter to the Retirement System stating the last date the member worked prior to the military service and the date the member
returned to service with the same local employer after the military service.
All of the forms listed below are located on the ORBIT website.
Periods of Active Military Duty Not Eligible Under the Free Provisions - See Form 462,
“Purchasing Retirement System Credit or Requesting Free Credit for Military Service.”
Withdrawn State, Local Governmental or Law Enforcement Retirement Accounts - See
Form 461, “Purchasing Retirement System Credit for Withdrawn Service.” Eligible local or
state withdrawn service purchased in the Local System or State System counts as creditable
service, not membership service. State System withdrawn service purchased in the State
System does not count toward the five-year membership service requirement for eligibility for
State Health Plan coverage as a Teachers’ and State Employees’ Retirement System retiree.
Out-of-State Governmental Service - See Form 455, “Purchasing Retirement System Credit
for a Period of Out-of-State Employment.”
Workers’ Compensation Leave - See Form 441, “Purchasing Retirement Credit for a Period
of Workers’ Compensation.”
Temporary State and Local Service - See Form 443, “Purchasing Retirement Credit for
State or Local Government Temporary Employment.”
Part-Time State and Local Service - See Form 451, “Purchasing Retirement Credit for a
Period of Part-Time State or Local Governmental Employment.”
Omitted State or Local Government Service - See Form 466, “Purchasing Retirement System Credit for Unreported Service Omitted Through Error.”
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Service with the Federal Government - See Form 467, “Purchasing Retirement System
Credit For a Period of Federal Service.”
Service with a Federally-Funded Public Community - See Form 479, “Purchasing Retirement System Credit for a Period of Federally-Funded Service.”
Service with a Local Governmental Employer - See Form 452, “Purchasing Retirement
Credit for a Period of Service with a Non-Participating Local Unit.”
Local Waiting Period - See Form 470, “Purchasing Retirement Credit for a Waiting Period
Imposed by a Local Unit.”
Service as a Member of the General Assembly - (No form necessary.)
Prior Law Enforcement Service - See Form 481, “Purchasing Retirement Credit for a Period of Service Not Credited by the Former LEORS (Law Enforcement Officers’ Retirement
System).”
Using a Rollover or Plan-to-Plan Transfer from an Eligible Retirement Plan or IRA to
Purchase Allowable Creditable Service - See Form 398, “Using a Distribution of Tax-Sheltered Savings to Purchase Retirement Credit.”
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Retirement Benefit Eligibility Requirements
This section is provided for your convenience for management planning. We do not want
you to advise employees. Please refer them to the Retirement Systems Division if they
have questions regarding their eligibility or related retirement issues.
Members should start planning for their retirement early and learn all they need to
know about becoming eligible for their benefits. Long-range planning for retirement is
very important. The Retirement System can assist members by explaining how they become eligible for their retirement benefits.
The Local Governmental Employees’ Retirement System benefits can be divided into two
basic categories, Unreduced Benefits and Reduced Benefits, as described below.
Vesting
A member becomes vested in the Retirement System after completing a minimum of 5
years of creditable service. This means that the member will be eligible to apply for lifetime monthly retirement benefits based on age, service requirements, and the formula described in this manual, provided the member does not withdraw his or her contributions.
Service Retirement (Unreduced Benefits) for General Employees
A member may retire with an unreduced service retirement benefit after:
■■ age 65 with at least 5 years of creditable service,
■■ age 60 with 25 or more years of creditable service, or
■■ completing 30 years of creditable service, regardless of age.
Early Retirement (Reduced Benefits) for General Employees
A member may retire early with a reduced retirement benefit after:
■■ age 60 with at least 5 years of creditable service, or
■■ age 50 with at least 20 years of creditable service.
If a member leaves employment before early or service retirement, the member may still
receive a benefit at a future date. A general employee is entitled to a benefit at age 50
with at least 20 years of creditable service.
Although a member may retire early, the retirement benefits will be paid over a longer
period of time and are, therefore, reduced. The amount of the reduction depends on the
member’s age and service when payments start.
For a member who is a general employee, the reduction in the allowance for early retirement is calculated as 5 percent times the lesser of:
■■ a member’s creditable service to 30 years, or
■■ a member’s age to age 60 plus 3 percent for each year from age 60 to age 65.
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For example, a general employee who is age 60 with 10 years of service would receive
85% of the unreduced benefit based on the reduction formula.
If a general employee is between ages 60 and 65, with less than 25 years of creditable
service, his or her early retirement benefit will be reduced to the following percentages:
If the member is
this age when
payments start
64
63
62
61
60
The member will
receive this percentage
of his or her benefit
97%
94%
91%
88%
85%
If a general employee is between ages 50 and 59, with less than 30 years of creditable
service, his or her early retirement will be reduced to the following percentages:
Creditable Service
Age
59
58
57
56
55
54
53
52
51
50
29
28
27
26
25
24
23
22
21
20
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
90%
90%
90%
90%
90%
90%
90%
90%
90%
90%
85%
85%
85%
85%
85%
85%
85%
85%
85%
85%
80%
80%
80%
80%
80%
80%
80%
80%
80%
80%
80%
75%
75%
75%
75%
75%
75%
75%
75%
75%
80%
75%
70%
70%
70%
70%
70%
70%
70%
70%
80%
75%
70%
65%
65%
65%
65%
65%
65%
65%
80%
75%
70%
65%
60%
60%
60%
60%
60%
60%
80%
75%
70%
65%
60%
55%
55%
55%
55%
55%
80%
75%
70%
65%
60%
55%
52%
50%
50%
50%
If the member is between birthdays when payments start, the reduction will be adjusted
proportionately.
Service Retirement (Unreduced Benefits) for Law Enforcement Officers
■■ A law enforcement officer qualifies for an unreduced benefit after reaching age 55
with at least 5 years of creditable service as a law enforcement officer.
■■ A law enforcement officer also qualifies for an unreduced benefit after completing 30
years of creditable service as a law enforcement officer, regardless of age.
