GSNC

ARTICLE 1. General Provisions.

Sec.

§ 128-1. No person shall hold more than one office; exception.

No person who shall hold any office or place of trust or profit under the United States, or any department thereof or under this State, or under any other state or government, shall hold or exercise any other office or place of trust or profit under the authority of this State, or be eligible to a seat in either house of the General Assembly except as provided in G.S. 128-1.1, or by other General Statute.

History

(Const., art. 14, s. 7; Rev., s. 2364; C.S., s. 3200; 1967, c. 24, s. 24; 1969, c. 1070; 1971, c. 697, s. 1; 1983, c. 609, s. 9.)

Cross References. - As to constitutional prohibition against double office holding, see N.C. Const., Art. VI, § 9.

Legal Periodicals. - For note, "Whose Forum is it Anyway: Individual Government Officials and Their Authority to Create Public Forums on Social Media,” see 69 Duke L.J. 701 (2019).

I. GENERAL CONSIDERATION.

Offices whose duties are congruous may be consolidated; but it is just, in cases of consolidation of offices, to postpone the operation of the law until a vacancy appears in the office whose duties are to be transferred. Troy v. Wooten, 32 N.C. 377 (1849).

Legislature May Change Duties and Emoluments. - The legislature may reduce or increase the salaries of such officers as are not protected by the Constitution during their term of office, but cannot deprive them of the whole. Cotten v. Ellis, 52 N.C. 545 (1860).

Unless the Constitution otherwise expressly provides, the legislature has power to increase or vary the duties, or diminish the salary or other compensation appurtenant to the office, or abolish any of its rights or privileges before the end of the term, or to alter or abridge the term, or to abolish the office itself. State ex rel. Caldwell v. Wilson, 121 N.C. 425, 28 S.E. 554 (1897), appeal dismissed, 169 U.S. 586, 18 S. Ct. 435, 42 L. Ed. 865 (1898); Mial v. Ellington, 134 N.C. 131, 46 S.E. 961 (1903).

The legislature may attach additional duties to an existing office, and it may afterwards lop off those duties and assign them to a new office, leaving the original office as it was before the additional duties were attached to it. State ex rel. Dowtin v. Beardsley, 126 N.C. 119, 35 S.E. 241 (1900).

In respect to offices created and provided for by the Constitution, the people in convention assembled alone can alter, change their tenure, duties or emoluments, or abolish them; while in respect to legislative offices, it is entirely within the power of the legislature to deal with them as public policy may suggest and public interest may demand. Mial v. Ellington, 134 N.C. 131, 46 S.E. 961 (1903).

Although an office is a constitutional one, the legislature may, within reasonable limits, change the statutory duties and diminish the emoluments of such office, if the public welfare requires it. Fortune v. Buncombe County Comm'rs, 140 N.C. 322, 52 S.E. 950 (1905); Commissioners v. Stedman, 141 N.C. 448, 54 S.E. 269 (1906).

Necessity of Taking Oath. - The taking of an oath of office is not an indispensable criterion, for the office may exist without it. State ex rel. Clark v. Stanley, 66 N.C. 59 (1872); State ex rel. Bryan v. Patrick, 124 N.C. 651, 33 S.E. 151 (1899).

Manner of Appointment. - Where officers have to be appointed to fill a regular term, the Governor nominates to the Senate, unless it be an officer who is elected by the people, and then he fills the vacancy or term until the people can elect his successor. People ex rel. Battle v. McIver, 68 N.C. 467 (1873). See also, People ex rel. Nichols v. McKee, 68 N.C. 429 (1873); People ex rel. Welker v. Bledsoe, 68 N.C. 457 (1873).

At common law there was no limit on the right of a citizen to hold several offices, except the incompatibility of the duties of the several officers. State ex rel. Barnhill v. Thompson, 122 N.C. 493, 29 S.E. 720 (1898).

The power to create vacancies in a public office, the incumbents of which are charged with continuing duties and responsibilities, rests, in the absence of provisions to the contrary, in the body possessing the original power of appointment. State ex rel. Greene v. Owen, 125 N.C. 212, 34 S.E. 424 (1899).

An officer appointed for a definite time to a legislative office has no vested property therein or contract right thereto of which the legislature cannot deprive him. Mial v. Ellington, 134 N.C. 131, 46 S.E. 961 (1903).

II. DISTINGUISHING CHARACTERISTICS.

In General. - Public office is tenure by virtue of an appointment, conferred by public authority. Willis v. Melvin, 53 N.C. 62 (1860).

The term embraces the ideas of tenure, duration, emolument and duties. State ex rel. Bryan v. Patrick, 124 N.C. 651, 33 S.E. 151 (1899).

A public office is an agency for the State, and the person whose duty it is to perform this agency is a public officer. State ex rel. Clark v. Stanley, 66 N.C. 59, 8 Am. R. 488 (1872); State ex rel. Barnhill v. Thompson, 122 N.C. 493, 29 S.E. 720 (1898); State Prison v. Day, 124 N.C. 362, 32 S.E. 748 (1899).

Definition of Public Officer - This is considered to be the true definition of a public officer in its original, broad sense. The essence of it is the duty of performing an agency, that is, of doing some act or acts or series of acts for the State. State ex rel. Clark v. Stanley, 66 N.C. 59 (1872).

True Test of Public Office is Parcel of the Administration of Government. - The true test of a public office is that it is a parcel of the administration of government, or is itself directly created by the lawmaking power. Eliason v. Coleman, 86 N.C. 235 (1882).

Portion of Sovereignty Attaches. - An office or place of trust requiring a proceeding by quo warranto for the removal of the incumbent is defined as a public position to which a portion of the sovereignty of the country, either legislative, executive or judicial, attaches for the time being, and which is exercised for the benefit of the public. State ex rel. Wooten v. Smith, 145 N.C. 476, 59 S.E. 649 (1907).

Combination of Duty and Agency. - The word "office" in its primary signification implies a duty or duties - the agency from the State to perform the duties. The duties of the office are of first consequence, and the agency from the State to perform those duties is the next step in the creation of an office. It is the union of the two factors, duty and agency, which makes the office. State Prison v. Day, 124 N.C. 362, 32 S.E. 748, 46 L.R.A. 295 (1899).

Public Office Distinguished from Public Agency. - The most important characteristic which distinguishes an office from a public agency is that the conferring of the office carries with it a delegation to the individual of some of the sovereign functions of the government. In this respect the terms "office" and "place of trust" as used in our Constitution are synonymous. Doyle v. Aldermen of Raleigh, 89 N.C. 133, 45 Am. R. 677 (1883); State ex rel. Barnhill v. Thompson, 122 N.C. 493, 29 S.E. 720 (1898); State ex rel. Wooten v. Smith, 145 N.C. 476, 59 S.E. 649 (1907).

Addition of Duties to Existing Office. - An act which merely attaches new duties to existing offices does not create a new office. McCullers v. Board of Comm'rs, 158 N.C. 75, 73 S.E. 816 (1911).

Authority to Appoint to Office. - If a person is authorized to appoint to an office, this duty of itself constitutes him a public officer. State ex rel. Clark v. Stanley, 66 N.C. 59, 8 Am. R. 488 (1872); State ex rel. Howerton v. Tate, 68 N.C. 546 (1873).

Office Distinguished from Employment and Contract. - An "office" is defined by good authority as involving a delegation to the individual of some of the sovereign functions of government, to be exercised by him for the benefit of the public, by which it is distinguished from "employment" or "contract." Eliason v. Coleman, 86 N.C. 235 (1882); State ex rel. Barnhill v. Thompson, 122 N.C. 493, 29 S.E. 720 (1898).

A public office is an administrative agency or public employment, and although an office is an employment, it does not follow that every employment is an office. State ex rel. Wooten v. Smith, 145 N.C. 476, 59 S.E. 649 (1907).

Officers Distinguished from Placemen. - The distinction between officers and placemen is that the former are required to take an oath to support the Constitutions of the State and of the United States, while the latter are not. Worthy v. Barrett, 63 N.C. 199 (1869), appeal dismissed, 76 U.S. 611, 19 L. Ed. 565 (1870).

III. ILLUSTRATIVE CASES.

Governor and Others in Executive Department. - The executive department is an agency for the State, and the Governor and others, whose duty it is to discharge this agency, are public officers. State ex rel. Clark v. Stanley, 66 N.C. 59 (1872).

Judges. - The judicial department is an agency for the State, and the judges are public officers. State ex rel. Clark v. Stanley, 66 N.C. 59, 8 Am. R. 488 (1872).

A clerk of the court is a public officer. Wilson v. Jordan, 124 N.C. 683, 33 S.E. 139 (1899).

A recorder is a public officer. Rhodes v. Love, 153 N.C. 468, 69 S.E. 436 (1910). See State v. Lord, 145 N.C. 479, 59 S.E. 656 (1907).

Members of Legislature. - The legislative department is an agency for the State, and the members of the Senate and of the House of Representatives are public officers in the broad sense in which the term is used in the Constitution of this State. State ex rel. Clark v. Stanley, 66 N.C. 59 (1872).

In Worthy v. Barrett, 63 N.C. 199 (1869), appeal dismissed, 76 U.S. 611, 19 L. Ed. 565 (1870), it is said that "members of the legislature are not officers. Theirs are places of trust and profit, but not offices of trust and profit." Doyle v. Aldermen of Raleigh, 89 N.C. 133 (1883). In this instance the court was using the terms in the restricted sense in which they are used in U.S. Const., Amend. XIV. Lewis v. White, 287 N.C. 625, 216 S.E.2d 134 (1975).

The members of the county board of education are public officers. State ex rel. Barnhill v. Thompson, 122 N.C. 493, 29 S.E. 720 (1898); State ex rel. Greene v. Owen, 125 N.C. 212, 34 S.E. 424 (1899).

State Printer. - Under the acts abolishing the office of State printer and providing for letting of State printing by contract, the position of State printer was not a public office. Brown v. Turner, 70 N.C. 93 (1874).

University Trustees and Directors of State Institutions. - The trustees of The University of North Carolina and the directors of the penitentiary, of the lunatic asylum and of the institution for the deaf, dumb and blind were public officers. People ex rel. Nichols v. McKee, 68 N.C. 429 (1873); People ex rel. Welker v. Bledsoe, 68 N.C. 457 (1873); People ex rel. Badger v. Johnson, 68 N.C. 471 (1873); People ex rel. Rogers v. McGowan, 68 N.C. 520 (1873).

The office of the superintendent of the State Prison, with its attendant duties, is a public office. State Prison v. Day, 124 N.C. 362, 32 S.E. 748 (1899).

A constable is a public officer. Rhodes v. Love, 153 N.C. 468, 69 S.E. 436 (1910).

Chief Inspector of Shellfish Commission. - The office of chief inspector of the Shellfish Commission is a public office. White v. Hill, 125 N.C. 194, 34 S.E. 432 (1899).

A town clerk is a public officer. Rhodes v. Love, 153 N.C. 468, 69 S.E. 436 (1910).

Clerk of the Peace. - See Rhodes v. Love, 153 N.C. 468, 69 S.E. 436 (1910).

Parish Clerk. - See Rhodes v. Love, 153 N.C. 468, 69 S.E. 436 (1910).

Clerk of City Works. - It has even been held that a clerk of the city works is a public officer. Rhodes v. Love, 153 N.C. 468, 69 S.E. 436 (1910).

The position of public administrator is a mere administrative agency, and not an office or place of trust, within former N.C. Const., Art. XIV, § 7 (now N.C. Const., Art. VI, § 9). State ex rel. Wooten v. Smith, 145 N.C. 476, 59 S.E. 649 (1907).

Sexton. - It has been held that a sexton is a public officer. Rhodes v. Love, 153 N.C. 468, 69 S.E. 436 (1910).

The chief engineer of the Western North Carolina Railroad is not a public officer. Eliason v. Coleman, 86 N.C. 235 (1882).

Opinions of Attorney General

Tribal Chairman. - The position of Tribal Chairman is neither an elective nor an appointive office subject to the dual office holding prohibitions of the North Carolina Constitution and related statutes. See opinion of Attorney General to The Honorable Ronnie Sutton, N.C. House of Representatives, 2000 N.C. AG LEXIS 6 (11/17/2000).

§ 128-1.1. Dual-office holding allowed.

Any person who holds an appointive office, place of trust or profit in State or local government is hereby authorized by the General Assembly, pursuant to Article VI, Sec. 9 of the North Carolina Constitution, to hold concurrently one other appointive office, place of trust or profit, or an elective office in either State or local government.
Any person who holds an elective office in State or local government is hereby authorized by the General Assembly, pursuant to Article VI, Sec. 9 of the North Carolina Constitution to hold concurrently one other appointive office, place of trust or profit, in either State or local government.
Any person who holds an office or position in the federal postal system or is commissioned as a special officer or deputy special officer of the United States Bureau of Indian Affairs is hereby authorized to hold concurrently therewith one position in State or local government.
Where authorized by federal law, any State or local law enforcement agency may authorize its law enforcement officers to also perform the functions of an officer under 8 U.S.C. § 1357(g) if the agency has a Memorandum of Agreement or Memorandum of Understanding for that purpose with a federal agency. State and local law enforcement officers authorized under this provision are authorized to hold any office or position with the applicable federal agency required to perform the described functions.
Repealed by Session Laws 2015-201, s. 3(b), effective August 5, 2015.
The term "elective office," as used herein, shall mean any office filled by election by the people when the election is conducted by a county board of elections under the supervision of the State Board of Elections.

History

(1971, c. 697, s. 2; 1975, c. 174; 1987, c. 427, s. 10; 2006-259, s. 24(a); 2011-31, s. 13; 2014-100, s. 14.11(b); 2015-201, s. 3(b); 2015-241, s. 14.30(u); 2017-6, s. 3; 2018-146, ss. 3.1(a), (b), 6.1.)

Re-recodification; Technical and Conforming Changes. - Session Laws 2017-6, s. 3, provides, in part: "The Revisor of Statutes shall recodify Chapter 138A of the General Statutes, Chapter 120C of the General Statutes, as well as Chapter 163 of the General Statutes, as amended by this act, into a new Chapter 163A of the General Statutes to be entitled `Elections and Ethics Enforcement Act,' as enacted by Section 4 of this act. The Revisor may also recodify into the new Chapter 163A of the General Statutes other existing statutory laws relating to elections and ethics enforcement that are located elsewhere in the General Statutes as the Revisor deems appropriate." The Revisor was further authorized to make additional technical and conforming changes to catchlines, internal citations, and other references throughout the General Statutes to effectuate this recodification. Pursuant to this authority, the Revisor of Statutes substituted "Bipartisan State Board of Elections and Ethics Enforcement" for "State Board of Elections" in subsection (d).

Session Laws 2018-146, ss. 3.1(a), (b) and 6.1, repealed Session Laws 2017-6, s. 3, and authorized the Revisor of Statutes to re-recodify Chapter 163A into Chapters 163, 138A, and 120C and to revert the changes made by the Revisor pursuant to Session Laws 2017-6, s. 3. Pursuant to this authority, the Revisor of Statutes reverted the change in subsection (d).

Editor's Notes. - Session Laws 2006-259, s. 24(b), provides: "This section [which added subsection (c1)] becomes effective January 1, 2006, and any actions taken between that date and the date this section becomes law that would have been proper if this section had been then in effect are in all respects validated and confirmed, and no office shall be considered to have been vacated."

Effect of Amendments. - Session Laws 2006-259, s. 24(a), effective January 1, 2006, added subsection (c1). See Editor's note.

Session Laws 2011-31, s. 13, effective April 7, 2011, deleted "or municipal" preceding "board of elections" in subsection (d).

Session Laws 2014-100, s. 14.11(b), effective July 1, 2014, added subsection (c2).

Session Laws 2015-201, s. 3, effective August 5, 2015, repealed subsection (c2).

Session Laws 2015-241, s. 14.30(u), effective July 1, 2015, substituted "Department of Environmental Quality" for "Department of Environment and Natural Resources" in subsection (c2).

CASE NOTES

Local Ordinance Conflicted with Section. - Local ordinance prohibiting concurrent service as an elected town official and as a member of the board of adjustment, an appointed position, conflicted with this section. Board of Adjustment v. Town of Swansboro, 108 N.C. App. 198, 423 S.E.2d 498 (1992), aff'd, 334 N.C. 421, 432 S.E.2d 310, reh'g denied, 335 N.C. 182, 436 S.E.2d 369 (1993).

While a trial judge presented with an application for the issuance of a writ of habeas corpus has the authority to determine whether it is entitled to act upon any such petition, it should (1) summarily deny an application seeking the issuance of a writ of habeas corpus that alleges that the petitioner is being held pursuant to an immigration-related arrest warrant or detainer by a sheriff who is a party to a 287(g) agreement with the federal government and (2) deny a petitioner's request for discharge in the event that the return filed by a sheriff who has entered into a 287(g) agreement with the federal government claims that the petitioner is being held pursuant to an immigration-related arrest warrant or detainer. Chavez v. McFadden, 374 N.C. 458, 843 S.E.2d 139 (2020).

Ordering two habeas petitioners' release was error where they were held due to an immigration-related process by a sheriff who was a party to a 287(g) agreement with the federal government. Thus, the court's state law authority to inquire into the lawfulness of petitioners' detentions had been superseded by federal law. Although the trial court had authority to make an initial determination as to its authority, an examination of the applications themselves should have led it to summarily deny the habeas corpus petitions. Chavez v. McFadden, 374 N.C. 458, 843 S.E.2d 139 (2020).

Applied in Ratcliff v. County of Buncombe, 663 F. Supp. 1003 (W.D.N.C. 1987).

Cited in Ratcliff v. County of Buncombe, 759 F.2d 1183 (4th Cir. 1985).

Opinions of Attorney General

Federal Postal System Employee May Hold Appointive But Not Elective Office in State or Local Government. - See opinion of Attorney General to Mr. Leo Mercer, Postmaster, 41 N.C.A.G. 633 (1971).

Serving as President of the board of directors of a telephone membership corporation and on the Board of the Rural Electrification Authority is not prohibited dual-office holding. See opinion of Attorney General to Mr. Aaron A. Hathcock, Administrator, Rural Electrification Authority, 52 N.C.A.G. 107 (1983).

