State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_135 > GS_135-3

§ 135‑3.  Membership.

The membership of thisRetirement System shall be composed as follows:

(1)        All persons whoshall become teachers or State employees after the date as of which theRetirement System is established. On and after July 1, 1947, membership in theRetirement System shall begin 90 days after the election, appointment oremployment of a "teacher or employee" as the terms are defined inthis Chapter. On and after July 1, 1955, membership in the Retirement Systemshall begin immediately upon the election, appointment or employment of a"teacher or employee," as the terms are defined in this Chapter.Under such rules and regulations as the Board of Trustees may establish andpromulgate, Cooperative Agricultural Extension Service employees excluded fromcoverage under Title II of the Social Security Act may in the discretion of thegoverning authority of a county, become members of the Teachers' and StateEmployees' Retirement System to the extent of that part of their compensationderived from a county. On and after July 1, 1965, new extension serviceemployees excluded from coverage under Title II of the Social Security Act inthe employ of a county participating in the Local Governmental Employees'Retirement System are hereby excluded from participation in the Teachers' andState Employees' Retirement System to the extent of that part of theircompensation derived from a county; provided that on and after July 1, 1965,new extension service employees excluded from coverage under Title II of the SocialSecurity Act who are required to accept a federal civil service appointment mayelect in writing, on a form acceptable to the Retirement System, to be excludedfrom the Teachers' and State Employees' Retirement System and the LocalRetirement System; provided further, that effective July 1, 1985, an extensionservice employee excluded from coverage under Title II of the Social SecurityAct who is employed in part by a county and who is compensated in whole by theCooperative Agricultural Extension Service pursuant to a contract where theCooperative Agricultural Extension Service is reimbursed by the county for thecounty's share of the compensation shall participate exclusively in theTeachers' and State Employees' Retirement System to the extent of their fullcompensation. On or after July 1, 1979, upon election, appointment oremployment, a legislative employee shall automatically become a member of theTeachers' and State Employees' Retirement System. At such time as CooperativeAgricultural Extension Service Employees excluded from coverage under Title IIof the Social Security Act become covered by Title II of the Social SecurityAct, such employees shall no longer be covered by the provisions of thissection, provided no accrued rights of these employees under this section priorto coverage by Title II of the Social Security Act shall be diminished.

(2)        All persons who areteachers or State employees on February 17, 1941, or who may become teachers orState employees on or before July 1, 1941, except those who shall notify theBoard of Trustees, in writing, on or before January 1, 1942, that they do notchoose to become members of this Retirement System, shall become members of theRetirement System.

(3)        Should any member inany period of six consecutive years after becoming a member be absent fromservice more than five years, or should he withdraw his accumulatedcontributions, or should he become a beneficiary or die, he shall thereuponcease to be a member: Provided that on and after July 1, 1967, should anymember in any period of eight consecutive years after becoming a member beabsent from service more than seven years, or should he withdraw hisaccumulated contributions, or should he become a beneficiary or die, he shallthereupon cease to be a member; provided further that the period of absencefrom service shall be computed from January 1, 1962, or later date ofseparation for any member whose contributions were not withdrawn prior to July1, 1967: Provided that on and after July 1, 1971, a member shall cease to be amember only if he withdraws his accumulated contributions, or becomes abeneficiary, or dies.

Notwithstandingthe foregoing, any persons whose membership was terminated under the provisionsset forth above who had five or more years of creditable service and had noteffected a return of contributions may elect to receive a retirement allowanceon or after age 60; provided that this member may retire only upon electronicsubmission or written application to the Board of Trustees setting forth atwhich time, not less than 30 days nor more than 90 days subsequent to theexecution and filing, he desires to be retired.