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Early Retirement (Reduced Benefits) for Law Enforcement Officers
■■ A law enforcement officer qualifies for a reduced benefit after reaching age 50 and
completing 15 years of creditable service as an officer.
Early retirement benefits are figured by using the same formula as for service retirement, and then applying a reduction factor.
For a law enforcement officer, the reduction is calculated as the lesser of:
■■ 5 percent times a member’s creditable service to 30 years, or
■■ 4 percent times a member’s age to age 55.
For example, a law enforcement officer who is age 53 with 25 years of service would receive
92% of the unreduced benefit based on the reduction formula.
The table below shows early retirement percentages at various ages and periods of creditable service.
If a law enforcement officer is between ages 50 and 55, with less than 30 years of creditable
service, his or her early retirement benefit will be reduced to the following percentages:
Creditable Service
Age
54
53
52
51
50
29
28
27
26
25
20
15
96%
95%
95%
95%
95%
96%
92%
90%
90%
90%
96%
92%
88%
85%
85%
96%
92%
88%
84%
80%
96%
92%
88%
84%
80%
96%
92%
88%
84%
80%
96%
92%
88%
84%
80%
If the member is between birthdays when payments start, the reduction will be adjusted
proportionately.
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Reciprocity Provisions
Creditable service in the Legislative Retirement System, the Consolidated Judicial Retirement System, or the Teachers’ and State Employees’ Retirement System may be
counted along with creditable service in the Local Governmental Employees’ Retirement
System in order to determine eligibility for benefits from each retirement system. However, only the creditable service in this Retirement System will be used in computing
the amount of the benefit payable from this System, and creditable service in any other
system will be used in computing benefits from that system. This is referred to as reciprocity or reciprocal creditable service.
Reciprocal creditable service in all four retirement systems can be used to determine eligibility for the following benefits: unreduced retirement, reduced retirement, survivor’s
alternate benefit, and interest on returns of contributions. Any member with 5 or more
years of total reciprocal prior Local System service and/or membership service may
purchase withdrawn credit in the retirement system from which it was withdrawn, regardless of whether he or she has a currently active account in that retirement system.
The purchased creditable service may then be counted as reciprocal creditable service.
Reciprocal creditable service cannot be used to determine eligibility for the death benefit.
A member is not required to begin retirement benefits from all retirement systems simultaneously. The member does not have to terminate employment in order to begin
retirement benefits from a retirement system to which he or she no longer contributes,
except in cases where the reciprocity is between the Teachers’ and State Employees’
Retirement System and the Consolidated Judicial Retirement System.
If a member is out of service in two retirement systems and has used reciprocity to begin
receiving a monthly benefit from one retirement system, the member may withdraw contributions and creditable service from the other system. The member cannot withdraw
from the retirement system that pays the monthly benefit.
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Retirement Formula and How Benefits are
Calculated
Retirement Formula
Once it has been determined that a member is eligible for retirement, the retirement
benefit is calculated by using the following formula:
1.85% of average final compensation
TIMES
years and months of creditable service
Three terms need to be defined to assist in explaining the formula so that members will
fully understand how their retirement benefit is calculated.
The first term is “average final compensation.” Average final compensation is the average of the member’s salary during the 4 highest consecutive paid years. If the member’s
four highest-paid years in a row include a final payment for unused vacation leave (and/
or prorated longevity), the member’s average final compensation may be increased by
the extra payment(s). Final payments, if any, for unused sick leave, payments for housing, or any other allowances or reimbursements for expenses, whether or not these are
classified as salary or wages, are not includable in average final compensation. Normally, the four highest consecutive years of salary will be the last four; however, they could
have been earlier in one’s career.
The second term is “year.” One year of credit is given to each member for 12 months
of covered employment. A member earns credit for each month in the year for which
he or she makes a retirement contribution. For example, a member contributing for
12 months will earn one full year’s credit. If, however, a member contributes only 8
months, he or she will earn credit for 8/12 of one year.
The third term which requires clarification is “creditable service.” Creditable service
means any period during which a member contributes to LGERS. Creditable service
may also include military service, out-of-state service, unused sick leave, and other
service for which credit has been allowed. See the section on “Creditable Service and
Service Purchase Provisions,” which begins on page 21, for more details.
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How Benefits are Calculated
Calculating a Service Retirement Benefit for a General Employee or Law Enforcement Officer
In the first example, the member is retiring at age 60 with 32 years of creditable service.
Step 1
Add salary during four
$ 30,000
highest-paid years in a row.
31,000
32,000
+ 33,000
TOTAL
$ 126,000
Step 2
Divide Step 1 by 4 to get
average final compensation.
$ 126,000
÷
4
$ 31,500
Step 3
Multiply Step 2 by .0185 to
apply formula.
$
x
$
Step 4
Determine years and months
of creditable service.
31,500
.0185
582.75
32 years
Step 5
Multiply Step 3 by Step 4
$ 582.75
x
32
$18, 648.00
Step 6
Divide Step 5 by 12 to get
$18,648.00
monthly maximum allowance.
÷
12
$1,554.00
A member can create his or her own custom estimate by visiting our website at www.
myncretirement.com, clicking on the “ORBIT” link, and logging into his or her personal
ORBIT account.
Because the member in this example has over 30 years of creditable service at retirement, he or she can receive the maximum annual benefit of $18,648 or approximately
$1,554 each month, which ceases at the member’s death unless he or she selects a
payment option. (See page 34 for information about the Guaranteed Refund feature.) In
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addition, when the member is age 62, he or she may also be eligible to apply for Social
Security benefits.
The example above involved an individual who applied for service retirement and received unreduced benefits. Now, we will look at an individual who is going to apply for
early retirement and receive reduced benefits.
Calculating an Early Retirement Benefit for a General Employee
This member retires early at age 61, with:
■■ average final compensation of $28,000 and
■■ 24 years of creditable service.
Here is how to calculate the early retirement benefit:
$ 28,000.00
x
.0185
$
518.00
x
24
$ 12,432.00
(average final compensation)
(creditable service)
Now apply the early retirement reduction percentage from the chart on page 26.