Person holding appointive office as police officer can hold position as elected officer in either State or local government, including as a school board member. See opinion of Attorney General to Captain Bobby Kilgore, Monroe Public Safety Department, 55 N.C.A.G. 34 (1985).

Member of the Parks and Recreation Authority who holds an appointment as trustee of a community college may also hold an elective office in the local government of the town. See opinion of Attorney General to Mr. Daniel C. Oakley, General Counsel, Department of Environment and Natural Resources, 2003 N.C.A.G. 6 (8/19/03).

§ 128-1.2. Ex officio service by county and city representatives and officials.

Except when the resolution of appointment provides otherwise, whenever the governing body of a county or city appoints one of its own members or officials to another board or commission, the individual so appointed is considered to be serving on the other board or commission as a part of the individual's duties of office and shall not be considered to be serving in a separate office.

As used in this section, the term "official" means (i) in the case of a county, the county manager, acting county manager, interim county manager, county attorney, finance officer, or clerk to the board and (ii) in the case of a city, the city manager, acting city manager, interim city manager, city attorney, finance officer, city clerk, or deputy clerk. As used in this section, the term "city" has the meaning provided in G.S. 160A-1.

History

(1983, c. 651, s. 1; 1991, c. 508, s. 5.)

Opinions of Attorney General

§ 128-2. Holding office contrary to the Constitution; penalty.

If any person presumes to hold any office, or place of trust or profit, or is elected to a seat in either house of the General Assembly, contrary to Article VI, Sec. 9 of the North Carolina Constitution, he shall forfeit all rights and emoluments incident thereto.

History

(1790, c. 319, P.R.; 1792, c. 366, P.R.; 1793, c. 393, P.R.; 1796, c. 450, P.R.; 1811, c. 811, P.R.; R.C., c. 77, s. 1; Code, s. 1870; Rev., s. 2365; C.S., s. 3201; Ex. Sess., 1924, c. 110; 1971, c. 697, s. 3.)

Cross References. - As to parties to suits for penalties, see G.S. 1-58.

§ 128-3. Bargains for office void.

All bargains, bonds and assurances made or given for the purchase or sale of any office whatsoever, the sale of which is contrary to law, shall be void.

History

(5 and 6 Edw. VI, c. 16, s. 3; R.C., c. 77, s. 2; Code, s. 1871; Rev., s. 2366; C.S., s. 3202.)

CASE NOTES

Theory of Appointments. - By the theory of our government, appointments to office are presumed to be made solely upon the principle detur digniori, and any practice whereby the bare consideration of money is brought to bear in any form upon such appointments to or resignation of office conflicts with and degrades this great principle. The services performed under such appointments are paid for by salary or fees, presumed to be adjusted at the point of adequate remuneration only. Any premium paid to obtain office interferes with this adjustment and tempts to speculation, overcharges and frauds in the effort to restore the balance thus disturbed. Basket v. Moss, 115 N.C. 448, 20 S.E. 733 (1894).

The public has a right to some better test of the capacity of their servants than the fact that they possess the means of purchasing their offices. Basket v. Moss, 115 N.C. 448, 20 S.E. 733 (1894).

Agreements Void. - Public offices are public trusts, and should be conferred solely upon considerations of ability, integrity, fidelity and fitness for the position. Agreements for compensation to procure these tend directly and necessarily to lower the character of the appointments, to the great detriment of the public. Hence, such agreements, of whatever nature, have always been held void as being against public policy. Basket v. Moss, 115 N.C. 448, 20 S.E. 733 (1894).

Contracts to procure appointments to an office or to resign an office in another's favor are void at common law, as well as by statute. Basket v. Moss, 115 N.C. 448, 20 S.E. 733 (1894).

Federal Offices. - Notwithstanding that the office is under the United States government, if an action were brought in our courts to recover upon a bond or mortgage given for such consideration, our courts would hold it void. Basket v. Moss, 115 N.C. 448, 20 S.E. 733 (1894).

§ 128-4. Receiving compensation of subordinates for appointment or retention; removal.

Any official or employee of this State or any political subdivision thereof, in whose office or under whose supervision are employed one or more subordinate officials or employees who shall, directly or indirectly, receive or demand, for himself or another, any part of the compensation of any such subordinate, as the price of appointment or retention of such subordinate, shall be guilty of a Class 1 misdemeanor: Provided, that this section shall not apply in cases in which an official or employee is given an allowance for the conduct of his office from which he is to compensate himself and his subordinates in such manner as he sees fit. Any person convicted of violating this section, in addition to the criminal penalties, shall be subject to removal from office. The procedure for removal shall be the same as that provided for removal of certain local officials from office by G.S. 128-16 to 128-20, inclusive.

History

(1937, c. 32, ss. 1, 2; 1993, c. 539, s. 942; 1994, Ex. Sess., c. 24, s. 14(c).)

§ 128-5. Oath required before acting; penalty.

Every officer and other person required to take an oath of office, or an oath for the faithful discharge of any duty imposed on him, and also the oath appointed for such as hold any office of trust or profit in the State, shall take all said oaths before entering on the duties of the office, or the duties imposed on such person, on pain of forfeiting five hundred dollars ($500.00) to the use of the poor of the county in or for which the office is to be used, and of being ejected from his office or place by proper proceedings for that purpose.

History

(R.C., c. 77, s. 4; Code, s. 1873; Rev., s. 2367; C.S., s. 3203.)

CASE NOTES

The taking of the oath of office is not an indispensable criterion, for the office may exist without it. It is a mere incident, and constitutes no part of the office. State ex rel. Clark v. Stanley, 66 N.C. 59 (1872); State ex rel. Bryan v. Patrick, 124 N.C. 651, 33 S.E. 151 (1899).

Acts of Officer May Be Valid Though Oath Not Taken. - Failure to take an oath of office, while it might subject one exercising the duties of the office to a penalty under this section, would not deprive his acts of the validity given those of de facto officers performing the duties of a de jure office. Vance S. Harrington & Co. v. Renner, 236 N.C. 321, 72 S.E.2d 838 (1952).

§ 128-6. Persons admitted to office deemed to hold lawfully.

Any person who shall, by the proper authority, be admitted and sworn into any office, shall be held, deemed, and taken, by force of such admission, to be rightfully in such office until, by judicial sentence, upon a proper proceeding, he shall be ousted therefrom, or his admission thereto be, in due course of law, declared void.

History

(Const., art. 4, s. 25; 1844, c. 38, s. 2; 1848, c. 64, s. 1; R.C., c. 77, s. 3; Code, s. 1872; Rev., s. 2368; C.S., s. 3204.)

CASE NOTES

I. General Consideration.
II. Proceedings to Try Title to Office.

I. GENERAL CONSIDERATION.

The General Assembly has conferred express approval on the judicial doctrine of de facto office by enacting this section. People ex rel. Duncan v. Beach, 294 N.C. 713, 242 S.E.2d 796 (1978).

The acts of a de facto officer are valid as to the public and third persons. People ex rel. Duncan v. Beach, 294 N.C. 713, 242 S.E.2d 796 (1978).

Acts of de facto officers, who exercise their office for a considerable length of time, are as effectual when they concern the rights of third persons or the public as if they were officers de jure. Hughes v. Long, 119 N.C. 52, 25 S.E. 743 (1896).

The acts of one purporting to be an officer are evidence of his authority; and such acts, as to third persons, are to be taken as valid while the incumbent is thus acting. Swindell v. Warden, 52 N.C. 575 (1860).

Officers entering office under color of irregular election. - The official acts of persons entering into office under color of an irregular election are of full force until such officers are removed by a proper proceeding. Commissioners of Trenton v. McDaniel, 52 N.C. 107 (1859).

Usurping, De Facto and De Jure Officers Distinguished. - A usurper is one who takes possession without any authority. His acts are utterly void, unless he continues to act for so long a time or under such circumstances as to afford a presumption of his right to act. And then his acts are valid as to the public and third persons. But he has no defense in a direct proceeding against himself. A de facto officer is one who goes in under color of authority or who exercises the duties of the office so long or under such circumstances as to raise a presumption of his right, in which cases his necessary official acts are valid as to the public and third persons; but he may be ousted by a direct proceeding. A de jure officer is one who is regularly and lawfully elected or appointed and inducted into office and exercises the duties as his right. All his necessary official acts are valid, and he cannot be ousted. The only difference between an officer de facto and an officer de jure is that the former may be ousted in a direct proceeding against him, while the latter cannot be. So far as the public and third persons are concerned, there is no difference whatever. The acts of one have precisely the same force and effect as the acts of the other. People ex rel. Norfleet v. Staton, 73 N.C. 546 (1875).

A mere intruder or usurper is not ordinarily, but may become, an officer de facto in some cases. This can happen only by the continued exercise of the office by him and the acquiescence therein by the public authorities and the public for such length of time as to afford to citizens generally a strong presumption that he had been duly appointed. But when without color of authority he simply assumes to act, to exercise authority as an officer, and the public knows the fact, or reasonably ought to know that he is a usurper, his acts are absolutely void for all purposes. The mere fact that, apart from his usurpation, his supposed official acts were fair and honest could not impart to them validity and efficiency. Burke v. Elliott, 26 N.C. 355 (1844); People ex rel. Norfleet v. Staton, 73 N.C. 546 (1875); State ex rel. Van Amringe v. Taylor, 108 N.C. 196, 12 S.E. 1005, 23 Am. St. R. 51, 12 L.R.A. 202 (1891); Whitehead v. Pittman, 165 N.C. 89, 80 S.E. 976 (1914).

A usurper in office is distinguished from a de facto officer in that a usurper takes possession of office and undertakes to act officially without any authority, either actual or apparent. Since he is not an officer at all or for any purpose, his acts are absolutely void, and they can be impeached at any time in any proceeding. People ex rel. Duncan v. Beach, 294 N.C. 713, 242 S.E.2d 796 (1978).

This section applies to a person who, having duly qualified, is performing the duties of the office under color of right, and not to a case where the appointee of the Governor, requiring the concurrence of the Senate in order to hold his office for the full unexpired term of his predecessor, is holding over after the Senate has met and concurred in the appointment of another. State ex rel. Salisbury v. Croom, 167 N.C. 223, 83 S.E. 354 (1914).

Who Is Officer De Facto. - Persons who have been regarded as public officers for the greater part of the time during which the office existed, and whose acts are recognized by other public functionaries, must be taken to be officers de facto. Burton ex rel. Reeves v. Patton, 47 N.C. 124, 62 Am. Dec. 194 (1854).

An officer de facto is one whose acts, though not those of a lawful officer, the law, upon principles of policy and justice, will hold valid, so far as they involve the interests of the public and third persons, where the duties of the office were exercised (1) without a known appointment or election, but under such circumstances of reputation or acquiescence as were calculated to induce people, without inquiry, to submit to or revoke his action, supposing him to be the officer he assumed to be; (2) under color of a known and valid appointment or election, but where the officer failed to conform to some precedent requirement or condition, such as taking an oath, giving a bond, or the like; (3) under color of a known election or appointment, void because there was a want of power in the electing or appointing body, or by reason of some defect or irregularity in its exercise, such ineligibility, want of power or defect being unknown to the public; (4) under color of an election or appointment, by or pursuant to a public unconstitutional law, before the same is adjudged to be such. State v. Speaks, 95 N.C. 689 (1886); State v. Lewis, 107 N.C. 967, 12 S.E. 457, 13 S.E. 247 (1890); State ex rel. Van Amringe v. Taylor, 108 N.C. 196, 12 S.E. 1005 (1891); Whitehead v. Pittman, 165 N.C. 89, 80 S.E. 976 (1914).

To constitute an officer de facto it is requisite that there be some colorable election or appointment to and induction into the office. Van Amringe v. Taylor, 108 N.C. 196, 12 S.E. 1005, 23 Am. St. R. 51, 12 L.R.A. 202 (1891).

To constitute one an officer de facto there must be an actual exercise of the office and acquiescence of the public authorities long enough to cause, in the mind of the citizen, a strong presumption that the officer was duly appointed. Hughes v. Long, 119 N.C. 52, 25 S.E. 743 (1896).

The indispensable basis of being a de facto officer is that there is such an office. State v. Shuford, 128 N.C. 588, 38 S.E. 808 (1901).

A judge de facto is defined as one who occupies a judicial office under some color of right, and for the time being performs its duties with public acquiescence, though having no right in fact. In order for one to be deemed a judge de facto, he must have satisfied the following four conditions: (1) He assumes to be the judge of a court which is established by law; (2) he is in possession of the judicial office in question, and is discharging its duties; (3) his incumbency of the judicial office is illegal in some respects; and (4) he has at least a fair color of right or title to the judicial office, or has acted as its occupant for so long a time and under such circumstances of reputation or acquiescence by the public generally as are calculated to afford a presumption of his right to act and to induce people, without inquiry, to submit to or invoke official action on his part on the supposition that he is the judge he assumes to be. People ex rel. Duncan v. Beach, 294 N.C. 713, 242 S.E.2d 796 (1978).

So far as the public and third persons are concerned, a judge de facto is competent to do whatever may be done by a judge de jure. In consequence, acts done by a judge de facto in the discharge of the duties of his judicial office are as effectual so far as the rights of third persons or the public are concerned as if he were a judge de jure. People ex rel. Duncan v. Beach, 294 N.C. 713, 242 S.E.2d 796 (1978).

A Judge De Jure. - A judge de jure exercises the office of judge as a matter of right. In order to become a judge de jure one must satisfy three requirements: (1) He must possess the legal qualifications for the judicial office in question; (2) he must be lawfully chosen to such office; and (3) he must have qualified himself to perform the duties of such office according to the mode prescribed by law. People ex rel. Duncan v. Beach, 294 N.C. 713, 242 S.E.2d 796 (1978).

Elected and Qualifying City Councilman Is De Facto Officer Until Removed. - Upon his election, and after having been sworn in as a member of a city council, a person is a de facto councilman until he is removed from such office in a quo warranto proceeding or otherwise removed therefrom as provided by law. Armstrong v. McInnis, 264 N.C. 616, 142 S.E.2d 670 (1965).

Tabulation of Election Result by Clerk Is Prima Facie Correct. - A tabulation of the result of an election by the clerk, in the manner required by law, is prima facie correct, and can only be questioned in a quo warranto proceeding. Cozart v. Fleming, 123 N.C. 547, 31 S.E. 822 (1898).

Commissioner's Appointment Void Upon Appointment of Successor. - Panel of commissioners was evenly split and no majority existed because when the opinion and award was filed, a commissioner who concurred in the opinion was not an officer de jure pursuant as the commissioner's term had ended and a successor had been appointed. Therefore, because the commissioner's appointment was void before the opinion and award were entered, and because the commissioner's concurrence in the opinion and award was not the act of a qualified officer - neither de jure nor de facto - the concurrence was a nullity. Baxter v. Danny Nicholson, Inc., 191 N.C. App. 168, 661 S.E.2d 892 (2008).

Cited in In re Wingler, 231 N.C. 560, 58 S.E.2d 372 (1950).

II. PROCEEDINGS TO TRY TITLE TO OFFICE.

Injunction is not the proper method of trying title to an office, and it will not lie at the suit of the incumbent of a public office to restrain a claimant of the office from claiming and exercising its powers and duties. Patterson v. Hubbs, 65 N.C. 119 (1871); Jones v. Commissioners of Granville, 77 N.C. 280 (1877).

The erroneous action of the county commissioners in declaring an office vacant because of an apparent tie vote, and ordering a new election, does not warrant the granting of an injunction to one of the candidates, since the title to the office can be inquired into by quo warranto even after such a new election. Cozart v. Fleming, 123 N.C. 547, 31 S.E. 822 (1898).

Injunction does not lie to restrain county commissioners from declaring a public office vacant because of an apparent tie vote where it is an attempt, in effect, to try the title to the office by injunction, which is not permissible. Cozart v. Fleming, 123 N.C. 547, 31 S.E. 822 (1898).

Proceeding Is in Nature of Quo Warranto. - Title to a public office cannot be tried by motion, but must be determined by a proceeding in the nature of quo warranto. Sneed v. Bullock, 77 N.C. 282 (1877).

Who May Bring Action. - An action to try the right of an incumbent to any public office may be brought by the Attorney General upon his own information, or upon the complaint of any private party. People ex rel. Cloud v. Wilson, 72 N.C. 155 (1875); People ex rel. Hargrove v. Hilliard, 72 N.C. 169 (1875).

Any person having a right to an office can, in his own name, bring an action for the purpose of testing his right as against one claiming adversely. Brown v. Turner, 70 N.C. 93 (1874).

Maxim "De Minimis" Not Applicable. - Notwithstanding the maxim "De minimis non curat lex," a suit will be entertained to determine rights to an office paying only eight dollars a month in addition to board. State ex rel. Greene v. Owen, 125 N.C. 212, 34 S.E. 424 (1899).

No demand is necessary before suing to try the right to an office. State ex rel. Shennonhouse v. Withers, 121 N.C. 376, 28 S.E. 522 (1897).

Allegation of Citizenship in Complaint. - Where persons who have been elected and qualified as county commissioners bring an action against persons appointed by the judge of the district, under the provisions of Chapter 135, Laws 1895, to try the defendants' title to office, the complaint must allege that the plaintiffs are citizens and taxpayers of the county. State ex rel. Houghtalling v. Taylor, 122 N.C. 141, 122 N.C. 171, 29 S.E. 101 (1898).

A relator in quo warranto proceedings to try title to office accepts the position that he has been displaced in the office, by the form of action in which he seeks to assert his rights, and may not therein avail himself of the position that under this section he should have been ousted therefrom by a judicial sentence, under a proper proceeding, etc. State ex rel. Salisbury v. Croom, 167 N.C. 223, 83 S.E. 354 (1914).

Estoppel to Deny Acceptance of Office and Vacating of Prior Office. - A person who held himself out and who acted as an officer and who signed his name as such, and who in writing resigned the office, is estopped from denying that he accepted the office, and thus vacated a prior office filled by him. State ex rel. Midgett v. Gray, 159 N.C. 443, 74 S.E. 1050 (1912).

A person who held himself out and who acted as an officer was estopped to deny his qualification when the acceptance of such office was relied on to vacate a prior office filled by him, despite the fact that he was not sworn on the Bible when he qualified for the second office. State ex rel. Midgett v. Gray, 159 N.C. 443, 74 S.E. 1050 (1912). See State v. Cansler, 75 N.C. 442 (1876); State v. Long, 76 N.C. 254 (1877).