(4)        Notwithstanding anyprovisions contained in this section, any employee of the State of NorthCarolina who was taken over and required to perform services for the federalgovernment, on a loan basis, and by virtue of an executive order of thePresident of the United States effective on or after January 1, 1942, and whoon the effective date of such executive order was a member of the RetirementSystem and had not withdrawn all of his or her accumulated contributions, shallbe deemed to be a member of the Retirement System during such period of federalservice or employment by virtue of such executive order of the President of theUnited States. Any such employee who within a period of 12 months after thecessation of such federal service or employment, is again employed by the Stateor any employer as said term is defined in this Chapter, or within said periodof 12 months engages in service or membership service, shall be permitted toresume active participation in the Retirement System and to resume his or hercontributions as provided by this Chapter. If such member so elects, he or shemay pay to the Board of Trustees for the benefit of the proper fund or accountan amount equal to his or her accumulated contributions previously withdrawnwith interest from date of withdrawal to time of payment and the accumulatedcontributions, with interest thereon, that such member would have made duringsuch period of federal employment to the same extent as if such member had beenin service or engaged in the membership service for the State or an employer asdefined in this Chapter, which such payment of accumulated contributions shallbe computed on the basis of the salary or earnable compensation received bysuch member on the effective date of such executive order.

(5)        Any teacher or Stateemployee whose membership is contingent on his own election and who elects notto become a member may thereafter apply for and be admitted to membership; butno such teacher or State employee shall receive prior service credit unless heelected to become a member prior to July 1, 1946. Any such member on or afterJune 30, 1965, anything in this Chapter to the contrary, may deposit in theannuity savings fund by a single payment the contributions plus interest whichwould have been credited to his account had he not signed a nonelection blankon or before January 1, 1942, and be entitled to such membership servicecredits and any prior service credits which became void upon execution of suchnonelection blank; provided that the employer will pay the appropriate matchingcontributions.

(6)        Repealed by SessionLaws 1981 (Regular Session, 1982), c. 1396, s. 1.

(7)        The provisions ofthis subdivision (7) shall apply to any member whose retirement becameeffective prior to July 1, 1963, and who became entitled to benefits hereunderin accordance with the provisions hereof. Such benefits shall be computed inaccordance with the provisions of G.S. 135‑5(b) as in effect at the dateof such retirement.

a.         Notwithstanding anyother provision of this Chapter, any member who separates from service prior tothe attainment of the age of 60 years for any reason other than death orretirement for disability as provided in G.S. 135‑5(d), after completing20 or more years of creditable service, and who leaves his total accumulatedcontributions in said System shall have the right to retire on a deferredretirement allowance upon attaining the age of 60 years: Provided, that suchmember may retire only upon written application to the Board of Trusteessetting forth at what time, not less than 30 days nor more than 90 dayssubsequent to the execution and filing thereof, he desires to be retired. Suchdeferred retirement allowance shall be computed in accordance with theprovisions of G.S. 135‑5(b), subdivisions (1), (2) and (3).

b.         In lieu of thebenefits provided in paragraph a of this subdivision (7) any member who separatesfrom service on or after July 1, 1951, and prior to the attainment of the ageof 60 years, for any reason other than death or retirement for disability asprovided in G.S. 135‑5(d), after completing 30 or more years ofcreditable service, and who leaves his total accumulated contributions in saidSystem, may elect to retire on an early retirement allowance; provided thatsuch member may so retire only upon written application to the Board ofTrustees setting forth at what time, not less than 30 days nor more than 90days subsequent to the execution and filing thereof, he desires to be retired;provided further that such application shall be duly filed within 60 daysfollowing the date of such separation. Such early retirement allowance soelected shall be the actuarial equivalent of the deferred retirement allowanceotherwise payable at the attainment of the age of 60 years upon properapplication therefor.

c.         In lieu of thebenefits provided in paragraph a of this subdivision (7), any member whoseparated from service before July 1, 1951, and prior to the age of 60 yearsfor any reason other than death or retirement for disability as provided inG.S. 135‑5(d), and who left his total accumulated contributions in saidSystem, may elect to retire on an early retirement allowance; provided thatsuch member may so retire only upon written application to the Board ofTrustees setting forth at what time, subsequent to July 1, 1951, and not lessthan 30 days nor more than 90 days subsequent to the execution and filingthereof, he desires to be retired; provided that such application shall be dulyfiled not later than August 31, 1951. Such early retirement allowance soelected shall be the actuarial equivalent of the deferred retirement allowanceotherwise payable at the attainment of the age of 60 years upon properapplication therefor.

d.         Should a teacher oremployee who retired on an early or service retirement allowance be restored toservice prior to the attainment of the age of 62 years, his allowance shallcease, he shall again become a member of the Retirement System, and he shallcontribute thereafter at the uniform contribution rate payable by all members.Upon his subsequent retirement, he shall be entitled to the allowance describedin 1 below reduced by the amount in 2 below.