$ 12,432.00
x
.88 $10,940.16
(percentage at age 61)
In this example, the member receives a maximum allowance of approximately $10,940 a
year, or about $911 a month, which ceases at the member’s death unless he or she selects a payment option. (See page 34 for Guaranteed Refund feature.) Additionally, this
member may also be eligible for Social Security benefits in one year, at age 62.
Calculating an Early Retirement Benefit for a Law Enforcement Officer
A law enforcement officer retires early at age 51, with:
■■ average final compensation of $32,000 and
■■ 24 years of creditable service
Here is how to calculate the early law enforcement retirement benefit:
$ 32,000.00
x
.0185
$
592.00
x
24
$ 14,208.60
(average final compensation)
(creditable service)
Now apply the early retirement reduction percentage from the chart on page 27.
$ 14,208.00
x
.84 $11,934.72
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In this example, the law enforcement officer receives a maximum allowance of approximately $11,934 a year, or about $994 a month, which ceases at the member’s death
unless he or she selects a payment option. (See pages 34-37.) Additionally, this law
enforcement officer would be eligible for benefits from the Supplemental Retirement
Income [NC 401(k)] Plan (see pages 48 and 49). Social Security benefits may also be
available at age 62.
Examples of Benefits Paid to General Employees
The following chart shows the approximate monthly benefit paid at various salary levels,
depending on age and creditable service.
Average Final Compensation
Monthly Retirement Benefit Under Maximum Allowance
Age
Service
50
20
55
28
60
25
Any
30
Any
40
$80,000
70,000
60,000
55,000
50,000
45,000
40,000
35,000
30,000
25,000
$1,233
1,079
925
847
770
693
616
539
462
385
$3,108
2,719
2,331
2,136
1,942
1,748
1,554
1,359
1,165
971
$3,083
2,697
2,312
2,119
1,927
1,734
1,541
1,348
1,156
963
$3,700
3,237
2,775
2,543
2,312
2,081
1,850
1,618
1,387
1,156
$,4,933
4,316
3,700
3,391
3,083
2,775
2,466
2,158
1,850
1,541
Of course, these are only examples. A member’s benefit is calculated individually and
depends on age, creditable service, and average final compensation.
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Examples of Benefits Paid to Law Enforcement Officers
The following chart shows the approximate monthly benefit paid at various salary levels,
depending on age and creditable service.
Monthly Retirement Benefit Under Maximum Allowance
Age
Service
50
15
52
28
55
25
N/A
30
N/A
40
$80,000
70,000
60,000
55,000
50,000
45,000
40,000
35,000
30,000
25,000
$1,480
1,295
1,110
1,017
925
832
740
647
555
462
$3,108
2,719
2,331
2,136
1,942
1,748
1,554
1,359
1,165
971
$3,083
2,697
2,312
2,119
1,927
1,734
1,541
1,348
1,156
963
$3,700
3,237
2,775
2,543
2,312
2,081
1,850
1,618
1,387
1,156
$,4,933
4,316
3,700
3,391
3,083
2,775
2,466
2,158
1,850
1,541
Of course, these are only examples. A member’s benefit is calculated individually and
depends on age, creditable service, and average final compensation.
It is important to stress that the benefit calculated in our examples is the Maximum
Allowance, which is payable for the life of the retired member with monthly payments
ceasing upon his or her death. Many of our retired members desire to have some form of
monthly payment made after their death to a survivor. Currently, there are several optional methods of receiving one’s retirement benefits that are available upon retirement.
The payment options are described in the section titled “Retirement Benefit Payment
Plans” which begins on page 34.
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Retirement Benefit Payment Plans
When a member retires, there are several important decisions to make. One of them
relates to the type of payment plan he or she selects. Since there are several options
or alternative methods of receiving retirement benefits, this decision should be strictly
personal and must take into consideration needs during retirement and the needs of a
dependent, if any, after the member’s death.
Before the selection of an optional payment plan is made, the member should realize
that from an actuarial standpoint, each payment plan is mathematically equal to the
others. Therefore, each optional payment plan is calculated so that the total value of the
plan selected is the same as the other plans if the member and beneficiary live normal
life expectancies.
Initially, a member must decide if he or she needs to provide a monthly payment to a
beneficiary after the member’s death (e.g., Options 2, 3, 6-2, and 6-3) or a plan that
does not (e.g., Maximum Allowance and Option 4). If a member elects not to provide
a monthly payment for a beneficiary after the member’s death, then he or she would
receive a greater benefit monthly for life and monthly payments would stop at the member’s death.
A member is not allowed to change his or her payment plan after cashing a retirement check or after the 25th of the month following the month in which the first
check is mailed, with the following exceptions:
■■ A member can change an optional payment plan if he or she selected Options 2,
3, 6-2, or 6-3 to provide a monthly benefit to his or her spouse as named survivor
beneficiary after the member’s death, and later becomes divorced from that spouse.
■■ If a member is rehired in a position covered by the Retirement System and contributes to a new account for at least three years, upon the second retirement, he or she
may change the original optional payment plan.
■■ If a member elected Option 2 or 3 and named his or her spouse as monthly survivorship beneficiary and the member’s spouse dies before the member, the member may
request, within 90 days of remarriage, to name his or her new spouse as monthly
survivorship beneficiary under the same option with an additional reduction in his
or her benefit amount. The redesignation paperwork must be properly completed
and filed with the Retirement System within 120 days of remarriage.
Guaranteed Refund
Regardless of which retirement plan a member selects, there is a Guaranteed Refund feature which provides that the total amount paid out after retirement will not be less than
the amount of the member’s contributions and interest. Should the death of the member
and the death of the beneficiary named to receive a monthly payment, if any, occur before
the total of all monthly payments equals the amount of the member’s contributions and
interest, the unrecovered portion of the member’s contributions and interest will be paid
in one lump sum to another beneficiary(ies).