Conduct Amounting to Surrender of Office. - Where a person had been elected clerk of the superior court, and at the proper time had tendered his bonds, which had been accepted by the court, and he was inducted into office, while the former clerk was present in court, cognizant of what was going on, and did not object thereto, but surrendered up the office and records to the new clerk and retired from the performance of the duties of the office for 12 months thereafter, it was held, in an action in the nature of quo warranto, that such conduct in the old clerk amounted to a surrender of his office to the court, and justified the reception and induction into office of the newly elected clerk. Williams v. Sommers, 18 N.C. 61 (1834).

§ 128-7. Officer to hold until successor qualified.

All officers shall continue in their respective offices until their successors are elected or appointed, and duly qualified.

History

(1848, c. 64, s. 2; R.C., c. 77, s. 3; Code, s. 1872; Rev., s. 2368; C.S., s. 3205.)

Editor's Note. - Session Laws 2005-425, s. 4, provides, in part: "Judges elected in 2006 and thereafter take office accordingly, and as provided by Section 10 of Article VI of the North Carolina Constitution and G.S. 128-7, those in office on the first Monday in December of 2006 or 2008 shall continue until their successors' terms begin and are duly qualified."

CASE NOTES

Holding Over After Expiration of Term. - An officer elected by the people, holding over after his regular term on failure of his successor to qualify, holds over until the place is filled at the next general election, under former N.C. Const., Art. 3, §§ 1 and 13 (now N.C. Const., Art. III, § 7 and Art. VI, § 10). People ex rel. Battle v. McIver, 68 N.C. 467 (1873).

Where an officer has been inducted into his office before the beginning of the term for which he was reelected, one who is appointed to fill the vacancy caused by his death before that term begins, holds only until the expiration of the first term. People ex rel. Worley v. Smith, 81 N.C. 304 (1879).

Panel of commissioners was evenly split and no majority existed because when the opinion and award was filed, a commissioner who concurred in the opinion was not an officer de jure pursuant as the commissioner's term had ended and a successor had been appointed. Therefore, because the commissioner's appointment was void before the opinion and award were entered, and because the commissioner's concurrence in the opinion and award was not the act of a qualified officer - neither de jure nor de facto - the concurrence was a nullity. Baxter v. Danny Nicholson, Inc., 191 N.C. App. 168, 661 S.E.2d 892 (2008).

Holding Over Until Successor Takes Oath. - Although an industrial commissioner had been notified that his service was at an end and that his successor had been appointed, a decision awarding workers' compensation benefits was within the commissioner's authority under N.C. Const., Art. VI, § 10 and G.S. 128-7 because it was made before the successor had taken the oath of office. Baxter v. Danny Nicholson, Inc., 363 N.C. 829, 690 S.E.2d 265 (2010).

Term of Appointee of Judge. - In case of a vacancy in the office of the clerk of the superior court, the appointee of the judge holds only until the next election at which members of the General Assembly are chosen. Rodwell v. Rowland, 137 N.C. 617, 50 S.E. 319 (1905).

Status of Officer Holding Over - De Jure. - Whether regarded as a part of an original term or a new and conditional one by virtue of the statute, the holders are regarded as officers de jure until their successors have been lawfully elected or appointed and have properly qualified. State ex rel. Markham v. Simpson, 175 N.C. 135, 95 S.E. 106 (1918).

Status of Officer Holding Over - De Facto. - Where a clerk of the superior court held over in office until his successor qualified, he was at least clerk de facto; his acts cannot be collaterally impeached, and are valid as to third parties. Threadgill v. Carolina Cent. Ry., 73 N.C. 178 (1875).

The mayor of a municipality was constituted a special court for the municipality by valid act (Chapter 144, Private Laws of 1913). A duly elected and qualified mayor assumed the duties as judge of the special court under claim of authority. By Chapter 1142, Session Laws of 1949, it was provided that said judge should be appointed by the commissioners of the town, and that he should hold no other office. The town commissioners failed to appoint a judge under the provisions of this act. It was held that a sentence imposed by the mayor acting as judge of the special court cannot be collaterally attacked in habeas corpus since he was at least a judge de facto if not de jure. In re Wingler, 231 N.C. 560, 58 S.E.2d 372 (1950).

When Legislature Presumed to Acquiesce in Continuation in Office. - The General Assembly having failed to appoint or provide for the election of successors to the highway and sinking fund commissioners of Madison County, who were appointed for a four- or six-year term by Chapter 341, Public-Local Laws of 1931, the General Assembly having power to terminate their continuance in office, and the General Assembly having power to terminate, change or continue the appointments, it will not be held that it intended to create perpetuities or exclusive emoluments in violation of any of the provisions of former N.C. Const., Art. I (now N.C. Const., Art. VI), and said commissioners continue to hold office with power to discharge the duties thereof. Freeman v. Board of County Comm'rs, 217 N.C. 209, 7 S.E.2d 354 (1940).

Vacancy Created by Resignation. - Where a district court judge resigned upon the discovery of his legal infirmity under G.S. 7A-4.20, his resignation from office created an actual vacancy in that position. Hence, upon the resignation, there was no one legally entitled to hold office by virtue of an election, nor under this section was there an incumbent with the legal right to continue in office until a successor was elected or appointed. The judge, therefore, created a legal as well as an actual vacancy in office under N.C. Const., Art. IV, § 19. People ex rel. Duncan v. Beach, 294 N.C. 713, 242 S.E.2d 796 (1978).

Cited in State ex rel. Hedgpeth v. Allen, 220 N.C. 528, 17 S.E.2d 781 (1941); State ex rel. Hill v. Ponder, 221 N.C. 58, 19 S.E.2d 5 (1942); Ludlum v. State, 227 N.C. App. 92, 742 S.E.2d 580 (2013).

Opinions of Attorney General

Members of the Environmental Management Commission continue to hold their positions until other appointments are made. See opinion of Attorney General to Mr. William Holman, Secretary, North Carolina Department of Environment and Natural Resources, 2000 N.C. AG LEXIS 5 (05/09/2000).

Where an individual elected as district court judge died prior to certification of the election, the defeated incumbent judge may remain in office until the end of his term or until his successor is appointed, whichever occurs later. See opinion of Attorney General to The Honorable Christopher W. Bragg, Union County Courthouse, 2004 N.C. AG LEXIS 12 (11/18/2004).

§ 128-7.1. Failure to qualify creates vacancy.

If any person who has been elected to public office (i) dies or becomes disqualified for the office before qualifying for the office, or (ii) for any reason refuses to qualify for the office, the office shall be declared vacant. Unless otherwise provided by law, such vacancy shall be filled by appointment by the authority having the power to fill vacancies as prescribed by law.

History

(1971, c. 183.)

§ 128-7.2. Qualifications for appointment to fill vacancy in elective office.

No person is eligible for appointment to fill a vacancy in any elective office, whether State or local, unless that person would have been qualified to vote as an elector for that office if an election were to be held on the date of appointment. This section is intended to implement the provisions of Section 8 of Article VI of the Constitution.

History

(2007-391, s. 27(a).)

Cross References. - As to disqualifications for public office, generally, see N.C. Const., Art. VI, § 8.

Editor's Note. - Session Laws 2007-391, s. 27.(c), made this section effective August 19, 2007, and applicable only to appointments made on or after that date.

§ 128-8: Repealed by Session Laws 1981, c. 884, s. 13.

§ 128-9: Repealed by Session Laws 1979, c. 650.

§ 128-10. Citizen to recover funds of county or town retained by delinquent official.

When an official of a county, city or town is liable upon his bond for unlawfully and wrongfully retaining by virtue of his office a fund, or a part thereof, to which the county, city or town is entitled, any citizen and taxpayer may, in his own name for the benefit of the county, city or town, institute suit and recover from the delinquent official the fund so retained. Any county commissioners, aldermen, councilmen or governing board who fraudulently, wrongfully and unlawfully permit an official so to retain funds shall be personally liable therefor; any citizen and taxpayer may, in his own name for the benefit of the county, city or town, institute suit and recover from such county commissioners, aldermen, councilmen, or governing board, the fund so retained. Before instituting suit under this section, the citizen and taxpayer shall file a statement before the county commissioners, treasurer, or other officers authorized by law to institute the suit, setting forth the fund alleged to be retained or permitted to be retained, and demanding that suit be instituted by the authorities authorized to sue within 60 days. The citizen and taxpayer so suing shall receive one-third part, up to the sum of five hundred dollars ($500.00), of the amount recovered, to indemnify him for his services, but the amount received by the taxpayer and citizen as indemnity shall in no case exceed five hundred dollars ($500.00).

History

(1913, c. 80; C.S., s. 3206.)

Legal Periodicals. - For comment on taxpayers' actions, see 13 Wake Forest L. Rev. 397 (1977).

CASE NOTES

Citizens and taxpayers of a county may maintain an action against the commissioners of the county and its defaulting sheriff to enforce collection of the amount of the default upon allegations that the county commissioners have corruptly refused to perform their duties in this respect. Weaver v. Hampton, 201 N.C. 798, 161 S.E. 480 (1931).

This section applies to money collected before its passage, and a citizen and taxpayer, on sufficient and proper averment of default on the part of the county officials, has a right to maintain an action of this character without resort to the provisions of the statute. Waddill v. Masten, 172 N.C. 582, 90 S.E. 694 (1916).

An action by citizens and taxpayers to recover monetary damages from a State officer for misuse of State property while in office is not recognized and may not be maintained. Flaherty v. Hunt, 82 N.C. App. 112, 345 S.E.2d 426, cert. denied, 318 N.C. 505, 349 S.E.2d 859 (1986).

Judge Held Without Authority to Indemnify Plaintiffs. - In an action by taxpayers under this section to recover of county commissioners on account of public funds unlawfully expended, etc., plaintiffs disclaiming any right personally to participate in the recovery, it was held that after a recovery by plaintiffs and the entry of a consent judgment dismissing the appeals, wherein no mention was made of indemnifying plaintiffs for their services, the resident judge was without authority to entertain a petition of one of the original taxpayer plaintiffs for such reimbursement. Hill v. Stansbury, 224 N.C. 356, 30 S.E.2d 150 (1944).

Authority of Commissioners to Allow County Treasurer Additional Salary. - In a civil action by taxpayers against county commissioners and against the treasurer of the county to recover moneys paid to such treasurer in excess of his annual salary as fixed by law, where the evidence tended to show that the county treasurer's salary was fixed at $1,800 a year in 1927, and that in 1931, agreeable to the Machinery Act of that year, the commissioners designated the county treasurer to receive tax prepayments and for this extra service allowed him $1,200 per year additional, and again in 1939 allowed him $240 more per year, both without legislative authority, judgment of nonsuit as to the commissioners was properly allowed under the express provisions of this section, there being no evidence of bad faith, etc., while such judgment as to the county treasurer was reversed. Hill v. Stansbury, 223 N.C. 193, 25 S.E.2d 604 (1943).

Statutory Factors Not Present. - This section does not create an initial cause of action against commissioners, but rather establishes a derivative remedy, requiring both retained funds by a bonded officer and refusal to act by commissioners. The allegations and the pleadings indicate that neither of these factors were present in action wherein county commissioners expended county funds to produce and distribute information concerning referenda regarding redistricting and merger or nonmerger of county public schools. Bardolph v. Arnold, 112 N.C. App. 190, 435 S.E.2d 109, cert. denied, 335 N.C. 552, 439 S.E.2d 141 (1993).

When taxpayers sued county commissioners for entering into a contract which benefitted one of the commissioners, they did not have a claim under G.S. 128-10 because they did not show a public official who was liable on his bond or commissioners who refused to take action against such official, and the existence of insurance coverage issued by the North Carolina Counties Liability and Property Insurance Pool Fund did not provide a bond, as insurance and suretyship were not synonymous terms. Gibbs v. Mayo, 162 N.C. App. 549, 591 S.E.2d 905, cert. denied, 358 N.C. 543, 599 S.E.2d 45 (2004).

§ 128-11. Trust funds to be kept separate.

Any sheriff, treasurer or other officer of any county, city, town or other political subdivision of the State, receiving, by virtue of his office, public money or money to be held by him in trust shall keep or deposit such money or the credits or other evidence thereof separate and apart from his own funds and shall not, at any time, apply such money to his own use or benefit or intermingle the same in any manner with credits or funds of his own.

History

(1931, c. 77, s. 1.)

CASE NOTES

Cited in Patterson v. Southern Ry., 214 N.C. 38, 198 S.E. 364 (1938).

§ 128-12. Violations to be reported; misdemeanors.

It shall be the duty of the director of the Local Government Commission to report to the district attorney of the district any violation of G.S. 128-11 of which he may have knowledge, and any violation of such section shall be unlawful and shall constitute a Class 1 misdemeanor.

History

(1931, c. 60, s. 3; 1931, c. 77, s. 2; 1973, c. 47, s. 2; 1993, c. 539, s. 943; 1994, Ex. Sess., c. 24, s. 14(c).)

CASE NOTES

Cited in Patterson v. Southern Ry., 214 N.C. 38, 198 S.E. 364 (1938).

§ 128-13. Officers compensated from fees in certain counties to render statement; penalty; proceeds to school fund.

Every clerk of the superior court, register of deeds, sheriff, coroner, surveyor, or other county officer, whose compensation or services performed shall be derived from fees, shall render to the board of county commissioners of their respective counties, on the first Monday in December of each year, a statement, verified under oath, showing: first, the total gross amount of all fees collected during the preceding fiscal year; second, the total amount paid out during the preceding fiscal year for clerical or office assistance. Any county officer, subject to this section, who refuses or fails to file such report as above provided, on or before the first Monday in December, shall be subject to a fine of twenty-five dollars ($25.00) and ten dollars ($10.00) additional for each day or fraction of a day such failure shall continue. The board of county commissioners shall assess and collect the penalty above provided for, and supply same to the general school fund of the county. The first report under this section shall be for the fiscal year beginning December 12, 1913.

This section applies only to the Counties of Anson, Bertie, Bladen, Cabarrus, Carteret, Chowan, Currituck, Duplin, Halifax, Harnett, Haywood, Hertford, Johnston, Jones, Moore, Pender, Perquimans, Pitt, Randolph, Richmond, Rowan, Scotland, Union, Vance, Warren, Washington, Wayne, Wilson.

History

(1913, c. 97; Ex. Sess., 1913, c. 10; 1935, c. 390.)

CASE NOTES

Power of Legislature to Regulate Pay. - One who accepts a public office does so, with well defined exceptions as to certain constitutional officers, under the authority of the legislature to change the emoluments he is to receive for the performance of his duties, at any time, and while the office of sheriff is a constitutional one, the regulation of his fees is within the control of the legislature, and the same may be reduced during the term of the incumbent or he may therein be compensated by a salary instead of on a fee basis. Mills v. Deaton, 170 N.C. 386, 87 S.E. 123 (1915).

Construction of Act Changing Pay from Salary to Fee Basis. - An act changing the pay of county officials from a salary to a fee basis, taking prospective effect from the expiration of the terms of the present incumbents, will be presumed to have a sensible and just intent, with knowledge of existing conditions and will not be construed as to apply to deprive the incumbent sheriff of the emoluments of his term by requiring that he deliver the tax lists to his successor. Commissioners of Orange County v. Bain, 173 N.C. 377, 92 S.E. 176 (1917).

§ 128-14. Identification cards for field agents or deputies of State departments.

Every field agent or deputy of the various State departments who is authorized to collect money, audit books, inspect premises of individual or business firms and/or any other field work pertaining to the department which he represents, shall be furnished with an identification card signed by the head of the department represented by him, certifying that the said field agent or deputy has authority to represent the department, and such identification card shall carry a photographic likeness of said representative.

History

(1937, c. 236.)

§ 128-15. Employment preference for veterans and their spouses or surviving spouses.

It shall be the policy of the State of North Carolina that, in appreciation for their service to this State and this country during a period of war, and in recognition of the time and advantage lost toward the pursuit of a civilian career, veterans shall be granted preference in employment with every State department, agency, and institution.
As used in this section:
1. "A period of war" includes World War I (April 16, 1917, through November 11, 1918), World War II (December 7, 1941, through December 31, 1946), the Korean Conflict (June 27, 1950, through January 31, 1955), the period of time between January 31, 1955, and the end of the hostilities in Vietnam (May 7, 1975), or any other campaign, expedition, or engagement for which a campaign badge or medal is authorized by the United States Department of Defense.
2. "Veteran" means a person who served in the Armed Forces of the United States on active duty, for reasons other than training, and has been discharged under other than dishonorable conditions.
3. "Eligible veteran" means:
  1. A veteran who served during a period of war; or
  2. The spouse of a disabled veteran; or
  3. The surviving spouse or dependent of a veteran who dies on active duty during a period of war either directly or indirectly as the result of such service; or
  4. A veteran who suffered a disabling injury for service-related reasons during peacetime; or
  5. The spouse of a veteran described in subdivision d. of this subsection; or
  6. The surviving spouse or dependent of a person who served in the Armed Forces of the United States on active duty, for reasons other than training, who dies for service-related reasons during peacetime.
Hereafter, in all evaluations of applicants for positions with this State or any of its departments, institutions or agencies, a preference shall be awarded to all eligible veterans who are citizens of the State and who served the State or the United States honorably in the military forces of this State or of the United States during a period of war. This preference applies to initial employment with the State and extends to other employment events including subsequent hirings, promotions, reassignments, and horizontal transfers.
The provisions of this section shall be subject to the provisions of Article 1 of Chapter 165 of the General Statutes, and Parts 13 and 19 of Article 9 of Chapter 143B of the General Statutes.

History

(1939, c. 8; 1953, c. 1332; 1967, c. 536; 1987 (Reg. Sess., 1988), c. 1064, s. 2; 2007-286, s. 1; 2011-183, s. 96.)

Editor's Note. - Session Laws 2007-286, s. 3, provides: "The State Personnel Commission [now State Human Resources Commission] and State agencies, departments, and institutions shall adopt rules to implement this act."

Effect of Amendments. - Session Laws 2007-286, s. 1, effective July 27, 2007, added the last sentence in subsection (c).

Session Laws 2011-183, s. 96, effective June 20, 2011, substituted "in the military forces of this State or of the United States" for "in either the army, navy, marine corps, nurses' corps, air corps, air force, coast guard, or any of the armed services" in the first sentence of subsection (c).

