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STATE OF NORTH CAROLINA DEPARTMENT OF STATE TREASURER -..~ .... ; - RETIREMENT AND HEAL3;~I BENEFITS DIVISION MEMORANDUM TO: Participaling Units of the Local Governmental Employees' Retirement System FROM: E.T. Barnes SUBJECT: Retirement Legislation [Statutory ]References G.S. lilS-t6(a), 1~,8-26(i) and 128-i6(j)] The 1973 Session [2nd Session, 1974) of the Generai Assembly amended the ]Retirement Act so as to provide i~or three benefits on an optional basis with each participating employer. Included herein is information concerning the adoption of any or all of these benefits. (Please see the publication, Your ]Retirement System and the provi~ious of the General Statutes referenced above for additional information.) Also, shown below is information concerning the percent of in- crease in the employer rale of contribution which will be required to fund these optional benefits. A. Credit for Military Sen,ice (.13% increase). B. ]Repayment of Voluntarily Withdrawn Accounts (.04% increase). C. Credit for Out-of-State Service (.0'7o increase). The additional cost to a participating employer will be dependent on which of these optional benefits are adopted by its governing board. For instance, if a participating employer elects to provide coverage for its employees under all three categories, its employer rate would increase b)' .17,%. Since these additional benefits are available on an optional basis, the governing board of each participating employer must execute an a~-eement svith the Director of thc ]Reiirement System in order for these particular benefits to be available to eligible employees. The requiredagreement,.whlch may become effective on the first da), of any calendar quarter, may. be obtained.by, request to the ]Retirement~)'stem ..... : ...... After the required agreement becomes effective, the legislation pr. ovid~ th,at in 6rder to purchase credit-there.under,' ..... a member mt~t have 10 ),ear~ of current membership sen'ice (i.e. must have contr~uted to tbe ]Rctiremknt'S),stem roi 10 _ . - ' )'ears). Prior sen,ice credits do not serve to qualify for the purpose of this legislation. Therefore, it is unlikely that a par- ' - ticipating employer, which has been covered by the Retirement S)~tem for less than 10 )'ears, would find it to be advan- tageeus to enter into the required agreement until il had participated in the Retirement System for at least 10 ).ears or until a majority of its employees had contributed to the Retirement S)~tem for at least 10 years. When a participating employer does execute the required agreement, those employeez who already have 10 or more )-ears of current membership sen'ice (i.e. 10 or more years of contributing sen'ice) become eligible to make their pur- chases on the effeclive date of the agreement. Those employees who have le~ than 10 )'ears of current membership ser- · ,~ce on the effective date will become eligible to make their purchases on the date they accumulate 10 ),ears of current membership service. Current membership service means "currently aetlve" membership service. Therefore, service under a withdrasvn or out-of-state account cannot be used to meet the eligibility requirement of 10 years of current membership service. After an employer has made an agreement with the Retirement System to pro~-ide for one or all of the optional benefits, employees should be advised that the)' ma)' make indis'idual Inquiry dlreclly to the Retirement S)~tem {or the desired benelil. Inquiries to the Relirement System should contain the employee's Retirement Number and Social Security Number and the name under which previous service was rendered if the name has been subsequently changed. Also, inquiries pertaining to military sen'ice should include a copy of an official military document that shows the dales of entry and separation from aclive military duty. As stated above, the employer cost will be covered by an increase in the employer rate of contribution. The cost to eligible members will be calculated on an individual basis to be paid in one lump sum; however, il should be empbasized that the n~ethod used to calculate a member's cost during the initial three )'ears of his eligibilily lo make payment usually produces a much lower cost than does the melhed used after the initial three )'ear period of eligibility.