1.         The allowance towhich he would have been entitled if he were retiring for the first time,calculated on the basis of his total creditable service represented by the sumof his creditable service at the time of his first retirement, and hiscreditable service after he was restored to service.

2.         The actuarialequivalent of the retirement benefits he previously received.

e.         Should a teacher oremployee who retired on an early or service retirement allowance be restored toservice after the attainment of the age of 62 years, his retirement allowanceshall be reduced to the extent necessary (if any) so that the sum of theretirement allowance at the time of his retirement and earnings from employmentby a unit of the Retirement System for any year (beginning January 1, andending December 31) will not exceed the member's compensation received for the12 months of service prior to retirement. Provided, however, that under nocircumstances will the member's retirement allowance be reduced below theamount of his annuity as defined in G.S. 135‑1(3).

(8)        The provisions ofthis subsection (8) shall apply to any member whose membership is terminated onor after July 1, 1963 and who becomes entitled to benefits hereunder inaccordance with the provisions hereof.

a.         Notwithstanding anyother provision of this Chapter, any member who separates from service prior tothe attainment of the age of 60 years for any reason other than death orretirement for disability as provided in G.S. 135‑5(c), after completing15 or more years of creditable service, and who leaves his total accumulatedcontributions in said System shall have the right to retire on a deferredretirement allowance upon attaining the age of 60 years; provided that suchmember may retire only upon electronic submission or written application to theBoard of Trustees setting forth at what time, not less than one day nor morethan 90 days subsequent to the execution and filing thereof, he desires to beretired; and further provided that in the case of a member who so separatesfrom service on or after July 1, 1967, or whose account is active on July 1,1967, or has not withdrawn his contributions, the aforestated requirement of 15or more years of creditable service shall be reduced to 12 or more years ofcreditable service; and further provided that in the case of a member who soseparates from service on or after July 1, 1971, or whose account is active onJuly 1, 1971, the aforestated requirement of 12 or more years of creditableservice shall be reduced to five or more years of creditable service. Suchdeferred retirement allowance shall be computed in accordance with the serviceretirement provisions of this Article pertaining to a member who is not a lawenforcement officer or an eligible former law enforcement officer.Notwithstanding the foregoing, any member whose services as a teacher oremployee are terminated for any reason other than retirement, who becomesemployed by a nonprofit, nonsectarian private school in North Carolina below thecollege level within one year after such teacher or employee has ceased to be ateacher or employee, may elect to leave his total accumulated contributions inthe Teachers' and State Employees' Retirement System during the period he is inthe employment of such employer; provided that he files notice thereof inwriting with the Board of Trustees of the Retirement System within five yearsafter separation from service as a public school teacher or State employee;such member shall be deemed to have met the requirements of the aboveprovisions of this subdivision upon attainment of age 60 while in suchemployment provided that he is otherwise vested.

b.         In lieu of thebenefits provided in paragraph a of this subdivision (8), any member whoseparates from service prior to the attainment of the age of 60 years, for anyreason other than death or retirement for disability as provided in G.S. 135‑5(c),after completing 20 or more years of creditable service, and who leaves histotal accumulated contributions in said System, may elect to retire on an earlyretirement allowance upon attaining the age of 50 years or at any timethereafter; provided that such member may so retire only upon electronicsubmission or written application to the Board of Trustees setting forth atwhat time, not less than one day nor more than 90 days subsequent to theexecution and filing thereof, he desires to be retired. Such early retirementallowance so elected shall be equal to the deferred retirement allowanceotherwise payable at the attainment of the age of 60 years reduced by thepercentage thereof indicated below.