CASE NOTES

Construction with Other Sections. - Pursuant to G.S. 126-83, employees of the System designated in G.S. 126-5(a)(2) are expressly excluded from the preference afforded by G.S. 126-80 but, if qualified under this section, are entitled to the veterans preference thereunder applicable to all employees of State departments, agencies and institutions. Wright v. Blue Ridge Area Auth., 134 N.C. App. 668, 518 S.E.2d 772, cert. denied, 351 N.C. 122, 541 S.E.2d 472 (1999).

Minimum Requirements for Position Must Be Met. - Although this section awards a preference rating of 10 points to veterans who apply for employment with the State or any of its departments, it does not state that the minimum requirements specified for a position may be ignored. Davis v. Vance County Dep't of Social Servs., 91 N.C. App. 428, 372 S.E.2d 88 (1988).

Refusal to Allow Education Equivalencies to Fulfill Requirements Not Error. - The State Personnel Commission's [now State Human Resources Commission's] refusal to allow education equivalencies to fulfill the minimum education requirement of graduation from a four-year college for a position opening in the Department of Social Services, was not arbitrary and capricious where petitioning employee's history, including 20 years of clerical/administrative experience and service during the Vietnam conflict, although noteworthy and commendable, failed to meet the requirements under the department's prescribed and published basis. Davis v. Vance County Dep't of Social Servs., 91 N.C. App. 428, 372 S.E.2d 88 (1988).

§ 128-15.1: Repealed by Session Laws 1987 (Regular Session, 1988), c. 1064, s. 4.

§ 128-15.2. Appointment of acting heads of certain agencies.

In every case where a State board or commission is authorized by statute to appoint the executive head of a State agency or institution, that board or commission may appoint an acting executive head of that agency or institution to serve

During the physical or mental incapacity of the regular holder of the office to discharge the duties of his office,
During the continued absence of the regular holder of the office, or
During a vacancy in the office and pending the selection and qualification of a person to serve for the unexpired term.

An acting executive head of a State agency or institution appointed in accordance with this section may perform any act and exercise any power which a regularly selected holder of such office could lawfully perform and exercise. All powers granted to an acting executive head of a State agency or institution under this section shall expire immediately

(1) Upon the termination of the incapacity of the officer in whose stead he acts,

(2) Upon the return of the officer in whose stead he acts, or

(3) Upon the selection and qualification of a person to serve for the unexpired term.

Each State board or commission may determine (after such inquiry as it deems appropriate) that the executive head of a State agency or institution whom it is authorized by statute to appoint is physically or mentally incapable of performing the duties of his office. Each such board or commission may also determine that such incapacity has terminated.

History

(1959, c. 284, s. 1.)

§ 128-15.3. Discrimination against handicapped prohibited in hiring; recruitment, etc., of handicapped persons.

There shall be no discrimination in the hiring policies of the State Human Resources system against any applicant for employment based upon any physical defect or impairment of the applicant unless the defect or impairment to some degree prevents the applicant from performing the duties required by the employment sought.

It shall be the policy of this State to give positive emphasis to the recruitment, evaluation, and employment of physically handicapped persons in State government. To carry out the provisions of this section, the Office of State Human Resources shall develop methods and programs to assist and encourage the departments, institutions, and agencies of State government in carrying out this policy and to provide for appropriate study and review of the employment of handicapped persons.

History

(1971, c. 748; 1973, c. 1299; 2013-382, s. 9.1(c); 2014-115, s. 55.4(c).)

Editor's Note. - Session Laws 2013-382, s. 9.1(b), provides: "The following entities and positions created by Chapter 126 of the General Statutes are hereby renamed by this act:

"(1) The State Personnel Commission is renamed the 'North Carolina Human Resources Commission.'

"(2) The Office of State Personnel is renamed the 'North Carolina Office of State Human Resources.'

"(3) The State Personnel Director is renamed the 'Director of the North Carolina Office of State Human Resources.' "

Session Laws 2013-382, s. 9.1(c), provides: "Modification of References. - The Revisor of Statutes shall delete any references in the General Statutes to the State Personnel Act, State Personnel Commission, the State Personnel Director, and the Office of State Personnel (or any derivatives thereof) and substitute references to the North Carolina Human Resources Act, the State Human Resources Commission, the Director of the Office of State Human Resources, and the Office of Human Resources (or the appropriate derivative thereof) to effectuate the renaming set forth in this section wherever conforming changes are necessary."

Session Laws 2013-382, s. 9.2, provides: "No action or proceeding pending on the effective date of this section [August 21, 2013], brought by or against the State Personnel Commission, the Director of the Office of State Personnel, or the Office of State Personnel, shall be affected by any provision of this section, but the same may be prosecuted or defended in the new name of the Commission, Director, and Office. In these actions and proceedings, the renamed Commission, Director, or Office shall be substituted as a party upon proper application to the courts or other public bodies."

Session Laws 2013-382, s. 9.3, provides: "Any business or other matter undertaken or commanded by the former State Personnel Commission, State Personnel Director, or Office of State Personnel regarding any State program, office, or contract or pertaining to or connected with their respective functions, powers, obligations, and duties that are pending on the date this act becomes effective [August 21, 2013] may be conducted and completed by the Commission, Director, or Office in the same manner and under the same terms and conditions and with the same effect as if conducted and completed by the formerly named commission, director, or office."

Effect of Amendments. - Session Laws 2013-382, s. 9.1(c), effective August 21, 2013, substituted "Office of State Human Resources" for "Office of State Personnel" in the second paragraph.

Session Laws 2014-115, s. 55.4(c), effective August 11, 2014, substituted "State Human Resources system" for "State Personnel System" in the first paragraph.

ARTICLE 2. Removal of Unfit Officers.

Sec.

§ 128-16. Officers subject to removal; for what offenses.

Any sheriff or police officer shall be removed from office by the judge of the superior court, resident in or holding the courts of the district where said officer is resident upon charges made in writing, and hearing thereunder, for the following causes:

For willful or habitual neglect or refusal to perform the duties of his office.
For willful misconduct or maladministration in office.
For corruption.
For extortion.
Upon conviction of a felony.
For intoxication, or upon conviction of being intoxicated.

History

(P.L. 1913, c. 761, s. 20; 1919, c. 288; C.S., s. 3208; 1959, c. 1286; 1961, c. 991; 1973, c. 108, s. 82.)

Local Modification. - Onslow: 1965, c. 753.

Cross References. - As to action by Attorney General, see G.S. 1-515.

As to removal for receiving compensation of subordinates, see G.S. 128-4.

CASE NOTES

Purpose of Statute. - Officer may be removed for misconduct or failure to perform the duties of his office, whether such failures were willful or habitually negligent; the statute was evidently enacted for the protection of the public, and not for the punishment of the delinquent officer. State ex rel. Hyatt v. Hamme, 180 N.C. 684, 104 S.E. 174 (1920); State v. Hockaday, 265 N.C. 688, 144 S.E.2d 867 (1965).

This section does not purport to create a criminal offense, nor does any provision of this Article provide for prosecution by indictment or otherwise for any criminal offense. State v. Hockaday, 265 N.C. 688, 144 S.E.2d 867 (1965).

Proceeding under this section is not a criminal prosecution for punishment but is a civil proceeding. State v. Hockaday, 265 N.C. 688, 144 S.E.2d 867 (1965).

Actions under this Article are neither civil nor criminal, but are merely an inquiry into the conduct of the office holder to determine whether he is unfit to continue in office. State ex rel. Leonard v. Huskey, 65 N.C. App. 550, 309 S.E.2d 726 (1983).

A proceeding under this Article is neither a civil nor criminal action. State v. Felts, 79 N.C. App. 205, 339 S.E.2d 99 (1986).

The North Carolina Rules of Civil Procedure, G.S. 1A-1, do not apply to actions brought pursuant to this Article. State ex rel. Leonard v. Huskey, 65 N.C. App. 550, 309 S.E.2d 726 (1983).

Attorney General Is Not Authorized to Bring An Action Under This Article. - Neither G.S. 114-2(1), 114-11.6 nor 128-17 gives the Attorney General or his designee the authority to file an action pursuant to this Article. State v. Felts, 79 N.C. App. 205, 339 S.E.2d 99 (1986).

Limited to Advising District Attorney. - Neither the Attorney General nor his designee is given specific authority to file an action under this Article in place of the district authority or the county attorney. Absent this statutory authorization, the Attorney General is limited to consulting with and advising the district attorney in carrying out his statutory duty to initiate a petition for removal from office of a sheriff or police officer. State v. Felts, 79 N.C. App. 205, 339 S.E.2d 99 (1986), expressing no opinion on whether the Attorney General could have brought a similar action under his common law powers.

Failure to Take Oath Does Not Exempt from Liability. - There can be no doubt that if one elected to an office takes possession of it, engages in the exercise of its duties, and misbehaves by taking unlawful and extortionate fees, that he will be liable for such misbehavior, notwithstanding the fact that he failed to take the oath of office. State v. Cansler, 75 N.C. 442 (1876).

Sufficiency of Evidence. - Under this section as it stood before the 1973 amendment, it was held that the evidence in proceedings to remove a prosecuting attorney from office under this section was sufficient to sustain an order removing him when he admitted that he attempted to induce, and did induce, a person to violate the statutes of the State in participating in acts made an offense for immorality, etc., whatever his intent may have been therein. State ex rel. Hyatt v. Hamme, 180 N.C. 684, 104 S.E. 174 (1920), wherein it was also held that defendant could not complain because he was removed not in accordance with the specifications alleged in the petition, but upon his own evidence.

Hearing Required. - Because of the severe adverse consequences possible for the office holder in an action under this Article, fundamental fairness entitles such office holder to a hearing which meets the basic requirements of due process, requirements which must include adequate time and opportunity to prepare to respond to the accusations against him. State ex rel. Leonard v. Huskey, 65 N.C. App. 550, 309 S.E.2d 726 (1983).

Jury Not Required. - The proceedings under this section do not require an issue to be submitted to the jury. A public office is not a property right under former N.C. Const., Art. I, § 19 (now N.C. Const., Art. I, § 25). State ex rel. Hyatt v. Hamme, 180 N.C. 684, 104 S.E. 174 (1920).

Time of Trial. - Although this Article requires a prompt trial, its terms are broad enough to allow the trial court to set the time of trial within his discretion, considering, among other things, the nature of the charges brought and the terms of court available for trial. State ex rel. Leonard v. Huskey, 65 N.C. App. 550, 309 S.E.2d 726 (1983).

Appeal from Superior Court. - An appeal from the judgment of the superior court judge that a prosecuting attorney be removed for "willful misconduct or maladministration in office," etc., is upon questions of law and legal inferences, if justified by the findings of facts supported by evidence, N.C. Const., Art. VI, § 8; and the appeal is allowed by G.S. 1-277. State ex rel. Hyatt v. Hamme, 180 N.C. 684, 104 S.E. 174 (1920), decided under this section as it stood before the 1973 amendment.

Enjoining Vacating of Office by Commissioners Before They Have Qualified. - An action to enjoin newly elected county commissioners, who had not yet qualified, from declaring a public office vacant, and electing a successor, is properly dismissed as premature. Cozart v. Fleming, 123 N.C. 547, 31 S.E. 822 (1898).

Former G.S. 7-115 and this Article were not in pari materia. State ex rel. Swain v. Creasman, 260 N.C. 163, 132 S.E.2d 304 (1963).

Cited in State ex rel. Swain v. Creasman, 255 N.C. 546, 122 S.E.2d 358 (1961); Jones v. Buchanan, 164 F. Supp. 2d 734 (W.D.N.C. 2001); Harmon v. Buchanan, 164 F. Supp. 2d 649 (W.D.N.C. 2001).

§ 128-17. Petition for removal; county attorney to prosecute.

The complaint or petition shall be entitled in the name of the State of North Carolina, and may be filed upon the relation of any five qualified electors of the county in which the person charged is an officer, upon the approval of the county attorney of such county, or the district attorney of the district, or by any such officer upon his own motion. It shall be the duty of the county attorney or district attorney to appear and prosecute this proceeding.

History

(P.L. 1913, c. 761, s. 21; 1919, c. 288; C.S., s. 3209; 1973, c. 47, s. 2.)

Legal Periodicals. - For a survey of 1996 developments in constitutional law, see 75 N.C.L. Rev. 2281 (1997).

CASE NOTES

The North Carolina Rules of Civil Procedure, G.S. 1A-1, do not apply to actions brought pursuant to this Article. State ex rel. Leonard v. Huskey, 65 N.C. App. 550, 309 S.E.2d 726 (1983).

Who May File Petition for Removal. - The clear language of this section specifies that only three classes of persons may file a petition for removal: (1) Five qualified electors, upon the approval of the county attorney or district attorney; (2) the county attorney; or (3) the district attorney. State v. Felts, 79 N.C. App. 205, 339 S.E.2d 99 (1986).

Attorney General Is Not Authorized to Bring An Action Under This Article. - This section does not give the Attorney General or his designee the authority to file an action pursuant to this Article. State v. Felts, 79 N.C. App. 205, 339 S.E.2d 99 (1986), expressing no opinion on whether the Attorney General could have brought a similar action under his common law powers.

Neither G.S. 114-2(1) nor G.S. 114-11.6 authorizes the Attorney General or his designee to bring a proceeding under this Article for removal of a sheriff or police officer. State v. Felts, 79 N.C. App. 205, 339 S.E.2d 99 (1986).

Attorney General May Not Delegate Authority to File Petition. - There is no provision in this Article authorizing the district attorney or the county attorney to delegate to the Attorney General his duty to file the petition. State v. Felts, 79 N.C. App. 205, 339 S.E.2d 99 (1986).

Cited in State ex rel. Swain v. Creasman, 255 N.C. 546, 122 S.E.2d 358 (1961); State ex rel. Swain v. Creasman, 260 N.C. 163, 132 S.E.2d 304 (1963); Jones v. Buchanan, 164 F. Supp. 2d 734 (W.D.N.C. 2001); Harmon v. Buchanan, 164 F. Supp. 2d 649 (W.D.N.C. 2001).

§ 128-18. Petition filed with clerk; what it shall contain; answer.

The accused shall be named as defendant, and the petition shall be signed by some elector, or by such officer. The petition shall state the charges against the accused, and may be amended, and shall be filed in the office of the clerk of the superior court of the county in which the person charged is an officer. The accused may at any time prior to the time fixed for hearing file in the office of the clerk of the superior court his answer, which shall be verified.

History

(P.L. 1913, c. 761, s. 22; 1919, c. 288; C.S., s. 3210.)

CASE NOTES

The North Carolina Rules of Civil Procedure, G.S. 1A-1, do not apply to actions brought pursuant to this Article. State ex rel. Leonard v. Huskey, 65 N.C. App. 550, 309 S.E.2d 726 (1983).

Cited in State v. Felts, 79 N.C. App. 205, 339 S.E.2d 99 (1986).

§ 128-19. Suspension pending hearing; how vacancy filled.

Upon the filing of the petition in the office of the clerk of the superior court, and the presentation of the same to the judge, the judge may suspend the accused from office if in his judgment sufficient cause appear from the petition and affidavit, or affidavits, which may be presented in support of the charges contained therein. In case of suspension, as herein provided, the temporary vacancy shall be filled in the manner provided by law for filling of the vacancies in such office.

History

(P.L. 1913, c. 761, s. 23; 1919, c. 288; C.S., s. 3211.)

CASE NOTES

The North Carolina Rules of Civil Procedure, G.S. 1A-1, do not apply to actions brought pursuant to this Article. State ex rel. Leonard v. Huskey, 65 N.C. App. 550, 309 S.E.2d 726 (1983).

§ 128-20. Precedence on calendar; costs.

In the trial of the cause in the superior court the cause shall be advanced and take precedence over all other causes upon the court calendar, and shall be heard at the next session after the petition is filed, provided the proceedings are filed in said court in time for said action to be heard. The superior court shall fix the time of hearing. If the final termination of such proceedings be favorable to any accused officer, said officer shall be allowed the reasonable and necessary expense, including a reasonable attorney fee, to be fixed by the judge, he has incurred in making his defense, by the county, if he be a county officer, or by the city or town in which he holds office, if he be a city officer. If the action is instituted upon the complaint of citizens as herein provided, and it appears to the court that there was no reasonable cause for filing the complaint, the costs may be taxed against the complaining parties.

History

(P.L. 1913, c. 761, s. 24; 1919, c. 288; C.S., s. 3212; 1973, c. 108, s. 83.)

CASE NOTES

The purpose of this section is to ensure that charges of misconduct will be resolved as quickly as possible, minimizing the risk of loss of public confidence in law enforcement. State ex rel. Leonard v. Huskey, 65 N.C. App. 550, 309 S.E.2d 726 (1983).

The North Carolina Rules of Civil Procedure, G.S. 1A-1, do not apply to actions brought pursuant to this Article. State ex rel. Leonard v. Huskey, 65 N.C. App. 550, 309 S.E.2d 726 (1983).

Applied in State ex rel. Swain v. Creasman, 260 N.C. 163, 132 S.E.2d 304 (1963).

ARTICLE 3. Retirement System for Counties, Cities and Towns.

Sec.

(Effective January 1, 2022) Membership.

§ 128-21. Definitions.