A member may name one or more beneficiaries for this Guaranteed Refund provision and
he or she may change the beneficiary(ies) for this purpose as often as desired. A beneficiary named for the Guaranteed Refund cannot be named as beneficiary for a monthly benefit. In addition, if the member and designated beneficiary for a monthly benefit, if any, die
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after the member retires, the remaining balance of any payment made by the member to
purchase creditable service after retirement will be refunded to the member’s designated
beneficiary(ies) for the Guaranteed Refund. The additional Guaranteed Refund payable, if
any, will be equal to the total purchase cost less the administrative fee, reduced by the accumulated total increase in retirement allowances attributable to the purchased service.
Maximum Allowance
When a member retires on a service retirement allowance, his or her basic benefit is the
Maximum Allowance and is calculated using the formula on page 29. If the member retires early, his or her Maximum Allowance is calculated using the same formula and then
reduced for early retirement. In either case, unless the member chooses a payment option, the member will receive his or her Maximum Allowance each month for as long as he
or she lives. All monthly payments will stop at the member’s death.
Option 4, Social Security Leveling Option
Option 4 does not provide a monthly payment to a beneficiary after a member’s death. It
is only available to members who have not reached age 62.
Under Option 4, the member receives larger monthly payments from the Retirement System than he or she would normally be entitled to receive, until he or she becomes eligible
for Social Security at age 62. NOTE: The age at which an employee can receive full Social
Security payments may change according to legislative changes enacted by the federal
government. Beginning at age 62, the monthly payments from the Retirement System will
be reduced to an amount that is less than what he or she would normally be entitled to
receive. However, the reduced retirement payments after age 62 plus the allowance from
the Social Security Administration should be approximately the same amount as the inflated payment he or she received from the Retirement System before age 62.
The reduction in the monthly retirement payments after age 62 allows the Retirement
System to recover the inflated amounts received before age 62. Therefore, on average,
larger amounts received before age 62, together with the reduced amounts received after
age 62, are equal in value to the other retirement plans over the member’s life expectancy.
The member should contact the Social Security Administration to inquire about how to
apply for benefits and what date the first age 62 Social Security benefit will be paid. This
will help the member plan his or her finances in the event the Social Security age 62 benefit is not paid until the latter part of the month following the month the member’s Option
4 benefit is reduced.
For example, if a member, referred to here as Mr. Davis, had been only age 60 and chose
Option 4, he would receive his Maximum Allowance figure of $1,512 plus approximately
82% of the monthly amount the Social Security Administration estimates that he will be
entitled to receive from them at age 62. Assuming that Mr. Davis’ Social Security payment
is estimated to be $600 monthly at age 62, his monthly payment from the Retirement System until he reaches age 62 would be approximately $2,004. His monthly retirement payment for life starting the month after his 62nd birthday would be approximately $1,404.
Of course, after reaching age 62, he may also become eligible to start receiving his Social
Security benefits. (In this example, it should be understood that Mr. Davis’ advance of
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approximately 82% of his estimated Social Security payment is based on his age of 60. If
he had been only age 51, for example, the advance would have been approximately 36%
instead of approximately 82% to allow for the longer period of inflated payments.)
If, at retirement, the member wants an estimate under Option 4, he or she must furnish
the Retirement System with an estimate, obtained by the member from the Social Security Administration, of the Social Security benefit available to him or her at age 62. The
member should request the age 62 Social Security estimate, in today’s dollars, if he or she
stops working at the age he or she will be on his or her effective date of retirement. This
estimate should be obtained within one year prior to his or her effective date of retirement.
The following optional payment plans provide the member with a reduced lifetime
monthly benefit. After the member’s death, they provide a monthly lifetime benefit
to one beneficiary. After the death of the surviving beneficiary, all monthly payments cease.
Option 2, 100% Joint and Survivor Option
Under Option 2, the member receives reduced monthly lifetime benefits. After his or her
death, the beneficiary receives the same amount for life. If the member and the beneficiary
are approximately the same age, the reduction between the maximum allowance and payment under Option 2 would normally range from 12% to 21%.
For example, if Mr. Davis chose Option 2 and named his wife, who is age 60, as his beneficiary, he would receive approximately $1,285 each month for life. After his death, she
would receive the same amount for life.
Option 3, 50% Joint and Survivor Option
Under Option 3, the member receives reduced monthly lifetime benefits. After his or her
death, one-half of the monthly payment continues to the beneficiary for life. If the member
and the beneficiary are approximately the same age, the reduction between the maximum
allowance and payment under Option 3 would normally range from 6% to 11%.
For example, if Mr. Davis chose Option 3 and named his wife as his beneficiary, he would
receive approximately $1,389 each month for life. After his death, she would receive onehalf that amount for life.
Under Options 2 and 3, the member may name only one beneficiary to receive a monthly
payment. Generally, if his or her beneficiary dies before the member does, another beneficiary may not be named. The beneficiary may be changed after retirement in the event
of a divorce from the beneficiary, or if the member returns to covered employment and
contributes to a new retirement account for at least 3 years.
After retirement, under Options 2 or 3, the retired member may name a new spouse as
his or her beneficiary to receive monthly survivor benefits under certain conditions. If at
retirement, the spouse at that time was designated to receive survivor benefits, and if that
spouse dies before the retired member, and the retired member subsequently remarries,
he or she may request that the new spouse be named as beneficiary within 90 days of
the remarriage under the same option that was chosen at retirement. The redesignation
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paperwork must be properly completed and filed with the Retirement System within 120
days of remarriage. The new benefit will be mathematically reduced on the basis of the
retired member’s age and the age of his or her new spouse at the time of the change.
The new beneficiary designation will be effective on the first day of the month in which
the designation is made, and it will provide retirement benefits that are mathematically
equal to the retirement benefits that were in effect prior to the new beneficiary designation. The benefit payable to the retired member will be the benefit he or she received prior
to the death of his or her original spouse, additionally reduced in order to cover the new
spouse as beneficiary. In all instances, the amount of the monthly benefit payable after
the designation of the new spouse will be less than the amount being received prior to the
new designation.