Age at                                                              Percentage

Retirement                                                           Reduction

59                                                                           7

58                                                                          14

57                                                                          20

56                                                                          25

55                                                                          30

54                                                                          35

53                                                                          39

52                                                                          43

51                                                                          46

50                                                                          50

b1.       In lieu of thebenefits provided in paragraphs a and b of this subdivision, any member who isa law‑enforcement officer at the time of separation from service prior tothe attainment of the age of 50 years, for any reason other than death ordisability as provided in this Article, after completing 15 or more years ofcreditable service in this capacity immediately prior to separation fromservice, and who leaves his total accumulated contributions in this System mayelect to retire on a deferred early retirement allowance upon attaining the ageof 50 years or at any time thereafter; provided, that the member may commenceretirement only upon electronic submission or written application to the Boardof Trustees setting forth at what time, as of the first day of a calendarmonth, not less than one day nor more than 90 days subsequent to the executionand filing thereof, he desires to commence retirement. The deferred earlyretirement allowance shall be computed in accordance with the serviceretirement provisions of this Article pertaining to law‑enforcementofficers.

b2.       In lieu of thebenefits provided in paragraphs a and b of this subdivision, any member who isa law‑enforcement officer at the time of separation from service prior tothe attainment of the age of 55 years, for any reason other than death ordisability as provided in this Article, after completing five or more years ofcreditable service in this capacity immediately prior to separation fromservice, and who leaves his total accumulated contributions in this System mayelect to retire on a deferred early retirement allowance upon attaining the ageof 55 years or at any time thereafter; provided, that the member may commenceretirement only upon electronic submission or written application to the Boardof Trustees setting forth at what time, as of the first day of a calendar monthnot less than one day nor more than 90 days subsequent to the execution andfiling thereof, he desires to commence retirement. The deferred earlyretirement allowance shall be computed in accordance with the serviceretirement provisions of this Article pertaining to law‑enforcementofficers.

b3.       Vested deferredretirement allowance of members retiring on or after July 1, 1994. – In lieu ofthe benefits provided in paragraphs a. and b. of this subdivision, any memberwho separates from service prior to attainment of age 60 years, aftercompleting 20 or more years of creditable service, and who leaves his totalaccumulated contributions in said System, may elect to retire on a deferredretirement allowance upon attaining the age of 50 years or any time thereafter;provided that such member may so retire only upon electronic submission orwritten application to the Board of Trustees setting forth at what time, notless than one day nor more than 90 days subsequent to the execution and filingthereof, he desires to be retired. Such deferred retirement allowance shall becomputed in accordance with the service retirement provisions of this Articlepertaining to a member who is not a law enforcement officer or an eligible formerlaw enforcement officer.

c.         (Effective untilJune 30, 2013 – see Editor's Note) Should a beneficiary who retired on anearly or service retirement allowance under this Chapter be reemployed by, orotherwise engaged to perform services for, an employer participating in theRetirement System on a part time, temporary, interim, or on a fee for servicebasis, whether contractual or otherwise, and if such beneficiary earns anamount during the 12 month period immediately following the effective date of retirementor in any calendar year which exceeds fifty percent (50%) of the reportedcompensation, excluding terminal payments, during the 12 months of servicepreceding the effective date of retirement, or twenty thousand dollars($20,000), whichever is greater, as hereinafter indexed, then the retirementallowance shall be suspended as of the first day of the month following themonth in which the reemployment earnings exceed the amount above, for thebalance of the calendar year, except when the reemployment earnings exceed theamount above in the month of December, in which case the retirement allowanceshall not be suspended. The retirement allowance of the beneficiary shall bereinstated as of January 1 of each year following suspension. The amount that maybe earned before suspension shall be increased on January 1 of each year by theratio of the Consumer Price Index to the Index one year earlier, calculated tothe nearest tenth of a percent (1/10 of 1%).