The following words and phrases as used in this Article, unless a different meaning is plainly required by the context, shall have the following meanings:

"Accumulated contribution" shall mean the sum of all amounts deducted from the compensation of a member and credited to his individual account in the annuity savings fund, together with regular interest thereon, as provided in G.S. 128-30, subsection (b).
"Actuarial equivalent" shall mean a benefit of equal value when computed upon the basis of actuarial assumptions as shall be adopted by the Board of Trustees.
"Annuity" shall mean payments for life derived from the accumulated contribution of a member. All annuities shall be payable in equal monthly installments.
"Annuity reserve" shall mean the present value of all payments to be made on account of any annuity or benefit in lieu of any annuity computed at regular interest upon the basis of such mortality tables as shall be adopted by the Board of Trustees.
"Authorized representatives who are assisting the Retirement Systems Division staff" means only other staff of the Department of State Treasurer, staff of the Department of Justice, or persons providing internal auditing assistance required under G.S. 143-746(b).
"Average final compensation" shall mean the average annual compensation, not including any terminal payments for unused sick leave, of a member during the four consecutive calendar years of creditable service producing the highest such average; but shall not include any compensation, 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 and wages. Payout of vacation leave shall be included in "average final compensation" only if the payout is received by the member during the four consecutive calendar years of membership service producing the highest average annual compensation of the member.
"Beneficiary" shall mean any person in receipt of a pension, an annuity, a retirement allowance or other benefit as provided by this Article.
"Board of Trustees" shall mean the Board provided for in G.S. 128-28 to administer the Retirement System.
1. "Compensation" shall mean all salaries and wages prior to any reduction pursuant to sections 125, 401(k), 403(b), 414(h)(2), and 457 of the Internal Revenue Code, not including any terminal payments for unused sick leave, derived from public funds which are earned by a member of the Retirement System for service as an employee in the unit of the Retirement System for which he is performing full-time work. In addition to the foregoing, "compensation" shall include: (7a) a. "Compensation" shall mean all salaries and wages prior to any reduction pursuant to sections 125, 401(k), 403(b), 414(h)(2), and 457 of the Internal Revenue Code, not including any terminal payments for unused sick leave, derived from public funds which are earned by a member of the Retirement System for service as an employee in the unit of the Retirement System for which he is performing full-time work. In addition to the foregoing, "compensation" shall include:
  1. Performance-based compensation (regardless of whether paid in a lump sum, periodic installments, or on a monthly basis);
  2. Conversion of additional benefits to salary (additional benefits such as health, life, or disability plans), so long as the benefits are other than mandated by State law or regulation;
  3. 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";
  4. Payout of vacation leave so long as such payouts are permitted by applicable law and regulation;
  5. Employee contributions to eligible deferred compensation plans; and
  6. Effective July 1, 2009, payment of military differential wages.
2. "Compensation" shall not include any payment, 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 and wages. Notwithstanding any other provision of this Chapter, "compensation" shall not include:
  1. Supplement/allowance provided to employee to purchase additional benefits such as health, life, or disability plans;
  2. Travel supplement/allowance (nonaccountable allowance plans);
  3. Employer contributions to eligible deferred compensation plans;
  4. Employer-provided fringe benefits (additional benefits such as health, life, or disability plans);
  5. Reimbursement of uninsured medical expenses;
  6. Reimbursement of business expenses;
  7. Reimbursement of moving expenses;
  8. Reimbursement/payment of personal expenses;
  9. Incentive payments for early retirement;
  10. Bonuses paid incident to retirement;
  11. Contract buyout/severance payments; and
  12. Payouts for unused sick leave.
3. In the event an employer reports as "compensation" payments not specifically included or excluded as "compensation", such payments shall be "compensation" for retirement purposes only if the employer pays the Retirement System the additional actuarial liability created by such payments.
"Compliance investigation" means an independent review or examination by Retirement Systems Division staff or authorized representatives who are assisting the Retirement Systems Division staff of records, activities, actions, or decisions by employers or other affiliated or associated entities having an impact on a Retirement System or benefits administered by the Board of Trustees. The purpose of a compliance investigation is to help detect errors and ensure compliance and full accountability in the use of pension funds.
"Consumer Price Index" shall mean the Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, all items, not seasonally adjusted, standard reference base, as published by the Bureau of Labor Statistics of the U.S. Department of Labor.
"Creditable service" shall mean the total of "prior service" plus "membership service" plus service, both noncontributory and purchased, for which credit is allowable as provided in G.S. 128-26. In no event, however, shall "creditable service" be deemed "membership service" for the purpose of determining eligibility for benefits accruing under this Chapter.
"Duly acknowledged" means notarized, including electronic notarization, or verified through an identity authentication service approved by the Department of State Treasurer.
"Earnable compensation" shall mean the full rate of the compensation that would be payable to an employee if he worked the full normal working time, including any allowance of maintenance or in lieu thereof received by the member.
"Employee" shall mean any person who is regularly employed in the service of and whose salary or compensation is paid by the employer as defined in subdivision (11) of this section, whether employed or appointed for stated terms or otherwise, except teachers in the public schools and except such employees who hold office by popular election as are not required to devote a major portion of their time to the duties of their office. "Employee" also means all full-time, paid firemen who are employed by any fire department that serves a city or county or any part of a city or county and that is supported in whole or in part by municipal or county funds. "Employee" also includes any participant whose employment is interrupted by reason of service in the Uniformed Services, as that term is defined in section 4303(16) of the Uniformed Services Employment and Reemployment Rights Act, Public Law 103-353, if that participant was an employee at the time of the interruption; if the participant does not return immediately after that service to employment with a covered employer in this System, then the participant shall be deemed "in service" until the date on which the participant was first eligible to be separated or released from his or her involuntary military service. In all cases of doubt the Board of Trustees shall decide who is an employee. On and after August 1, 2001, a person who is a nonimmigrant alien and who otherwise meets the requirements of this subdivision shall not be excluded from the definition of "employee" solely because the person holds a temporary or time-limited visa.
"Employer" shall mean any county, incorporated city or town, the board of alcoholic control of any county or incorporated city or town, the North Carolina League of Municipalities, and the State Association of County Commissioners. "Employer" shall also mean any separate, juristic political subdivision of the State as may be approved by the Board of Trustees upon the advice of the Attorney General.
"Filing" when used in reference to an application for retirement shall mean the receipt of an acceptable application on a form provided by the Retirement System.
"Firefighter" means a person (i) who is a full-time paid employee of an employer that participates in the Local Governmental Employees' Retirement System and maintains a fire department certified by the North Carolina Department of Insurance and (ii) who is actively serving in a position with assigned primary duties and responsibilities for the prevention, detection, and suppression of fire.
"Fraud investigation" means an independent review or examination by Retirement Systems Division staff or authorized representatives who are assisting the Retirement Systems Division staff of records, activities, actions, or decisions by employers or other affiliated or associated entities having an impact on the Retirement System. The purpose of a fraud investigation is to help detect and prevent fraud and to ensure full accountability in the use of pension funds.
"Law Enforcement Officer" means a full-time 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 Article 1 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 means 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.
"Medical board" shall mean the board of physicians provided for in G.S. 128-28, subsection (l).
"Member" shall mean any person included in the membership of the Retirement System as provided in G.S. 128-24.
"Membership service" shall mean service as an employee rendered while a member of the Retirement System or membership service in a North Carolina Retirement System that has been transferred into this system.
"Pension" shall mean payments for life derived from money provided by the employer. All pensions shall be payable in equal monthly installments.
"Pension reserve" shall mean the present value of all payments to be made on account of any pension or benefit in lieu of any pension computed at regular interest upon the basis of such mortality tables as shall be adopted by the Board of Trustees.
"Prior service" shall mean the service of a member rendered before the date he becomes a member of the System, certified on his prior service certificate and allowable as provided by G.S. 128-26. No prior service shall be allowed at any employer for which participation is adopted and approved by the Board of Trustees in this Retirement System on or after August 1, 2015.
"Regular interest" shall mean interest compounded annually at such rate as shall be determined by the Board of Trustees in accordance with G.S. 128-29, subsection (b).
"Regularly employed" shall mean employment in a position for which the duties require not less than 1,000 hours of work in a calendar year, provided that the term shall not include any individuals whose employment is considered "temporary employment" as defined in subdivision (22b) of this section or "statutorily-required interim employment" as defined in subdivision (22a) of this section.
"Rescue squad worker" means a person (i) who is a full-time paid employee of an employer that participates in the Local Governmental Employees' Retirement System and maintains a rescue squad or emergency medical services team certified by the North Carolina Department of Insurance or the Department of Health and Human Services and (ii) who is actively serving in a position with assigned primary duties and responsibilities for the alleviation of human suffering and assistance to persons who are in difficulty, who are injured, or who become suddenly ill, by providing proper and efficient care or emergency medical services.
"Retirement" under this Article shall mean the commencement of monthly retirement benefits, along with the termination of employment and the complete separation from active service with no intent or agreement, expressed or implied, to return to service. A retirement allowance under the provisions of this Article may only be granted upon retirement of a member. In order for a member's retirement to become effective in any month, the member must perform no work for a participating employer, including part-time, temporary, substitute, or contractor work, at any time during the same month immediately following the effective first day of retirement.
"Retirement allowance" shall mean the sum of the annuity and the pension, or any optional benefit payable in lieu thereof.
"Retirement System" shall mean the North Carolina Local Governmental Employees' Retirement System as defined in this Article.
"Service" shall mean service as an employee as described in subdivision (10) of this section and paid for by the employer as described in subdivision (11) of this section.
"Statutorily-required interim employment" shall mean individuals whose employment for an employer as defined in subdivision (11) of this section occurs as a result of the individual's designation by the city council as an interim city manager, as provided in G.S. 160A-150 for a period not to exceed 12 months on a nonrecurring basis, or as a result of the individual's designation by the board of commissioners as an interim county manager, as provided in G.S. 153A-84 for a period not to exceed 12 months on a nonrecurring basis.
"Temporary employment" shall mean employment for a limited term, in no case to exceed 12 consecutive months on a nonrecurring basis, for an employer as defined in subdivision (11) of this section.
"Year" shall mean the regular fiscal year beginning July 1, and ending June 30; in the following calendar year unless otherwise defined by regulation of the Board of Trustees.

History

(1939, c. 390, s. 1; 1941, c. 357, s. 1; 1943, c. 535; 1945, c. 526, s. 1; 1947, c. 833, ss. 1, 2; 1949, c. 231, ss. 1, 2; 1949, c. 1015; 1959, c. 491, ss. 1, 2; 1961, c. 515, s. 5; 1965, c. 781; 1971, c. 325, ss. 1-4; 1975, 2nd Sess., c. 983, s. 125; 1977, c. 316, ss. 1, 2; 1981, c. 557, ss. 1, 2; 1985, c. 479, s. 196(b); c. 649, s. 3; 1991, c. 51, s. 1; 1991 (Reg. Sess., 1992), c. 762, ss. 1, 2; 1997-144, s. 1; 1999-167, ss. 1, 2; 1999-456, s. 37; 2001-426, s. 1; 2003-359, ss. 13, 14; 2009-66, ss. 2(a), 6(f), (j); 2011-92, s. 1; 2011-294, s. 4; 2012-185, s. 2(a); 2013-288, ss. 3(b), 4(b); 2014-97, s. 4(b); 2015-164, s. 8; 2015-168, s. 5; 2017-125, s. 1(b); 2017-128, s. 1(e), (f), (g); 2020-48, s. 1.1(a); 2021-75, s. 3.1(a).)

Local Modification. - Catawba: 1995, c. 306, s. 1; 1995 (Reg. Sess., 1996), c. 693, s. 2; Mecklenburg: 1995, c. 532, s. 1; 1995 (Reg. Sess., 1996), c. 693, s. 1; city of Asheville: 1981, c. 737; city of Charlotte: 1947, c. 926, amended by Session Laws 1949, c. 734; 1951, c. 387; 1965, c. 575; 1969, c. 132; 1971, c. 860; c. 903, s. 2; 1973, c. 267; 1983, c. 506; (as to Art. 3) 1985, c. 185; 1987, c. 506; 1987 (Reg. Sess., 1988), c. 1033; 1989, c. 248; c. 770, s. 45; 1991 (Reg. Sess., 1992), c. 830; c. 1030, s. 51.6; 1993 (Reg. Sess., 1994), c. 640, s.1; 1995, c. 171, s. 1; 1999-100, s. 1; 2001-22, 2002-43, ss. 1-5; 2006-117, s. 1, 2; 2010-7, s. 1; 2017-71, s. 1; (as to Article 3) city of Fayetteville: 1998-61; city of High Point: 1987, c. 327; town of Stovall: 2008-52, s. 1 (as to prior service credits).

Open Enrollment - Contributory Death Benefit. - Session Laws 2007-388, s. 1, provides: "Notwithstanding any section of law or any rules and regulations adopted by the Boards of Trustees to the contrary, the Retirement Systems Division of the Department of State Treasurer shall allow for an open enrollment period in the Contributory Death Benefit for Retired Members of the Teachers' and State Employees' Retirement System, the Local Governmental Employees' Retirement System, the Consolidated Judicial Retirement System, and the Legislative Retirement System. This open enrollment period shall begin February 1, 2008, and end May 31, 2008. The Retirement Systems Division shall send notice by U.S. mail of the open enrollment period to all retirees who elected not to be covered under this benefit or who failed to make any election at the time of their retirement and shall send a second notice by U.S. mail to any such retiree who fails to make an election within 60 days of the notification of the open enrollment period. Notice, at minimum, shall consist of notification of the open enrollment period and the consequences of failure to respond within the specified time frames, informational materials explaining the benefit program and the associated costs, and a preprinted personalized enrollment application to facilitate the enrollment process indicating each individual retiree's contribution rate. The contribution rate for retirees electing coverage during the open enrollment period shall be increased by eleven and one-tenth percent (11.1%) the rate established for retirees who elected coverage when first eligible, at retirement. For retirees electing coverage during this open enrollment period, coverage shall become effective the first of the month following the month in which the election of coverage is received by the Retirement Systems Division but not before February 1, 2008. Contribution rates for coverage shall be based upon the retiree's nearest age as of the effective date of coverage and shall begin by deduction from the retiree's net monthly retirement allowance in the month in which coverage becomes effective. Coverage elected by retirees during this open enrollment period shall be subject to all other laws and rules and regulations adopted by the Board of Trustees governing the Contributory Death Benefit for Retired Members."

Editor's Note. - Subdivision (7a)a, (7a)b, and (7a)c designations were added by the Revisor of Statutes.

At the direction of the Revisor of Statutes, subdivisions (7b) and (7c), as enacted by Session Laws 2011-92, s. 1, were redesignated as subdivisions (11b) and (18a), respectively, and former subdivision (11b) was redesignated as subdivision (11c).

Session Laws 1999-167, which in ss. 1 and 2 added the second sentence of subsection (10), deleted the second sentence of subdivision (11) (which was subsequently reinserted by Session Laws 1999-456, s. 37), and added the last sentence of subdivision (11), provided in s. 3 that the Board of Trustees of the North Carolina Local Governmental Employees' Retirement System through the Office of the Attorney General was to request a letter of determination or ruling from the Internal Revenue Service as to whether the status of the North Carolina Local Governmental Employees' Retirement System as a governmental plan would be adversely affected by the participation of employees affected by this legislation. The request was to be made no later than 30 days after the effective date of the act, June 8, 1999, and fire departments affected by this legislation were to be eligible for participation in the North Carolina Local Governmental Employees' Retirement System upon the first day of the calendar quarter following receipt of a favorable letter of determination or ruling. An unfavorable determination was received.

Session Laws 2009-378, s. 2, applicable to local government furloughs on and after January 1, 2009, and before July 1, 2010, provides: "Notwithstanding any other provision of law and upon the one-time irrevocable election of the employer as defined in G.S. 128-21(11), a public employee on a furlough who is a member of the Local Governmental Employees' Retirement System administered by the Retirement Systems Division of the Department of State Treasurer shall be considered in active service during any period of furlough and shall be entitled to all of the same benefits to which the employee was entitled on the workday immediately preceding the furlough. The member shall suffer no diminution of retirement average final compensation based on being on furlough, and the retirement average final compensation shall be calculated based on the undiminished compensation. During a furlough period, the employer who opts for this provision shall pay both employee and employer contributions to the Retirement Systems Division on behalf of the furloughed employee as though the employee were in active service. Notwithstanding the definition of 'compensation' in G.S. 128-21(7a), any employer who elects to cover its furloughed employees through this provision shall be entitled to include earnings lost due to furloughs taken after January 1, 2009, and before July 1, 2009, in the reported compensation and contributions for either July or August, 2009. Any compensation and contributions lost due to furloughs must be reported to the Retirement Systems Division within 90 days of the beginning of the period in which the compensation and contributions will be included."

Session Laws 2011-92, s. 1, which added subdivisions (11b) and (18a), is applicable to beneficiaries of firefighters and rescue squad workers killed in the line of duty on or after July 1, 2011.

Session Laws 2011-144, s. 1, provides: "Johnston Memorial Hospital Authority may elect to discontinue its participation as an employer in the Local Governmental Employees' Retirement System as defined in G.S. 128-21 for any and all employees hired on or after October 1, 2011. Johnston Memorial Hospital Authority's Board of Trustees shall communicate their decision and provide to the Retirement Systems Division of the State Treasurer's Office copies of any Board action relating to this election. Johnston Memorial Hospital Authority will continue to report the payroll of employees and remit the employee and employer contributions on all employees employed as of September 30, 2011, until such time as none exist."

At the direction of the Revisor of Statutes, subdivision (5a) as added by Session Laws 2012-185, was redesignated as subdivision (4a) to maintain alphabetical order.

Subdivision (8a) as added by Session Laws 2014-97, s. 4(b), was redesignated as subdivision (7b) at the direction of the Revisor of Statutes to maintain alphabetical order.

At the direction of the Revisor of Statutes, subdivisions (10a)-(10c), as enacted by Session Laws 2015-164, s. 8, were redesignated as subdivisions (18a), (22b) and (22a), respectively, and former subdivision (18a) was redesignated as subdivision (18b).

At the direction of the Revisor of Statutes, in subdivision (18a), "subdivision (22b)" and "subdivision (22a)" were substituted for "subdivision (10b)" and "subdivision (10c)" respectively.

"Article 1 of Chapter 17C" has been substituted for "Chapter 17C" in subdivision (11d) at the direction of the Revisor of Statutes.

Session Laws 2020-3, s. 4.22(a)-(d), provides: "(a) This section shall apply to the following General Statutes:

"(1) Article 1A of Chapter 120.

"(2) Article 3 of Chapter 128.

"(3) Article 1 of Chapter 135.

"(4) Article 4 of Chapter 135.

"(5) Article 6 of Chapter 135.

"(b) Whenever the medical board, as established under G.S. 128-28(l) , 135-6(k), or 135-102(d), is required to make a determination or certification of eligibility for disability benefits, the Director of the Retirement Systems Division of the Department of State Treasurer, or the Director's designee, may make an interim determination or an interim certification that a member or beneficiary is eligible for disability benefits. The Director may not make a determination or certification that a member or beneficiary is not eligible for disability benefits.