Options 6-2 and 6-3, Modified Joint and Survivor Options
A member receives reduced monthly payments under Option 6-2, which is a combination
of Option 2 and the Maximum Allowance, or under Option 6-3, which is a combination of
Option 3 and the Maximum Allowance. The member’s death, or the death of the beneficiary, affects monthly payments as follows:
Under Option 6-2, the member’s death entitles the beneficiary to receive a monthly payment for life in the same amount as the member received. However, if the beneficiary dies
before the member does, monthly payments to the member are increased to the amount
payable under the Maximum Allowance.
Under Option 6-3, the member’s death entitles the beneficiary to receive a monthly payment for life in the amount of one-half the amount the member received. However, if the
beneficiary dies before the member does, monthly payments to the member are increased
to the amount payable under the Maximum Allowance.
If the member and the beneficiary are approximately the same age, the reduction between
the Maximum Allowance and payment under Option 6-2 would normally range from 12%
to 23%, and from 7% to 13% for Option 6-3.
For example, if Mr. Davis chose Option 6-2 or 6-3 and named his wife as his beneficiary,
he will receive approximately $1,259 each month for life under Option 6-2 or approximately $1,374 each month for life under Option 6-3. After his death, his wife will receive,
for life, either the same amount or one-half the amount he was receiving. The amount will
depend on which plan he had chosen. If his wife dies before he does, his monthly payment
will increase to $1,512 each month for life.
Under Option 6-2 or 6-3, the member may name only one beneficiary to receive a monthly
survivor payment. Generally, if the monthly survivor beneficiary dies before the member does, the member may not name another monthly survivor beneficiary. The monthly
survivor beneficiary may be changed after retirement only if the member named his or
her spouse as survivor beneficiary and later became divorced from that spouse, or if the
member returns to covered employment and contributes to a new retirement account for
at least three years. However, under Options 6-2 and 6-3, if the monthly survivor beneficiary dies before the member dies, the member’s monthly benefit will be increased to
the amount payable under the Maximum Allowance beginning the month following the
survivor beneficiary’s death.
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Retirement Application Process
Once a member decides to retire and meets the eligibility requirements for monthly
benefits, there are certain steps which must be taken to begin the retirement process.
Monthly retirement benefits are effective the first day of any month; however, a retirement application must be signed, dated, and filed at least one day and not more than
120 days prior to the effective date of retirement.
Approximately 90 to 120 days before the member’s planned retirement date, the
member should complete a Form 6, “Claiming Your Monthly Retirement Benefit.”
The Guides on Form 6 contain additional detailed information about the retirement process. This form is available on the ORBIT website. Before Form 6 is sent to the Retirement System, the employer certification section (Section H) should be completed. The
employer certification section should also be completed by the employer if the member
is out of service, but his or her last day of service with a participating LGERS employer
was within the past one year and the member had unused sick leave.
If the member wants an estimate under Option 4, he or she must furnish the Retirement System with an estimate, obtained from the Social Security Administration, of the
Social Security benefit available to him or her at age 62. The member should obtain this
estimate within one year prior to the member’s effective date of retirement.
To be legally retired, a member must terminate employment, live until the effective date
of retirement, and not work in any capacity, including part-time, temporary, substitute,
or contractor work, for a Local System employer at any time during the same month immediately following the member’s effective first day of retirement.
Upon receipt of Form 6, the Retirement System will send the member an acknowledgement letter which will include instructions on the next steps in the retirement process
and:
■■ Form 170, “Authorizing Direct Deposit,” and
■■ Form 333, “Choosing the Contributory Death Benefit for Retired Members.”
By completing Form 333, the member will have an opportunity to elect coverage under
the optional $10,000 Contributory Death Benefit for Retired Members. This election
must be made within 60 days from the effective date of the member’s retirement.
Later, the member will receive an estimate of the monthly benefits he or she can receive
under the Maximum Allowance and the payment options, if applicable. Along with the
estimate, the member will receive:
■■ Form 6E, “Choosing Your Retirement Payment Option,”
■■ Form 290, “Choosing Income Tax Withholding Preferences,” and
■■ Form 336, “Designating Beneficiary(ies) for the Guaranteed Refund as a Retiree,” to
complete and return to the Retirement System.
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NOTE: The Retirement System will not be able to
pay monthly retirement benefits to the member until we have received his or her properly completed
Form 6E.
If the member dies during the retirement process, his
or her benefits will be handled as described in Guide G
on the Form 6.
The first monthly retirement benefit will be mailed to
the member. Thereafter, it is the policy of the Retirement Systems Division to directly
deposit the member’s monthly benefit into his or her bank account on the 25th day of
each month. In December, the member’s benefit will be deposited on the 20th. If the
25th falls on a Saturday, Sunday, or holiday, the deposit will be made on the last workday before the 25th. Any authorization or change in a member’s direct deposit received
less than 7 business days prior to the benefit pay date will be effective the following
month. Direct deposit is fast, automatic, and free of cost.
“Deposit notification” statements for benefit recipients – retirees, beneficiaries and disability recipients – are available through the ORBIT system. Statements are not mailed
each month.
Accessing statements through ORBIT is a cost saving measure that reduces paper, and
also enhances members’ personal security by eliminating mailings with social security
or member identification numbers. ORBIT is a secure website that provides members
with access to their personal retirement account information 24 hours a day. If accessing electronic statements presents a hardship for benefit recipients because they do not
have access to a computer or the internet, members should contact Member Services at
1-877-733-4191 (toll-free) or 1-919-733-4191 (Raleigh area only) to opt out of electronic statements. If a retire opts out of electronic statements, direct deposit statements will
be mailed a few times a year, when there is a change in the retiree’s net benefit amount.
To access a member’s monthly statement through ORBIT, the member should visit
www.myncretirement.com and select the “ORBIT” link from the menu. The member will
be directed to the log-in page to register, or log-in if already registered. Once logged on
to his or her personal ORBIT account, the member may print out his or her statement.