Thecomputation of postretirement earnings of a beneficiary under this sub‑subdivisionwho retired on or before June 1, 2009, regardless of age or years of creditableservice, or who retires on or after July 1, 2009, after attaining (i) the ageof at least 65 with five years of creditable service; or (ii) the age of atleast 60 with 25 years of creditable service; or (iii) 30 years of service; andwho has been retired at least six months and has not been employed in anycapacity with a State‑supported community college or a State‑supporteduniversity for at least six months immediately preceding the effective date ofreemployment, shall not include earnings while the beneficiary is employed toteach in a permanent full‑time or part‑time capacity that exceedsfifty percent (50%) of the applicable workweek as a nursing instructor in acertified nursing program for a maximum period of three years.

Inorder for a retired nursing instructor to be rehired, the community college oruniversity must certify to the Teachers' and State Employees' Retirement Systemthat it has a shortage of qualified nursing instructors, and must:

1.         Make a good faitheffort to fill positions with qualified nursing instructors who are notretirees;

2.         Post the vacancy orvacancies for at least two months;

3.         Solicit applicationsthrough local newspapers, other media, and nursing education programs; and

4.         Determine that thereis an insufficient number of eligible applicants for the advertised position orpositions.

TheNorth Carolina Community College System and The University of North Carolinashall certify to the Retirement System that a beneficiary is employed to teachas a nursing instructor with a State‑supported community college or aState‑supported university under the provisions of this sub‑subdivision.

c.         (Effective June30, 2013 – see Editor's Note) Should a beneficiary who retired on an earlyor service retirement allowance under this Chapter be reemployed by, orotherwise engaged to perform services for, an employer participating in theRetirement System on a part time, temporary, interim, or on a fee for servicebasis, whether contractual or otherwise, and if such beneficiary earns anamount during the 12 month period immediately following the effective date ofretirement or in any calendar year which exceeds fifty percent (50%) of thereported compensation, excluding terminal payments, during the 12 months ofservice preceding the effective date of retirement, or twenty thousand dollars($20,000), whichever is greater, as hereinafter indexed, then the retirementallowance shall be suspended as of the first day of the month following themonth in which the reemployment earnings exceed the amount above, for thebalance of the calendar year, except when the reemployment earnings exceed theamount above in the month of December, in which case the retirement allowanceshall not be suspended. The retirement allowance of the beneficiary shall bereinstated as of January 1 of each year following suspension. The amount thatmay be earned before suspension shall be increased on January 1 of each year bythe ratio of the Consumer Price Index to the Index one year earlier, calculatedto the nearest tenth of a percent (1/10 of 1%).

c1.       Within 90 days of theend of each month in which a beneficiary is reemployed under the provisions ofsub‑subdivision c. of this subdivision, each employer shall provide areport for that month on each reemployed beneficiary, including the terms ofthe reemployment, the date of the reemployment, and the amount of the monthlycompensation. If such a report is not received within the required 90 days, theBoard shall assess the employer with a penalty of ten percent (10%) of thecompensation of the unreported reemployed beneficiaries during the months forwhich the employer did not report the reemployed beneficiaries, with a minimumpenalty of twenty‑five dollars ($25.00).

d.         Should a beneficiarywho retired on an early or service retirement allowance under this Chapter berestored to service as an employee or teacher, then the retirement allowanceshall cease as of the first of the month following the month in which thebeneficiary is restored to service and the beneficiary shall become a member ofthe Retirement System and shall contribute thereafter as allowed by law at theuniform contribution payable by all members.

Uponhis subsequent retirement, he shall be paid a retirement allowance determinedas follows:

1.         For a member whoearns at least three years' membership service after restoration to service,the retirement allowance shall be computed on the basis of his compensation andservice before and after the period of prior retirement without restrictions;provided, that if the prior allowance was based on a social security levelingpayment option, the allowance shall be adjusted actuarially for the difference betweenthe amount received under the optional payment and what would have been paid ifthe retirement allowance had been paid without optional modification.