"(c) The medical board shall review any interim determinations or interim certifications made in accordance with this section as soon as practicable and shall then make a final determination or final certification for disability benefits. If, subsequent to an interim determination or interim certification, the medical board makes a final determination that a member or beneficiary is not eligible for disability benefits, then any payment to that member or beneficiary shall cease and the determination shall be applied prospectively only so that the final determination will not require any refund by the member or beneficiary to the applicable retirement system or benefit plan for payments or benefits received during the interim period before the final determination is made.

"(d) This section is effective when it becomes law [May 4, 2020]. Subsection (b) of this section expires August 1, 2020. Any interim determinations or interim certifications made, as allowed under subsection (b) of this section, will remain valid until a final determination is made, in accordance with subsection (c) of this section."

Session Laws 2020-3, s. 5, is a severability clause.

Session Laws 2020-48, s. 6.1, is a severability clause.

Session Laws 2021-75, s. 3.1(c), made the substitution of "computed upon the basis of actuarial assumptions" for "computed at regular interest upon the basis of such mortality tables" in subdivision (2) of this section by Session Laws 2021-75, s. 3.1(a), applicable to benefit calculations performed on or after July 1, 2021.

Session Laws 2021-75, s. 8.1, is a severability clause.

Effect of Amendments. - Session Laws 2009-66, ss. 2(a), 6(f), and 6(j), effective July 1, 2009, added subdivision (7a)a.6., and made related changes; in subdivision (10), added the third sentence; and, in subdivision (11), deleted the last sentence, which read: " 'Employer' also means any fire department that serves a city or county or any part of a city or county and that is supported in whole or in part by municipal or county funds."

Session Laws 2011-92, s. 1, effective July 1, 2011, and applicable to beneficiaries of firefighters and rescue squad workers killed in the line of duty on or after that date, added subdivisions (11b) and (18a).

Session Laws 2011-294, s. 4, effective July 1, 2011, in subdivision (19), added the second sentence, and in the last sentence, inserted "including part time, temporary, substitute, or contractor service" and substituted "the month immediately following the effective date of retirement" for "that month."

Session Laws 2012-185, s. 2(a), effective July 1, 2012, added subdivision (5a); added subdivision (11c) and redesignated former subdivision (11c) as subdivision (11d).

Session Laws 2013-288, ss. 3(b), 4(b), effective July 1, 2013, added "or membership service in a North Carolina Retirement System that has been transferred into this system" in subdivision (14); and rewrote subdivision (19).

Session Laws 2014-97, s. 4(b), effective January 1, 2015, added subdivision (7b).

Session Laws 2015-164, s. 8, effective October 1, 2015, added subdivisions (18a), (22a) and (22b).

Session Laws 2015-168, s. 5, effective July 23, 2015, added the last sentence of subdivision (17).

Session Laws 2017-125, s. 1(b), effective July 20, 2017, added the last sentence in subdivision (5).

Session Laws 2017-128, s. 1(e)-(g), effective July 20, 2017, added present subdivision (7b) and redesignated former subdivision (7b) as subdivision (7c); and inserted "records" in the first sentence of subdivision (11c).

Session Laws 2020-48, s. 1.1(a), effective June 26, 2020, added subdivision (8a). For effective date and applicability, see editor's note.

Session Laws 2021-75, s. 3.1(a), effective July 1, 2021, substituted "computed upon the basis of actuarial assumptions" for "computed at regular interest upon the basis of such mortality tables" in subdivision (2). For applicability, see editor's note.

Legal Periodicals. - For comment on the 1939 enactment, see 17 N.C.L. Rev. 369 (1939).

For comment on the 1941 amendment, see 19 N.C.L. Rev. 510 (1941).

For article, "The Impact of Law on the State Pension Crisis," see 54 Wake Forest L. Rev. 105 (2019).

CASE NOTES

This Article creates contractual rights and obligations. Simpson v. North Carolina Local Gov't Employees' Retirement Sys., 88 N.C. App. 218, 363 S.E.2d 90 (1987), aff'd, 323 N.C. 362, 372 S.E.2d 559 (1988).

Any cessation of employment, including retirement, constitutes a termination from service as an employee. Walker v. Board of Trustees, 348 N.C. 63, 499 S.E.2d 429 (1998).

Discretionary Power to Participate in Retirement System. - Where a city has become an employer participating in the State Retirement System under authority conferred by this Article and by an act amending its charter, the repeal of the charter provision leaves its governing authorities with discretionary power to participate in the Retirement System under authority conferred by this Article, and mandamus will not lie to compel it to withdraw from the State Retirement System. Laughinghouse v. City of New Bern, 232 N.C. 596, 61 S.E.2d 802 (1950).

Credit Denied to a Self-Insured City for Disability Retirement Payments. - North Carolina Industrial Commission's decision to deny a city credit for disability retirement payments that were made to an injured city employee from a public employee benefits program was not an abuse of discretion under G.S. 97-42 because the city and the employee jointly contributed to the plan, and competent evidence, in the form of testimony as to the funding of the disability benefits plan, existed to support the Commission's findings of fact and conclusions of law. Cox v. City of Winston-Salem, 171 N.C. App. 112, 613 S.E.2d 746 (2005).

Interest Accrual and Compounding. - Consistent with the purposes of G.S. 135-1(19) and subdivision (18) of this section, underpayments were found to accrue interest from the date they became due. Furthermore, court found that statutes entitled beneficiaries to interest, not only on the principle due, but also on the accrued or earned interest. Faulkenbury v. Teachers' & State Emples. Retirement Sys., 133 N.C. App. 587, 515 S.E.2d 743 (1999), cert. denied, 351 N.C. 102, 540 S.E.2d 358 (1999).

Actuarial Equivalent to Include Interest. - The actuarial value includes interest and there was no double recovery where the court was following the definition of actuarial equivalent as prescribed by this section and included interest in the underpayment award. Faulkenbury v. Teachers' & State Emps. Retirement Sys., 345 N.C. 683, 483 S.E.2d 422 (1997).

Postjudgment Interest Not Awardable Against State. - Retirees under the state and local government retirement system were not entitled to post-judgment interest on retroactive disability benefits, because the state retirement statutes contain no provision for the allowance of such interest. Faulkenbury v. Teachers' & State Employees' Retirement Sys., 132 N.C. App. 137, 510 S.E.2d 675, cert. denied, 350 N.C. 379, 536 S.E.2d 620 (1999).

Retirement Is Withdrawal Not Termination. - This statute explicitly defines retirement as a withdrawal from active service not as termination of employment. Walker v. Board of Trustees, 127 N.C. App. 156, 487 S.E.2d 839 (1997), aff'd, 348 N.C. 63, 499 S.E.2d 429 (1998).

Applied in Pritchett v. Clapp, 288 N.C. 329, 218 S.E.2d 406 (1975); Campbell v. City of Laurinburg, 168 N.C. App. 566, 608 S.E.2d 98 (2005).

Cited in Wallace v. Bd. of Trs., Local Gov't Emples. Ret. Sys., 145 N.C. App. 264, 550 S.E.2d 552, cert. denied, 354 N.C. 580, 559 S.E.2d 553 (2001); Walker v. Town of Stoneville, 211 N.C. App. 24, 712 S.E.2d 239 (2011); Lovin v. Cherokee Cnty., 248 N.C. App. 527, 789 S.E.2d 869 (2016).

§ 128-22. Name and date of establishment.

A Retirement System is hereby established and placed under the management of the Board of Trustees for the purpose of providing retirement allowances and other benefits under the provisions of this Article for employees of those counties, cities and towns or other eligible employers participating in the said Retirement System. Following the filing of the application as provided in G.S. 128-23(c), the Board shall set a date, effective the first day of a calendar quarter, not more than 90 days thereafter, as of which date participation of the employer may begin, which date shall be known as the date of participation for such employer: Provided, that in the judgment of the Board of Trustees an adequate number of persons have indicated their intention to participate; otherwise at such later date as the Board of Trustees may set.

This Retirement System is a governmental plan, within the meaning of Section 414(d) of the Internal Revenue Code. Therefore, the nondiscrimination rules of Sections 401(a)(5) and 401(a)(26) of the Code do not apply. This System shall have the power and privileges of a corporation and shall be known as the "North Carolina Local Governmental Employees' Retirement System," and by such name all of its business shall be transacted, all of its funds invested, and all of its cash and securities and other property held.

Consistent with Section 401(a)(1) of the Internal Revenue Code, all contributions from participating employers and participating employees to this Retirement System shall be made to funds held in trust through trust instruments that have the purposes of distributing trust principal and income to retired members and their beneficiaries and of paying other definitely determinable benefits under this Chapter, after meeting the necessary expenses of administering this Retirement System. Neither the trust corpus nor income from this trust can be used for purposes other than the exclusive benefit of members or their beneficiaries, except that employer contributions made to the trust under a good faith mistake of fact may be returned to an employer, where the refund can occur within less than one year after the mistaken contribution was made, consistent with the rule adopted by the Board of Trustees. The Retirement System shall have a consolidated Plan document, consisting of Article V, Section 6(2) of the North Carolina Constitution, relevant statutory provisions in this Chapter, associated regulations in the North Carolina Administrative Code, substantive and procedural information on the official forms used by the Retirement System, and policies and minutes of the Board of Trustees.

History

(1939, c. 390, s. 2; 1941, c. 357, s. 2; 1943, c. 535; 1945, c. 526, s. 2; 1959, c. 491, s. 3; 2012-130, s. 7(b).)

Effect of Amendments. - Session Laws 2012-130, s. 7(b), effective July 1, 2012, inserted the first two sentences and substituted "This System" for "It" in the second paragraph and added the last paragraph.

State Government Reorganization. - The Local Governmental Employees' Retirement system was transferred to the Department of State Treasurer by G.S. 143A-35, enacted by Session Laws 1971, c. 864.

§ 128-23. Acceptance by cities, towns and counties.

Pursuant to the favorable vote of a majority of the employees of any incorporated city or town, the governing body may, by resolution legally adopted and approved by the Board of Trustees, elect to have its employees become eligible to participate in the Retirement System, and the said municipal governing body may make the necessary appropriation therefor and if necessary levy annually taxes for payment of the same.
Pursuant to the favorable vote of a majority of the employees of the county, the board of commissioners of any county may, by resolution legally adopted and approved by the Board of Trustees, elect to have its employees become eligible to participate in the Retirement System. Each county is authorized to make appropriations for these purposes and to fund them by levy of property taxes as authorized by Article 7 of Chapter 153A of the General Statutes and by the allocation of other revenues whose use is not otherwise restricted by law.
Any eligible employer desiring to participate in the Retirement System shall file with the Board of Trustees an application for participation under the conditions included in this Article on a form approved by the Board of Trustees. In such application the employer shall agree to make the contributions required of participating employers, to deduct from the salaries of employees who may become members the contributions required of members under this Article, and to transmit such contributions to the Board of Trustees. It shall also agree to make the employer's contributions for the participation in the Retirement System of all employees entering the service of the employer, after its participation begins, who shall become members.
Such contributions as are made by employers shall be regarded as additions to the compensation of such employees as are members of the Retirement System and deducted therefrom for the purpose of making the employer's contribution, in addition to the deduction from the compensation of employees on account of member contributions.
The agreement of such employer to contribute on account of its employees shall be irrevocable, but should an employer for any reason become financially unable to make the normal and accrued liability contributions payable on account of its employees, then such employer shall be deemed to be in temporary default. Such temporary default shall not relieve such employer from any liability for its contributions payable on account of its employees.
Effective January 1, 1955, there shall be three classes of employers to be designated Class A, Class B and Class C, respectively. Each employer whose date of participation occurs before July 1, 1951, shall be a Class A employer unless such an employer by written notice filed with the Board of Trustees on or before June 30, 1951, elected to be a Class B employer. Each employer whose date of participation occurs on or after July 1, 1951, but before January 1, 1955, shall be a Class A employer. Each employer whose date of participation occurs on or after January 1, 1955, shall be a Class C employer.
Notwithstanding any other provisions of this Article, any employer who is not a participating employer and who employs law enforcement officers transferred from the Law Enforcement Officers' Retirement System to this Retirement System on January 1, 1986, or who employs law enforcement officers electing to become members of this Retirement System on and after January 1, 1986, shall be employers participating in this Retirement System as this participation pertains to their law enforcement officers. The election of membership in this Retirement System shall be at the sole discretion of law enforcement officers of participating employers described in this subsection.
Notwithstanding any provision of this section, G.S. 128-21(11), or any other provision of law to the contrary, any board of alcoholic control that is not a participating employer in the Retirement System on June 30, 2021, is not eligible to participate in the Retirement System.

Notwithstanding anything to the contrary, the Retirement System shall not be liable for the payment of any pensions or other benefits on account of the employees or pensioners of any employer under this Article, for which reserves have not been previously created from funds contributed by such employer or its employees for such benefits.

History

(1939, c. 390, s. 3; 1951, c. 274, s. 1; 1955, c. 1153, s. 1; 1971, c. 325, s. 5; 1973, c. 803, s. 16; 1985, c. 479, s. 196(c); 1991, c. 585, s. 1; 2020-48, s. 1.14; 2021-59, s. 1.)

Editor's Note. - Session Laws 2020-48, s. 6.1, is a severability clause.

Effect of Amendments. - Session Laws 2020-48, s. 1.14, effective June 26, 2020, substituted "as authorized by Article 7 of Chapter 153A of the General Statutes" for "pursuant to G.S. 153-65" in the second sentence in subsection (b).

Session Laws 2021-59, s. 1, effective June 28, 2021, added subsection (h).

§ 128-23.1. Inactive employers.

An employer shall be considered an inactive employer if all of the following criteria are met:
1. The employer has no employees that qualify for membership in the Retirement System.
2. The employer has made no employer contributions for at least one month.
3. The employer makes a request in writing to the Retirement Systems Division of the Department of State Treasurer to be made inactive.
4. The Retirement Systems Division of the State Treasurer has reviewed the employer request to become inactive and has granted that request. The Retirement Systems Division shall provide written notification to the requesting employer of any decisions made under this section.
Not later than April 30 of each calendar year, the Retirement Systems Division of the Department of State Treasurer shall make a report to the Board on all employers who were determined to be inactive employers in that preceding calendar year.

History

(2020-48, s. 1.9(b).)

Editor's Note. - Session Laws 2020-48, s. 7.1 made this section effective June 26, 2020.

Session Laws 2020-48, s. 6.1, is a severability clause.

§ 128-24. (Effective until January 1, 2022.) Membership.

The membership of this Retirement System shall be composed as follows:

All employees entering or reentering the service of a participating employer after the date of participation in the Retirement System of the employer. On and after July 1, 1965, new extension service employees excluded from coverage under Title II of the Social Security Act in the employ of a county participating in the Local Governmental Employees' Retirement System are hereby excluded from participation in the Teachers' and State Employees' Retirement System to the extent of that part of their compensation derived from a county; provided that on and after July 1, 1965, new extension service employees excluded from coverage under Title II of the Social Security Act who are required to accept a federal Civil Service appointment may elect in writing on a form acceptable to the Retirement System, to be excluded from the Teachers' and State Employees' Retirement System and the local Retirement System. At such time as Cooperative Agricultural Extension Service Employees excluded from coverage under Title II of the Social Security Act become covered by Title II of the Social Security Act, such employees shall no longer be covered by the provisions of this section, provided no accrued rights of these employees under this section prior to coverage by Title II of the Social Security Act shall be diminished.
A member shall cease to be a member only if the member withdraws his or her accumulated contributions, or becomes a beneficiary, or dies.
All persons who are employees of a participating county, city, or town except those who shall notify the Board of Trustees in writing, on or before 30 days following the date of participation in the Retirement System by such county, city or town: Provided, further, that employees of county social services and health departments whose compensation is derived from federal, State, and local funds may be members of the North Carolina Local Governmental Employees' Retirement System to the full extent of their compensation. Any member on or after July 1, 1969, may deposit in the annuity savings fund by a single payment the contributions plus interest which would have been credited to his account had he not signed a nonelection blank, and be entitled to such membership service credits and any prior service credits which became void upon execution of such nonelection blank; provided that the employer will pay the appropriate matching contributions.
Effective January 1, 1955, there shall be three classes of members, to be designated Class A, Class B and Class C respectively. Each member who is an employee of a Class A employer shall be a Class A member; each member who is an employee of a Class B employer shall be a Class B member; and each member who is an employee of a Class C employer shall be a Class C member.
Repealed by Session Laws 1981 (Regular Session, 1982), c. 1396, s. 1.
The provisions of this subdivision (4) shall apply to any member whose retirement became effective prior to July 1, 1965, and became entitled to benefits hereunder in accordance with the provisions hereof. Such benefits shall be computed in accordance with the provisions of G.S. 128-27(b1) as in effect at the date of such separation from service.
1. Notwithstanding any other provision of this Chapter, any member who separates from service prior to the time he shall have attained the age of 60 years, or if a uniformed policeman or fireman prior to the time he shall have attained the age of 55 years, for any reason other than death or retirement for disability as provided in G.S. 128-27(c), after completing 20 or more years of creditable service, and who leaves his total accumulated contributions in the Retirement System, shall have the right to retire on a deferred retirement allowance upon the date he shall have attained the age of 60 years, or if a uniformed policeman or fireman upon the date he shall have attained the age of 55 years; provided that such member may retire only upon electronic submission or written application to the Board of Trustees setting forth at what time, not less than 30 days nor more than 120 days next following the date of filing such application, he desires to be retired. Such deferred retirement allowance shall be computed in accordance with the provisions of G.S. 128-27(b), paragraphs (1), (2) and (3).
2. In lieu of the benefits provided in paragraph a of this subdivision (4), any member who separates from service prior to the time he shall have attained the age of 60 years, or if a uniformed policeman or fireman prior to the time he shall have attained the age of 55 years, for any reason other than death or retirement for disability as provided in G.S. 128-27(c), after completing 30 or more years of creditable service, and who leaves his total accumulated contributions in the Retirement System, may elect to retire on an early retirement allowance; provided that such a member may so retire only upon electronic submission or written application to the Board of Trustees setting forth at what time, not less than 30 days nor more than 120 days next following the date of filing such application, he desires to be retired; provided further that such application shall be duly filed within 60 days following the date of such separation. Such early retirement allowance so elected shall be the actuarial equivalent of the deferred retirement allowance otherwise payable at the attainment of age 60 years, or if a uniformed policeman or fireman at the attainment of age 55 years, upon proper application therefor.
3. Should an employee who retired on an early or service retirement allowance be restored to service prior to the time he shall have attained the age of 62 years, or if a uniformed policeman or fireman prior to the time he shall have attained the age of 55 years, his allowance shall cease, he shall again become a member of the Retirement System, and he shall contribute thereafter at the uniform contribution rate for his class member. Upon his subsequent retirement, he shall be entitled to an allowance not less than the allowance described in 1 below reduced by the amount in 2 below.
  1. The allowance to which 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 sum of his creditable service at the time of his first retirement, and his creditable service after he was restored to service.
  2. The actuarial equivalent of the retirement benefits he previously received.
4. Should an employee who retired on an early or service retirement allowance be restored to service after the attainment of the age of 62 years, his retirement allowance shall be reduced to the extent necessary (if any) so that the sum of the retirement allowance at the time of retirement and earnings from employment by a unit of the Retirement System for any year (beginning January 1 and ending December 31) will not exceed the member's compensation received for the 12 months of service prior to retirement. Provided, however, that under no circumstances will the member's retirement allowance be reduced below the amount of his annuity as defined in G.S. 128-21(3).
The provisions of this subdivision (5) shall apply to any member whose membership is terminated on or after July 1, 1965, and who becomes entitled to benefits hereunder in accordance with the provisions hereof.
1. Notwithstanding any other provision of this Chapter, any member who separates from service prior to the attainment of the age of 60 years for any reason other than death or retirement for disability as provided in G.S. 128-27(c), after completing 15 or more years of creditable service, and who leaves his total accumulated contributions in said System shall have the right to retire on a deferred retirement allowance upon attaining the age of 60 years; provided that such member may retire only upon electronic submission or written application to the Board of Trustees setting forth at what time, not less than one day nor more than 120 days subsequent to the execution and filing thereof, he desires to be retired; and further provided that in the case of a member who so separates from service on or after July 1, 1967, the aforestated requirement of 15 or more years of creditable service shall be reduced to 12 or more years of creditable service; and further provided that in the case of a member who so separates from service on or after July 1, 1971, or whose account is active on July 1, 1971, the aforestated requirement of 12 or more years of creditable service shall be reduced to five or more years of creditable service. Such deferred retirement allowance shall be computed in accordance with the service retirement provisions of this Article pertaining to a member who is not a law enforcement officer or eligible former law enforcement officer.
2. In lieu of the benefits provided in paragraph a of this subdivision, any member who separates from service prior to the attainment of the age of 60 years, for any reason other than death or retirement for disability as provided in G.S. 128-27(c), after completing 20 or more years of creditable service, and who leaves his total accumulated contributions in said System may elect to retire on an early retirement allowance upon attaining the age of 50 years or at any time thereafter; provided that such member may so retire only upon electronic submission or written application to the Board of Trustees setting forth at what time, not less than one day nor more than 120 days subsequent to the execution and filing thereof, he desires to be retired. Such early retirement allowance so elected shall be equal to the deferred retirement allowance otherwise payable at the attainment of the age of 60 years reduced by the percentage thereof indicated below.
3. Should a beneficiary who retired on an early or service retirement allowance be reemployed by, or otherwise engaged to perform services for, an employer participating in the Retirement System on a part-time, temporary, interim, or on fee-for-service basis, whether contractual or otherwise, and if such beneficiary earns an amount during the 12-month period immediately following the effective date of retirement or in any calendar year which exceeds fifty percent (50%) of the reported compensation, excluding terminal payments, during the 12 months of service preceding the effective date of retirement, or twenty thousand dollars ($20,000), whichever is greater, as hereinafter indexed, then the retirement allowance shall be suspended as of the first day of the month following the month in which the reemployment earnings exceed the amount above, for the balance of the calendar year, except when the reemployment earnings exceed the amount above in the month of December, in which case the retirement allowance shall not be suspended. The retirement allowance of the beneficiary shall be reinstated as of January 1 of each year following suspension. The amount that may be earned before suspension shall be increased on January 1 of each year by the percentage change between the December Consumer Price Index in the year prior to retirement and the December Consumer Price Index in the year most recently ended, calculated to the nearest tenth of a percent (1/10 of 1%), provided that this percentage change is positive.
  1. Assess the employer with a penalty of ten percent (10%) of the compensation of the unreported reemployed beneficiaries during the months for which the employer did not report the reemployed beneficiaries, with a minimum penalty of twenty-five dollars ($25.00). If after being assessed a penalty, an employer provides clear and convincing evidence that the failure to report resulted from a lack of oversight or some other event beyond the employer's control and was not a deliberate attempt to omit the reporting of reemployed beneficiaries, the Board may reduce the penalty to not less than two percent (2%) of the compensation of the unreported reemployed beneficiaries during the months for which the employer failed to report, with a minimum penalty of twenty-five dollars ($25.00).
  2. Require the employer to reimburse the Retirement System for any retirement allowance paid to the beneficiary during a period when the allowance would have been suspended under sub-subdivision c. of this subdivision had the report been received within the required 90 days.
  3. Require the employer to pay any amounts that the beneficiary would have been required to pay to the Retirement System under sub-subdivision f. of this subdivision had the report been received within the required 90 days.
4. Should a beneficiary who retired on an early or service retirement allowance be restored to service as an employee, then the retirement allowance shall cease as of the first day of the month following the month in which the beneficiary is restored to service and the beneficiary shall become a member of the Retirement System and shall contribute thereafter as allowed by law at the uniform contribution payable by all members.
  1. For a member who earns at least three years' membership service after restoration to service, the retirement allowance shall be computed on the basis of his compensation and service before and after the period of prior retirement without restriction; provided, that if the prior allowance was based on a social security leveling payment option, the allowance shall be adjusted actuarially for the difference between the amount received under the optional payment and what would have been paid if the retirement allowance had been paid without optional modification. In the alternative, the member may receive a refund of the member's accumulated contributions for the period of service after restoration to service in accordance with G.S. 128-27(f).
  2. For a member who does not earn three years' membership service after restoration to service, the retirement allowance shall be equal to the sum of the retirement allowance to which he would have been entitled had he not been restored to service, without modification of the election of an optional allowance previously made, and the retirement allowance that results from service earned since being restored to service; provided, that if the prior retirement allowance was based on a social security leveling payment option, the prior allowance shall be adjusted actuarially for the difference between the amount that would have been paid for each month had the payment not been suspended and what would have been paid if the retirement allowance had been paid without optional modification. In the alternative, the member may receive a refund of the member's accumulated contributions for the period of service after restoration to service in accordance with G.S. 128-27(f), or the member may allow this new account to remain inactive.
5. Should a beneficiary who retired on an early or service retirement allowance under this Chapter be reemployed by, or otherwise engaged to perform services for, an employer participating in the Retirement System on a part-time, temporary, interim, or on a fee for service basis, whether contractual or otherwise at any time during the month immediately following the effective date of retirement, then the option of the two listed below that has the lesser financial impact on the member, as determined by the Retirement System, shall be applied:
  1. The member's retirement shall be deemed effective the month after the last month the member performed services for a participating employer, and the member shall repay all retirement benefits paid up to the deemed effective date, provided the member thereafter has satisfied the one-month separation required by G.S. 128-21(19).
  2. The member shall make a lump-sum payment to the Retirement System equal to three times the amount of compensation earned during the month immediately following the effective date of retirement.
Notwithstanding the provisions of paragraphs c and d of the subdivision (5) to the contrary, a beneficiary who was a beneficiary retired on an early or service retirement with the Law Enforcement Officers' Retirement System at the time of the transfer of law enforcement officers employed by a participating employer and beneficiaries last employed by a participating employer to this Retirement System on January 1, 1986, and who also was a contributing member of this Retirement System on January 1, 1986, shall continue to be paid his retirement allowance without restriction and may continue as a member of this Retirement System with all the rights and privileges appendant to membership. Any beneficiary who retired on an early or service retirement allowance as an employee of any participating employer under the Law Enforcement Officers' Retirement System and becomes employed as an employee by an employer participating in the Retirement System after January 1, 1986, becomes subject to the provisions of G.S. 128-24(5)c. and G.S. 128-24(5)d. on and after January 1, 1989.
Employees of a sending agency participating in an intergovernmental exchange of personnel under the provisions of Article 10 of Chapter 126 shall remain members entitled to all benefits of the System provided that the requirements of Article 10 of Chapter 126 are met; provided further, that a member may retain membership status while serving as an assigned employee or employee on leave under the provisions of Article 10 of Chapter 126 for purposes of receiving the death benefit regardless of whether he and his employer are contributing to his account during the exchange period except that no duplicate benefits shall be paid.

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 the benefits provided in paragraphs a and b of this subdivision, any member who is a law enforcement officer at the time of separation from service prior to the attainment of the age of 50 years, for any reason other than death or disability as provided in this Article, after completing 15 or more years of creditable service in this capacity immediately prior to separation from service, and who leaves his total accumulated contributions in this System, may elect to retire on a deferred early retirement allowance upon attaining the age of 50 years or at any time thereafter; provided, that the member may commence retirement only upon electronic submission or written application to the Board of Trustees setting forth at what time, as of the first day of a calendar month, not less than one day nor more than 120 days subsequent to the execution and filing thereof, he desires to commence retirement. The deferred early retirement allowance shall be computed in accordance with the service retirement provisions of this Article pertaining to law enforcement officers.

b2. In lieu of the benefits provided in paragraphs a and b of this subdivision, any member who is a law enforcement officer at the time of separation from service prior to the attainment of the age of 55 years, for any reason other than death or disability as provided in this Article, after completing five or more years of creditable service in this capacity immediately prior to separation from service, and who leaves his total accumulated contributions in this System may elect to retire on a deferred service retirement allowance upon attaining the age of 55 years or at any time thereafter; provided, that the member may commence retirement only upon electronic submission or written application to the Board of Trustees setting forth at what time, as of the first day of a calendar month not less than one day nor more than 120 days subsequent to the execution and filing thereof, he desires to commence retirement. The deferred service retirement allowance shall be computed in accordance with the service retirement provisions of this Article pertaining to law enforcement officers.

b3. Deferred retirement allowance of members retiring on or after July 1, 1995. - In lieu of the benefits provided in paragraphs a. and b. of this subdivision, any member who separates from service prior to attainment of age 60 years, after completing 20 or more years of creditable service, and who leaves his total accumulated contributions in said System, may elect to retire on a deferred retirement allowance upon attaining the age of 50 years or any time thereafter; provided that such member may so retire only upon electronic submission or written application to the Board of Trustees setting forth at what time, not less than one day nor more than 120 days subsequent to the execution and filing thereof, he desires to be retired. Such deferred retirement allowance shall be computed in accordance with the service retirement provisions of this Article pertaining to a member who is not a law enforcement officer or an eligible former law enforcement officer.

c1. (Effective until July 1, 2021) Within 90 days of the end of each month in which a beneficiary is reemployed under the provisions of sub-subdivision c. of this subdivision, each employer shall provide a report for that month on each reemployed beneficiary, including the terms of the reemployment, the date of the reemployment, and the amount of the monthly compensation. If such a report is not received within the required 90 days, the Board may assess the employer with a penalty of ten percent (10%) of the compensation of the unreported reemployed beneficiaries during the months for which the employer did not report the reemployed beneficiaries, with a minimum penalty of twenty-five dollars ($25.00). If after being assessed a penalty, an employer provides clear and convincing evidence that the failure to report resulted from a lack of oversight or some other event beyond the employer's control and was not a deliberate attempt to omit the reporting of reemployed beneficiaries, the Board may reduce the penalty to not less than two percent (2%) of the compensation of the unreported reemployed beneficiaries during the months for which the employer failed to report, with a minimum penalty of twenty-five dollars ($25.00). Upon receipt by the employer of notice that a penalty has been assessed under this sub-subdivision, the employer shall remit the payment of the penalty to the Retirement System, in one lump sum, no later than 90 days from the date of the notice.

c1. (Effective July 1, 2021) Within 90 days of the end of each month in which a beneficiary is reemployed under the provisions of sub-subdivision c. of this subdivision, each employer shall provide a report for that month on each reemployed beneficiary, including the terms of the reemployment, the date of the reemployment, and the amount of the monthly compensation. If the required report is not received within the required 90 days, the Board may do any or all the following:

Upon receipt by the employer of notice that any payment is due to the Retirement System under this sub-subdivision, the employer shall remit the payment of the amount due to the Retirement System, in one lump sum, no later than 90 days from the date of the notice.

If an employer is required to make payments to the Retirement System under sub-sub-subdivision 2. or sub-sub-subdivision 3. of this sub-subdivision, then (i) the beneficiary shall have no obligation to reimburse the Retirement System for related amounts under sub-subdivisions c. or e. of this subdivision, (ii) the provisions of G.S. 128-31(b) relating to offsetting overpayments against payments made from the Retirement System to the member or beneficiary shall not apply, (iii) the Retirement System shall have no duty under G.S. 143-64.80 to pursue repayment of overpayments from the beneficiary, (iv) the overpayments shall not be considered a debt of the beneficiary under Chapter 105A of the General Statutes, and (v) the beneficiary's effective date of retirement shall be adjusted if the adjustment is required under sub-subdivision e. of this subdivision.

Upon his subsequent retirement, he shall be paid a retirement allowance determined as follows:

History

(1939, c. 390, s. 4; 1941, c. 357, s. 3; 1949, cc. 1011, 1013; 1951, c. 274, s. 2; 1955, c. 1153, s. 2; 1957, c. 854; 1959, c. 491, s. 4; 1961, c. 515, s. 1; 1965, c. 781; 1967, c. 978, ss. 1, 2; 1969, c. 442, ss. 1-5, 7; c. 982; 1971, c. 325, ss. 6-8; c. 326, ss. 1, 2; 1973, c. 243, s. 1; 1977, c. 783, s. 2; 1981, c. 979, s. 2; 1981 (Reg. Sess., 1982), c. 1396, ss. 1, 2; 1983, c. 556, ss. 1, 2; 1983 (Reg. Sess., 1984), c. 1106, ss. 1, 2; 1985, c. 479, s. 196(d)-(g); c. 649, s. 2; 1987, c. 513, s. 1; c. 738, s. 38(a); 1993 (Reg. Sess., 1994), c. 769, ss. 7.30(a), 7.31(a), (b); 1995, c. 507, s. 7.22(d); 2002-126, s. 28.13(b); 2007-431, s. 10; 2009-66, ss. 3(g), (h), 8(b), 12(e), (f); 2010-72, s. 4(b); 2011-294, s. 2(b); 2012-130, s. 1; 2014-97, s. 4(e); 2015-164, s. 11(b); 2020-29, ss. 1(j), 7(b).)

Sub-subdivision (5)c1. Set Out Twice. - The first version of sub-subdivision (5)c1. set out above is effective until July 1, 2021. The second version of sub-subdivision (5)c1. set out above is effective July 1, 2021.

Local Modification. - Guilford: 1977, c. 278; city of Charlotte: 1949, c. 990; city of Raleigh: 1953, c. 1035; town of Troutman: 2005-279, s. 1.

Editor's Note. - Session Laws 2020-3, s. 4.23(a)-(e), as amended by Session Laws 2020-74, s. 9, and Session Laws 2020-80, s 1.1(f), provides: "(a) For individuals who retired under the Teachers' and State Employees' Retirement System (TSERS) on or after October 1, 2019, but before April 1, 2020, the six-month separation from service from an employer that is required under G.S. 135-1(20) in order for a retirement to become effective shall not apply and instead a one-month separation shall be required, provided that the position to which the individual returns is needed due to the COVID-19 pandemic, as certified to the Retirement Systems Division of the Department of State Treasurer by the employing agency. Upon the expiration of this section, all of the following shall apply:

"(1) The six-month separation from an employer required under G.S. 135-1(20) shall again be applicable to individuals who retired under TSERS on or after October 1, 2019, but before April 1, 2020.

"(2) In order for a member's retirement under TSERS on or after October 1, 2019, but before April 1, 2020, to become effective in any month, the member must perform no work for an employer, including part-time, temporary, substitute, or contractor work, at any time between the expiration of this section and the end of the six months immediately following the effective date of retirement, provided the expiration of the six-month period of separation did not occur while this section was in effect.

"(3) For individuals who retired under TSERS on or after October 1, 2019, but before April 1, 2020, any time worked between March 10, 2020, and the time this section expires shall not be considered work for the purposes of the six-month separation required under G.S. 135-1(20).

"(b) For individuals who retired prior to April 1, 2020, any earnings received between March 10, 2020, and the time that this section expires shall not be treated as earned by a TSERS beneficiary under the provisions of G.S. 135-3(8)c., provided those earnings are related to a position needed due to the COVID-19 pandemic, as certified to the Retirement Systems Division of the Department of State Treasurer by the employing agency.

"(c) For individuals who retired prior to April 1, 2020, any earnings received between March 10, 2020, and the time that this section expires shall not be treated as earned by a beneficiary of the Local Governmental Employees Retirement System (LGERS) under the provisions of G.S. 128-24(5)c., provided those earnings are related to a position needed due to the COVID-19 pandemic, as certified to the Retirement Systems Division of the Department of State Treasurer by the employing unit.

"(d) Any benefits received by or paid to a law enforcement officer or retired law enforcement officer under Article 12D of Chapter 143 of the General Statutes shall not be impacted by any work performed between March 10, 2020, and the time that this section expires, provided that work performed is needed due to the COVID-19 pandemic, as documented by the employing unit or agency.

"(e) This section is effective when it becomes law [May 4, 2020] and expires August 31, 2020."

Session Laws 2020-3, s. 5, is a severability clause.

Session Laws 2020-29, s. 1(k), provides: "For all service purchases that are required to have been made by December 31, 2021, the Retirement Systems Division of the Department of State Treasurer shall accept and process all service purchase request forms that are received by the Retirement Systems Division on or before December 31, 2021."

Session Laws 2020-29, s. 7(c), made the amendment to sub-subdivision (5)c1. of this section by Session Laws 2020-29, s. 7(b), effective July 1, 2021, and applicable to reports required to be made on or after that date.

Session Laws 2020-29, s. 10, is a severability clause.