Optional Supplemental Insurance
Optional supplemental insurance coverage including vision, dental, accident, and term
and whole life insurance, is available to retirees and benefit recipients through Pierce
Insurance Agency. Pierce will mail information to the member after his or her first retirement benefit has been issued. For more information, the member should contact Pierce
toll-free at 1-855-627-3847 or visit their website at www.ncretiree.com.
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NC 401(k) and NC 457 Transfer Benefit
NC 401(k) LEO Transfer Benefit
A law enforcement officer (LEO) may, at retirement,
make a one-time election to transfer any portion of
his or her eligible contributions, not including Roth
contributions and earnings, from the NC 401(k) Plan to the Local Governmental Employees’ Retirement System and receive a separate additional monthly lifetime allowance
based on his or her eligible account balance on the date of the transfer. This benefit
for law enforcement officers is referred to as the NC 401(k) LEO Transfer Benefit and is
available to law enforcement officers vested before July 1, 2010. This option is available
only at the time of retirement.
NC 401(k) or NC 457 Transfer Benefit
As an alternative, a law enforcement officer may choose another type of Transfer Benefit,
which is available to both law enforcement officers and general retirees, referred to as
the NC 401(k) or NC 457 Transfer Benefit. Under this Transfer Benefit, the member is
eligible to make a one-time election at or following retirement to transfer any portion of
his or her eligible contributions, not including Roth contributions and earnings, in the
NC 401(k) Plan and/or NC 457 Plan to the Local Governmental Employees’ Retirement
System and receive a separate additional monthly lifetime retirement allowance based
upon his or her transferred balance. This Transfer Benefit includes allowances available
with and without cost-of-living increases.
Please visit the Retirement System website at www.myncretirement.com to compare and
learn more about these different types of Transfer Benefits, to use our Transfer Benefit
estimator, and to access the required forms.
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Disability Retirement Benefits
After 5 years of creditable service, a member who becomes totally and permanently
disabled for his or her job, as approved by the Retirement Systems Division’s Medical
Review Board, is eligible to apply for disability retirement benefits. A law enforcement
officer, firefighter, or rescue squad worker who becomes disabled as the result of injuries
incurred in the line of duty will be eligible to apply for disability retirement regardless of
the amount of creditable service.
The disability benefit under the Maximum Allowance is based on the same formula as
a service retirement. The member may select any payment option except Option 4 (the
Social Security Leveling Option). If the member chooses a survivorship option, it will be
calculated using disability reduction percentages. In calculating the benefit, a member’s
average final compensation is based on the four highest-paid years in a row prior to the
disability retirement date. However, creditable service is counted as though the member
would have continued to work to the earliest date of qualification for an unreduced service retirement allowance as described on page 25.
In addition, if a member retires on an early retirement allowance, he or she has 3 years
from the effective date of retirement to convert to a disability retirement allowance,
provided it can be proven that he or she met all requirements for disability retirement
benefits while still in service as an active member.
The disability retirement application process follows the same basic steps as the retirement application process described on page 38, except the member begins the process
by completing:
■■ Form 7, “Requesting Disability Retirement Benefits,”
■■ Form 7A, “Medical Report for Disability Eligibility Review,” and submitting a copy of
his or her:
■■ Job Description, along with Forms 7 and 7A, to the Retirement Systems Division.
Form 7 and Form 7A are located on the ORBIT website.
Guide B on Form 7 provides a description of the steps in the disability retirement process. Form 7A should be completed and signed by the member’s attending physician.
Additional medical information may also be submitted along with Form 7A. The employer should also provide the member with a copy of his or her job description to attach
to Form 7.
The member should not delay submitting Form 7 to the Retirement Systems Division
even if Form 7A has not been completed by the attending physician. If Form 7A has not
been completed, the member may attach a note or letter to Form 7 that states Form 7A
will follow as soon as possible. Also, the member should not delay the submission of
Form 7 because he or she is in receipt of Worker’s Compensation benefits, since LGERS
disability retirement benefits and Worker’s Compensation benefits are not in any way
related.
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If a member dies after having filed an application for disability retirement but before
its effective date, and he or she has otherwise met all requirements for disability retirement benefits, the beneficiary may elect to receive the retirement allowance provided by
Option 2, instead of a return of retirement contributions and interest, if the following
conditions apply:
■■ The member had only one eligible beneficiary for the return of retirement contributions living at the time of the member’s death, and
■■ The member had not indicated to the Retirement System in writing that he or she
did not want the beneficiary to have this choice of receiving a retirement allowance
provided by Option 2.
If a member, whose application for disability retirement benefits has been approved,
dies after his or her retirement date:
■■ but prior to the cashing of the first benefit check and the Retirement System has
received the member’s acceptable election of benefits form (Form 7E), the retirement
benefit will be paid based on that election of benefits form.
■■ but prior to the Retirement System’s receipt of the member’s acceptable election of
benefits form and the member had only one eligible beneficiary for the return of contributions living at the time of the member’s death, that beneficiary may elect to receive the monthly benefit provided by Option 2, the 100% Joint and Survivor Option.
■■ but prior to the Retirement System’s receipt of the member’s acceptable election of
benefits form and the member had 2 or more eligible beneficiaries for the return of
contributions living at the time of the member’s death, the administrator or executor
of the member’s estate will select an option and name a beneficiary(ies).
For more information, please see “LGERS Disability Retirement Benefits” on our website
at www.myncretirement.com.
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Reemployment after Retirement
After a member has officially retired and is
receiving monthly benefits, if the member
performs work in any capacity for an employer under this Retirement System, he
or she will be subject to the reemployment
provisions described below. These provisions may require the member to work under an earnings limitation or to reenroll as
a contributing member of the Retirement
System. The member will be subject to reemployment provisions based on the nature of the particular work he or she performs for a Local System employer, regardless of the member’s job classification or
technical employment status (which may include being assigned to work for a Local
System employer by a private company such as a temporary agency).