2.         For a member whodoes not earn three years' membership service after restoration to service, theretirement allowance shall be equal to the sum of the retirement allowance towhich he would have been entitled had he not been restored to service, withoutmodification of the election of an optional allowance previously made, and theretirement allowance that results from service earned since being restored toservice; provided, that if the prior retirement allowance was based on a socialsecurity leveling payment option, the prior allowance shall be adjustedactuarially for the difference between the amount that would have been paid foreach month had the payment not been suspended and what would have been paid ifthe retirement allowance had been paid without optional modification.

e.         Any beneficiary whoretired on an early or service retirement allowance as an employee of any Statedepartment, agency or institution under the Law Enforcement Officers'Retirement System and becomes employed as an employee by a State department,agency, or institution as an employer participating in the Retirement System shallbecome subject to the provisions of G.S. 135‑3(8)c and G.S. 135‑3(8)don and after January 1, 1989.

(8a)      Notwithstanding theprovisions of paragraphs c and d of subdivision (8) to the contrary, abeneficiary who was a beneficiary retired on an early or service retirementwith the Law Enforcement Officers' Retirement System at the time of thetransfer of law enforcement officers employed by the State and beneficiarieslast employed by the State to this Retirement System on January 1, 1985, andwho also was a contributing member of this Retirement System on January 1,1985, shall continue to be paid his retirement allowance without restrictionand may continue as a member of this Retirement System with all the rights andprivileges appendant to membership.

(9)        Members who areparticipating in an intergovernmental exchange of personnel under theprovisions of Article 10 of Chapter 126 may retain their membership status andreceive all benefits provided by this Chapter during the period of the exchangeprovided the requirements of Article 10 of Chapter 126 are met; providedfurther, that a member participating in an intergovernmental exchange ofpersonnel under Article 10 of Chapter 126 shall, notwithstanding whether he andhis employer are making contributions to the member's account during theexchange period, be entitled to the death benefit if he otherwise qualifiesunder the provisions of this Article and provided further that no duplicatebenefits shall be paid.  (1941, c. 25, s. 3; 1945, c. 799; 1947, c. 414; c. 457, ss. 1, 2; c.458, s. 5; c. 464, s. 2; 1949, c. 1056, s. 1; 1951, c. 561; 1955, c. 1155, s.91/2; 1961, c. 516, ss. 1, 2; 1963, c. 687, s. 2; 1965, c. 780, s. 1; c. 1187;1967, c. 720, ss. 1, 2, 15; c. 1234; 1969, c. 1223, ss. 1, 2, 14; 1971, c. 117,ss. 6‑8; c. 118, ss. 1, 2; 1973, c. 241, s. 1; c. 994, s. 5; c. 1363;1977, c. 783, s. 3; 1979, c. 396; c. 972, s. 2; 1981, c. 979, s. 1; 1981 (Reg.Sess., 1982), c. 1396, ss. 1, 2; 1983, c. 556, ss. 1, 2; 1983 (Reg. Sess.,1984), c. 1034, ss. 228, 229, 236; c. 1106, ss. 1, 2, 4; 1985, c. 520, s. 1; c.649, ss. 2, 11; 1987, c. 513, s. 1; c. 738, s. 38(b); 1989, c. 791; 1993 (Reg.Sess., 1994), c. 769, ss. 7.30(e), (f), 7.31(d), (e); 1995, c. 509, s. 73.1;1998‑212, s. 28.24(a); 1998‑217, s. 67; 2000‑67, s. 8.24(a);2001‑424, s. 32.25(a); 2002‑126, ss. 28.10(a), (b), (d), 28.13(a);2004‑124, s. 31.18A(a), (b); 2004‑199, s. 57(a); 2005‑144,ss. 7A.1, 7A.2, 7A.4; 2005‑276, ss. 29.28(a)‑(d); 2005‑345, s. 43; 2006‑226, s.25(a); 2007‑145, s. 7(a), (b), (d)‑(f); 2007‑326, ss. 1,3(a), (b), (d)‑(f); 2007‑431, s. 9; 2009‑66, ss. 8(a), 12(a),(b); 2009‑137, s. 1.)