Please note that retirement law requires the member’s retirement date to be on the first
day of the month, and for his or her retirement to become effective on the first day of the
month, the member must not perform any work, including part-time, temporary, substitute or contractor work, for a Local System employer at any time during the month of
the effective date of retirement. If the retired member plans to work under the earnings
limitations with an employer participating in the Local Governmental Employees’ Retirement System, the member should contact the Retirement System prior to the reemployment in order to have the exact earnable amount calculated.
Reemployment Requiring Membership
After a 1-month break, an LGERS retiree may return to work in a position that requires
LGERS membership (see “Retirement System Membership Requirements” on page 9).
The retiree’s monthly retirement benefit must be suspended on the first day of the
month following the month of reemployment. The retired member must be reenrolled in
LGERS and become a contributing member in the month in which he or she is restored
to membership service.
If the member returns to service and contributes for at least 3 additional years, at
the time the member terminates the second period of employment, the member will have
the following choices:
■■ Combine service from the first and second periods of employment to create one (generally larger) monthly retirement benefit. The member can change the retirement
payment plan and/or beneficiary the member selected at the time of his or her original retirement. (Note: If Option Four was elected for first retirement, the Retirement
System must actuarially adjust benefits when the member retires again.)
■■ Reinstate the first retirement account and withdraw his or her contributions only
from the second account.
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If the member returns to service and contributes for less than 3 additional years, at
the time the member terminates the second period of employment, the member’s first
retirement benefit will be reinstated and the member will have the following choices for
his or her second retirement account:
■■ Apply to receive a second (generally smaller) monthly benefit based on the second
period of employment
■■ Withdraw contributions from the second account
■■ Leave the second account open
For additional information, please see “Return-to-Work Laws for LGERS” on our website
at www.myncretirement.com.
Reemployment Without Membership
After a 1-month break, if an LGERS member returns to work with an LGERS employer
on a part-time, interim, temporary, or contractual basis in a position not eligible for LGERS membership (see “Retirement System Membership Requirements” on page 9), the
member will be subject to earnings restrictions of the greater of the following:
■■ 50 percent of gross 12-month pre-retirement salary (excluding termination payments) or
■■ $31,140 (2014 amount)
The dollar figure is adjusted annually according to the Consumer Price Index, which is a
national measure of increase in the cost of living from one year to the next. These earnings restrictions apply for the 12 months immediately following retirement and for each
calendar year following the year of retirement.
If the member exceeds his or her earnings limitation, the member’s retirement benefit
will be suspended the first day of the month following the month in which the member
exceeds the limit for the remainder of the calendar year. The member’s retirement payment will start again on January 1 of the year after his or her benefit is suspended. If
the member’s earnings exceed the allowable amount in the month of December, the
member’s benefit will not be suspended.
For additional information, please see “Return-to-Work Laws for LGERS” on our website
at www.myncretirement.com.
Reemployment in a Temporary Position
A Local Governmental Employees’ Retirement System (LGERS) employer who rehires an
LGERS retiree in a temporary position should carefully evaluate the temporary job classification so that the retiree will not be in violation of return-to-work laws:
■■ Temporary positions should have a beginning and an ending date of employment.
■■ Positions classified as temporary are generally restricted to employment periods that
are no longer than 12 months.
■■ While the Retirement System cannot advise you on how to classify a position, please
contact our office if you need assistance in determining if a position meets LGERS
membership requirements.
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■■ A rehired LGERS retiree will be in violation of return-to-work laws if the LGERS employer rehires the retiree in a position that is incorrectly classified as temporary, but
should have been a contributing membership position.
Reemployment after Receiving Disability Payments
If a member receiving disability retirement benefits accepts any type of public or private
employment, the member may earn, on an annual basis, up to the difference between
the highest consecutive 12 months of salary in the 48 months preceding the member’s
disability retirement date and the amount of the member’s annual disability retirement
benefits, without affecting his or her disability retirement benefit. If the member earns
more than this amount, the member’s disability retirement benefit will be reduced dollar-for-dollar by the amount of his or her excess earnings. The amount the member is
allowed to earn is adjusted each January by any increase in the annual national Consumer Price Index.
For additional information, please see “LGERS Disability Retirement Benefits” on our
website at www.myncretirement.com.
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Law Enforcement Officer Separate Insurance
Benefits Plan
The Separate Insurance Benefits Plan provides certain temporary disability benefits and
a death benefit to eligible law enforcement officers.
A law enforcement officer is automatically an eligible participant in the Separate Insurance Benefits Plan if he or she is:
■■ a full-time law enforcement officer of the state or any of its political subdivisions, as
defined in either Chapter 128 or Chapter 135 of the North Carolina General Statutes,
and has the full power of arrest with the primary duty of preventing and detecting
crime, enforcing criminal laws on public property, or serving civil processes, or
■■ a former law enforcement officer as defined above and (a) had 20 or more years of
service as an officer or (b) is in receipt of a disability retirement allowance from any
state-administered retirement system.
The benefits under the Plan are:
■■ Accident and sickness insurance,
■■ A death benefit of $5,000 for participants in active service (while being paid salary),
■■ A death benefit of $4,000 for participants who are eligible former officers, and
■■ Accidental line-of-duty death benefit of $2,100.
Payments due to accidental injury or sickness shall be payable to a participant or his
legal representative. Payments due to death shall be payable to the surviving spouse, if
any, or otherwise to the estate of the participant unless the participant had designated,
in writing, since January 1, 1986, another person or persons as beneficiary(ies) and had
filed such designation with the Retirement System.
A “Quick Reference Guide” describing these benefits follows on page 47 for your review.
Accident and sickness benefits under the Plan are handled by Hartford Life Insurance
Company. Claim forms for these benefits should be requested from and claims should
be submitted to:
Hartford Life Insurance Company
ATTN: Association/Affinity Markets Disability
Post Office Box 2999
Hartford, Connecticut 06104-2999
Phone: 1-888-232-5340 toll free
Mon-Fri 8 a.m. – 5 p.m. EST
Fax: 1-866-913-4044
Policy Number AGP-1673
The death benefit under this Plan is administered by the Retirement Systems Division.
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NC 401(k) Plan
The Department of State Treasurer and the Supplemental Retirement Plans’ Board of Trustees have
contracted with Prudential Retirement to be the NC
401(k) Plan’s third-party administrator.
Employee participation in the NC 401(k) Plan is voluntary. If a person is currently a
member of the Local Governmental Employees’ Retirement System, he or she is eligible
to participate provided the employer elects to deduct and remit contributions through
payroll deduction. See page 17 for information regarding employer reporting of NC 401(k)
Plan contributions to Prudential Retirement.
Enrollment in the NC 401(k) Plan is easy and may be initiated by the completion of the
NC 401(k) Plan enrollment form, which is available from Prudential Retirement at www.
ncplans.prudential.com. Enrollment in the Plan can also be accomplished by calling the
Plan’s toll-free phone number, 1-866-627-5267. The member may contribute up to 80%
of annual salary, not to exceed $17,500, in 2014. The $17,500 is the 2014 limit and is
adjusted annually. Also, participants age 50 and over in 2014 may contribute an additional $5,500 in 2014 under catch-up provisions.
Although the NC 401(k) Plan allows access to the member’s funds, this access is regulated. Certain withdrawals may be subject to a 10% Internal Revenue Service withdrawal penalty. Withdrawals from a member’s account are allowed for the following reasons:
■■ Retirement,
■■ Attaining age 59 1/2,
■■ Permanent disability prohibiting a member from working,
■■ Termination of employment,
■■ Death (the balance of the account will be paid to the beneficiary),
■■ Certain financial hardships recognized by the Internal Revenue Service, and
■■ An in-service transfer to purchase retirement service credit. (This type of distribution
is not subject to ordinary income tax.)
In addition, there are also provisions for a participant to borrow from his or her account.
The member should contact Prudential Retirement regarding the loan provisions.
Several payout options are available when the member is eligible to receive the funds in
his or her NC 401(k) account. These options include systematic payments, lump-sum
payments, and monthly payments from the Transfer Benefit (see page 40).
To obtain benefit pamphlets, enrollment/change forms, or answers to detailed questions about the NC 401(k) Plan, the employer or member should contact Prudential
Retirement directly at:
1-866-627-5267 (toll-free)
or
www.ncplans.prudential.com
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NC 457 Plan
The Department of State Treasurer and the Plan’s
Board of Trustees have contracted with Prudential
Retirement to be the NC 457 Plan’s third-party administrator.
Employee participation in the NC 457 Plan is voluntary. If a person is currently employed with an employer in Local Governmental Employees’ Retirement System, he or
she may be eligible to participate provided the employer elects to deduct and remit contributions through payroll deduction. See page 17 for information regarding employer
reporting of NC 457 Plan contributions to Prudential Retirement.
Enrollment in the NC 457 Plan is easy and may be initiated by the completion of the
NC 457 Plan enrollment form, which is available from Prudential Retirement at www.
ncplans.prudential.com. Enrollment in the Plan can also be accomplished by calling the
Plan’s toll-free number, 1-866-627-5267. The member may contribute up to $17,500,
in 2014. The $17,500 is the 2014 limit and is adjusted annually. Also, participants
age 50 and over in 2014 may contribute an additional $5,500 in 2014 under catch-up
provisions. A participant within three years of normal retirement age may be eligible to
contribute even more annually; see the Plan’s website at www.ncplans.prudential.com
for more information.
Although the NC 457 Plan allows access to the member’s funds, this access is regulated.
While withdrawals are never subject to a 10% Internal Revenue Service withdrawal
penalty, the member is subject to paying State and federal income taxes at his or her
current income tax rate at the time of the distribution. Withdrawals from a member’s
account are allowed for the following reasons:
■■ Retirement,
■■ Permanent disability,
■■ Termination of employment,
■■ Death (the balance of the account will be paid to the beneficiary),
■■ Certain unforeseen financial emergencies, and
■■ For an in-service transfer to purchase retirement service credit. (This type of distribution is not subject to ordinary income tax.)
Several payout options are available when the member is eligible to receive funds in his
or her NC 457 account. These options include systematic payments, lump-sum payments, and monthly payments from the Transfer Benefit (see page 40).
In addition, there are also provisions for a participant to borrow from his or her account.
The member should contact Prudential Retirement regarding the loan provisions.
To obtain benefit brochures and pamphlets, enrollment and change forms, or answers
to detailed questions about the NC 457 Plan, the employer or member should contact
Prudential Retirement directly at:
1-866-627-5267 (toll-free), or
www.ncplans.prudential.com
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How to Contact the Retirement System
Telephone
Numbers:
Employer Only Number (for use by employers only) –
1-877-807-3131 (toll-free) or 919-807-3131 (within local calling
distance of Raleigh)
ORBIT Employer Reporting – 1-877-626-7248 (toll-free) or 919807-3055 (Raleigh area only)
Member Services (handles members’ requests for counseling, information, and scheduling visitor appointments) –
■■ Active employees: 1-877-627-3287 (toll-free) or
919-807-3050 (within local calling distance of Raleigh)
■■ Retirees: 1-877-733-4191 (toll-free) or 919-733-4191 (within
local calling distance of Raleigh)
Administration/Director’s Office – 919-508-5377
NOTE: The Retirement System provides visitors with one-on-one and group consultations
by appointment only. Members should email the Retirement System at nc.retirement@
nctreasurer.com or call us to schedule an appointment.
Fax
Number:
919-508-5350 (Member Services)
Email
Address:
[email protected]
ORBIT Employer Reporting – [email protected]
Internet
Address:
www.myncretirement.com
ORBIT - https://orbit.myncretirement.com/Orbit/Common/Pages/
BPASLogin.aspx
Mailing
Address:
Local Governmental Employees’ Retirement System
Department of State Treasurer
325 N. Salisbury Street
Raleigh, North Carolina 27603-1385
Location:
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Albemarle Building - 4th Floor
Corner of Salisbury and Lane Streets
Raleigh, NC
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