Effect of Amendments. - Session Laws 2007-431, s. 10, effective July 1, 2007, in the first sentence of subdivision (5)c., near the beginning, substituted "reemployed by" for "reemployed" and substituted "services for" for "services, by", and added "except when the reemployment earnings exceed the amount above in the month of December, in which case the retirement allowance shall not be suspended" following "for the balance of the calendar year" at the end.

Session Laws 2009-66, ss. 3(g), 3(h), 8(b), 12(e), and 12(f), effective July 1, 2009, in subdivisions (4)a., (4)b., (5)a., (5)b., (5)b1., (5)b2., and (5)b3., in the first sentence, inserted "electronic submission or" and substituted "120 days" for "90 days"; and added subdivision (5)c1.

Session Laws 2010-72, s. 4(b), effective July 1, 2010, added the last sentence in sub-subdivisions (5)d.1. and (5)d.2.

Session Laws 2011-294, s. 2(b), effective July 1, 2009, and applicable to penalties assessed on or after that date, in subdivision (5)c1., substituted "may assess" for "shall assess" in the second sentence, and added the last two sentences.

Session Laws 2012-130, s. 1, effective July 1, 2012, substituted "30 days" for "90 days" in subdivision (2).

Session Laws 2014-97, s. 4(e), effective January 1, 2015, rewrote the last sentence in subdivision (5)c, which read "The amount that may be earned before suspension shall be increased on January 1 of each year by the ratio of the Consumer Price Index to the Index one year earlier, calculated to the nearest tenth of a percent ( 1 / 10 of 1%)."

Session Laws 2015-164, s. 11.(b), effective October 1, 2015, added subdivision (5)e.

Session Laws 2020-29, s. 1(j), effective June 19, 2020, rewrote subdivision (1a), which read "Should any member in any period of eight consecutive years after becoming a member be absent from service more than seven years, or should he withdraw his accumulated contributions or should he become a beneficiary or die, he shall thereupon cease to be a member; provided that on and after July 1, 1971, a member shall cease to be a member only if he withdraws his accumulated contributions, or becomes a beneficiary, or dies."

Session Laws 2020-29, s. 7(b), rewrote sub-subdivision (5)c1. For effective date and applicability, see editor's note.

CASE NOTES

Who Excluded from Membership. - The exclusion from membership in the Retirement System will not be interpreted to apply only to those receiving retirement allowances from general funds in the State Treasury derived from general taxation, but is applicable to those entitled to benefits from any funds coming into the hands of the State Treasurer by virtue of a State law. Gardner v. Board of Trustees, 226 N.C. 465, 38 S.E.2d 314 (1946), decided prior to later amendments to this section.

Cited in Miracle v. North Carolina Local Gov't Employees Retirement Sys., 124 N.C. App. 285, 477 S.E.2d 204 (1996); Taylor v. City of Lenoir, 129 N.C. App. 174, 497 S.E.2d 715 (1998), appeal dismissed, 140 N.C. App. 337, 536 S.E.2d 848 (2000); Walker v. Town of Stoneville, 211 N.C. App. 24, 712 S.E.2d 239 (2011).

Membership.

The membership of this Retirement System shall be composed as follows:

All employees entering or reentering the service of a participating employer after the date of participation in the Retirement System of the employer. On and after July 1, 1965, new extension service employees excluded from coverage under Title II of the Social Security Act in the employ of a county participating in the Local Governmental Employees' Retirement System are hereby excluded from participation in the Teachers' and State Employees' Retirement System to the extent of that part of their compensation derived from a county; provided that on and after July 1, 1965, new extension service employees excluded from coverage under Title II of the Social Security Act who are required to accept a federal Civil Service appointment may elect in writing on a form acceptable to the Retirement System, to be excluded from the Teachers' and State Employees' Retirement System and the local Retirement System. At such time as Cooperative Agricultural Extension Service Employees excluded from coverage under Title II of the Social Security Act become covered by Title II of the Social Security Act, such employees shall no longer be covered by the provisions of this section, provided no accrued rights of these employees under this section prior to coverage by Title II of the Social Security Act shall be diminished.
A member shall cease to be a member only if the member withdraws his or her accumulated contributions, or becomes a beneficiary, or dies.
All persons who are employees of a participating county, city, or town except those who shall notify the Board of Trustees in writing, on or before 30 days following the date of participation in the Retirement System by such county, city or town: Provided, further, that employees of county social services and health departments whose compensation is derived from federal, State, and local funds may be members of the North Carolina Local Governmental Employees' Retirement System to the full extent of their compensation. Any member on or after July 1, 1969, and prior to January 1, 2023, may deposit in the annuity savings fund by a single payment the contributions plus interest which would have been credited to his account had he not signed a nonelection blank, and be entitled to such membership service credits and any prior service credits which became void upon execution of such nonelection blank; provided that the employer will pay the appropriate matching contributions.
Effective January 1, 1955, there shall be three classes of members, to be designated Class A, Class B and Class C respectively. Each member who is an employee of a Class A employer shall be a Class A member; each member who is an employee of a Class B employer shall be a Class B member; and each member who is an employee of a Class C employer shall be a Class C member.
Repealed by Session Laws 1981 (Regular Session, 1982), c. 1396, s. 1.
The provisions of this subdivision (4) shall apply to any member whose retirement became effective prior to July 1, 1965, and became entitled to benefits hereunder in accordance with the provisions hereof. Such benefits shall be computed in accordance with the provisions of G.S. 128-27(b1) as in effect at the date of such separation from service.
1. Notwithstanding any other provision of this Chapter, any member who separates from service prior to the time he shall have attained the age of 60 years, or if a uniformed policeman or fireman prior to the time he shall have attained the age of 55 years, for any reason other than death or retirement for disability as provided in G.S. 128-27(c), after completing 20 or more years of creditable service, and who leaves his total accumulated contributions in the Retirement System, shall have the right to retire on a deferred retirement allowance upon the date he shall have attained the age of 60 years, or if a uniformed policeman or fireman upon the date he shall have attained the age of 55 years; provided that such member may retire only upon electronic submission or written application to the Board of Trustees setting forth at what time, not less than 30 days nor more than 120 days next following the date of filing such application, he desires to be retired. Such deferred retirement allowance shall be computed in accordance with the provisions of G.S. 128-27(b), paragraphs (1), (2) and (3).
2. In lieu of the benefits provided in paragraph a of this subdivision (4), any member who separates from service prior to the time he shall have attained the age of 60 years, or if a uniformed policeman or fireman prior to the time he shall have attained the age of 55 years, for any reason other than death or retirement for disability as provided in G.S. 128-27(c), after completing 30 or more years of creditable service, and who leaves his total accumulated contributions in the Retirement System, may elect to retire on an early retirement allowance; provided that such a member may so retire only upon electronic submission or written application to the Board of Trustees setting forth at what time, not less than 30 days nor more than 120 days next following the date of filing such application, he desires to be retired; provided further that such application shall be duly filed within 60 days following the date of such separation. Such early retirement allowance so elected shall be the actuarial equivalent of the deferred retirement allowance otherwise payable at the attainment of age 60 years, or if a uniformed policeman or fireman at the attainment of age 55 years, upon proper application therefor.
3. Should an employee who retired on an early or service retirement allowance be restored to service prior to the time he shall have attained the age of 62 years, or if a uniformed policeman or fireman prior to the time he shall have attained the age of 55 years, his allowance shall cease, he shall again become a member of the Retirement System, and he shall contribute thereafter at the uniform contribution rate for his class member. Upon his subsequent retirement, he shall be entitled to an allowance not less than the allowance described in 1 below reduced by the amount in 2 below.
  1. The allowance to which 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 sum of his creditable service at the time of his first retirement, and his creditable service after he was restored to service.
  2. The actuarial equivalent of the retirement benefits he previously received.
4. Should an employee who retired on an early or service retirement allowance be restored to service after the attainment of the age of 62 years, his retirement allowance shall be reduced to the extent necessary (if any) so that the sum of the retirement allowance at the time of retirement and earnings from employment by a unit of the Retirement System for any year (beginning January 1 and ending December 31) will not exceed the member's compensation received for the 12 months of service prior to retirement. Provided, however, that under no circumstances will the member's retirement allowance be reduced below the amount of his annuity as defined in G.S. 128-21(3).
The provisions of this subdivision (5) shall apply to any member whose membership is terminated on or after July 1, 1965, and who becomes entitled to benefits hereunder in accordance with the provisions hereof.
1. Notwithstanding any other provision of this Chapter, any member who separates from service prior to the attainment of the age of 60 years for any reason other than death or retirement for disability as provided in G.S. 128-27(c), after completing 15 or more years of creditable service, and who leaves his total accumulated contributions in said System shall have the right to retire on a deferred retirement allowance upon attaining the age of 60 years; provided that such member may retire only upon electronic submission or written application to the Board of Trustees setting forth at what time, not less than one day nor more than 120 days subsequent to the execution and filing thereof, he desires to be retired; and further provided that in the case of a member who so separates from service on or after July 1, 1967, the aforestated requirement of 15 or more years of creditable service shall be reduced to 12 or more years of creditable service; and further provided that in the case of a member who so separates from service on or after July 1, 1971, or whose account is active on July 1, 1971, the aforestated requirement of 12 or more years of creditable service shall be reduced to five or more years of creditable service. Such deferred retirement allowance shall be computed in accordance with the service retirement provisions of this Article pertaining to a member who is not a law enforcement officer or eligible former law enforcement officer.
2. In lieu of the benefits provided in paragraph a of this subdivision, any member who separates from service prior to the attainment of the age of 60 years, for any reason other than death or retirement for disability as provided in G.S. 128-27(c), after completing 20 or more years of creditable service, and who leaves his total accumulated contributions in said System may elect to retire on an early retirement allowance upon attaining the age of 50 years or at any time thereafter; provided that such member may so retire only upon electronic submission or written application to the Board of Trustees setting forth at what time, not less than one day nor more than 120 days subsequent to the execution and filing thereof, he desires to be retired. Such early retirement allowance so elected shall be equal to the deferred retirement allowance otherwise payable at the attainment of the age of 60 years reduced by the percentage thereof indicated below.
3. Should a beneficiary who retired on an early or service retirement allowance be reemployed by, or otherwise engaged to perform services for, an employer participating in the Retirement System on a part-time, temporary, interim, or on fee-for-service basis, whether contractual or otherwise, and if such beneficiary earns an amount during the 12-month period immediately following the effective date of retirement or in any calendar year which exceeds fifty percent (50%) of the reported compensation, excluding terminal payments, during the 12 months of service preceding the effective date of retirement, or twenty thousand dollars ($20,000), whichever is greater, as hereinafter indexed, then the retirement allowance shall be suspended as of the first day of the month following the month in which the reemployment earnings exceed the amount above, for the balance of the calendar year, except when the reemployment earnings exceed the amount above in the month of December, in which case the retirement allowance shall not be suspended. The retirement allowance of the beneficiary shall be reinstated as of January 1 of each year following suspension. The amount that may be earned before suspension shall be increased on January 1 of each year by the percentage change between the December Consumer Price Index in the year prior to retirement and the December Consumer Price Index in the year most recently ended, calculated to the nearest tenth of a percent (1/10 of 1%), provided that this percentage change is positive.
  1. Assess the employer with a penalty of ten percent (10%) of the compensation of the unreported reemployed beneficiaries during the months for which the employer did not report the reemployed beneficiaries, with a minimum penalty of twenty-five dollars ($25.00). If after being assessed a penalty, an employer provides clear and convincing evidence that the failure to report resulted from a lack of oversight or some other event beyond the employer's control and was not a deliberate attempt to omit the reporting of reemployed beneficiaries, the Board may reduce the penalty to not less than two percent (2%) of the compensation of the unreported reemployed beneficiaries during the months for which the employer failed to report, with a minimum penalty of twenty-five dollars ($25.00).
  2. Require the employer to reimburse the Retirement System for any retirement allowance paid to the beneficiary during a period when the allowance would have been suspended under sub-subdivision c. of this subdivision had the report been received within the required 90 days.
  3. Require the employer to pay any amounts that the beneficiary would have been required to pay to the Retirement System under sub-subdivision f. of this subdivision had the report been received within the required 90 days.
4. Should a beneficiary who retired on an early or service retirement allowance be restored to service as an employee, then the retirement allowance shall cease as of the first day of the month following the month in which the beneficiary is restored to service and the beneficiary shall become a member of the Retirement System and shall contribute thereafter as allowed by law at the uniform contribution payable by all members.
  1. For a member who earns at least three years' membership service after restoration to service, the retirement allowance shall be computed on the basis of his compensation and service before and after the period of prior retirement without restriction; provided, that if the prior allowance was based on a social security leveling payment option, the allowance shall be adjusted actuarially for the difference between the amount received under the optional payment and what would have been paid if the retirement allowance had been paid without optional modification. In the alternative, the member may receive a refund of the member's accumulated contributions for the period of service after restoration to service in accordance with G.S. 128-27(f).
  2. For a member who does not earn three years' membership service after restoration to service, the retirement allowance shall be equal to the sum of the retirement allowance to which he would have been entitled had he not been restored to service, without modification of the election of an optional allowance previously made, and the retirement allowance that results from service earned since being restored to service; provided, that if the prior retirement allowance was based on a social security leveling payment option, the prior allowance shall be adjusted actuarially for the difference between the amount that would have been paid for each month had the payment not been suspended and what would have been paid if the retirement allowance had been paid without optional modification. In the alternative, the member may receive a refund of the member's accumulated contributions for the period of service after restoration to service in accordance with G.S. 128-27(f), or the member may allow this new account to remain inactive.
5. Should a beneficiary who retired on an early or service retirement allowance under this Chapter be reemployed by, or otherwise engaged to perform services for, an employer participating in the Retirement System on a part-time, temporary, interim, or on a fee for service basis, whether contractual or otherwise at any time during the month immediately following the effective date of retirement, then the option of the two listed below that has the lesser financial impact on the member, as determined by the Retirement System, shall be applied:
  1. The member's retirement shall be deemed effective the month after the last month the member performed services for a participating employer, and the member shall repay all retirement benefits paid up to the deemed effective date, provided the member thereafter has satisfied the one-month separation required by G.S. 128-21(19).
  2. The member shall make a lump-sum payment to the Retirement System equal to three times the amount of compensation earned during the month immediately following the effective date of retirement.
Notwithstanding the provisions of paragraphs c and d of the subdivision (5) to the contrary, a beneficiary who was a beneficiary retired on an early or service retirement with the Law Enforcement Officers' Retirement System at the time of the transfer of law enforcement officers employed by a participating employer and beneficiaries last employed by a participating employer to this Retirement System on January 1, 1986, and who also was a contributing member of this Retirement System on January 1, 1986, shall continue to be paid his retirement allowance without restriction and may continue as a member of this Retirement System with all the rights and privileges appendant to membership. Any beneficiary who retired on an early or service retirement allowance as an employee of any participating employer under the Law Enforcement Officers' Retirement System and becomes employed as an employee by an employer participating in the Retirement System after January 1, 1986, becomes subject to the provisions of G.S. 128-24(5)c. and G.S. 128-24(5)d. on and after January 1, 1989.
Employees of a sending agency participating in an intergovernmental exchange of personnel under the provisions of Article 10 of Chapter 126 shall remain members entitled to all benefits of the System provided that the requirements of Article 10 of Chapter 126 are met; provided further, that a member may retain membership status while serving as an assigned employee or employee on leave under the provisions of Article 10 of Chapter 126 for purposes of receiving the death benefit regardless of whether he and his employer are contributing to his account during the exchange period except that no duplicate benefits shall be paid.

On and after January 1, 2023, the member shall purchase this service by paying a lump sum amount to the annuity savings fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. Subject to the requirements of this subsection, an employer may pay all or part of the cost of a service purchase of a member in service. To the extent that the purchase is paid by the employer, the cost paid by the employer shall be credited to the pension accumulation fund. To the extent that the purchase is paid by the member, the cost paid by the member shall be credited to the member's annuity savings account provided, however, that an employer does not discriminate against any employed member or group of employed members in paying all or any part of the cost of the membership service.

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

c1. Within 90 days of the end of each month in which a beneficiary is reemployed under the provisions of sub-subdivision c. of this subdivision, each employer shall provide a report for that month on each reemployed beneficiary, including the terms of the reemployment, the date of the reemployment, and the amount of the monthly compensation. If the required report is not received within the required 90 days, the Board may do any or all the following:

Upon his subsequent retirement, he shall be paid a retirement allowance determined as follows:

History

Local Modification. - Guilford: 1977, c. 278; city of Charlotte: 1949, c. 990; city of Raleigh: 1953, c. 1035; town of Troutman: 2005-279, s. 1.

"(1) The six-month separation from an employer required under G.S. 135-1(20) shall again be applicable to individuals who retired under TSERS on or after October 1, 2019, but before April 1, 2020.

"(e) This section is effective when it becomes law [May 4, 2020] and expires August 31, 2020."

Session Laws 2020-3, s. 5, is a severability clause.

Session Laws 2020-29, s. 10, is a severability clause.

Session Laws 2021-57, s. 4.1, made the amendments to subdivision (2) of this section by Session Laws 2021-57, s. 2.1, effective January 1, 2022, and applicable to purchases of creditable service occurring on or after that date.

Session Laws 2010-72, s. 4(b), effective July 1, 2010, added the last sentence in sub-subdivisions (5)d.1. and (5)d.2.

Session Laws 2012-130, s. 1, effective July 1, 2012, substituted "30 days" for "90 days" in subdivision (2).

Session Laws 2015-164, s. 11.(b), effective October 1, 2015, added subdivision (5)e.

Session Laws 2020-29, s. 7(b), rewrote sub-subdivision (5)c1. For effective date and applicability, see editor's note.

Session Laws 2021-57, s. 2.1, in subdivision (2), inserted "and prior to January 1, 2023" near the beginning of the second sentence, and added the second paragraph. For effective date and applicability, see editor's note.

CASE NOTES

§ 128-25: Repealed by Session Laws 2016-56, s. 2, effective June 30, 2016.

History

(1939, c. 390, s. 5; 1941, c. 357, s. 4; repealed by 2016-56, s. 2, effective June 30, 2016.)

Editor's Note. - Former G.S. 128-25 pertained to membership in the state retirement system.

Session Laws 2016-56, s. 10, is a severability clause.

§ 128-26. (Effective until January 1, 2022) Allowance for service.

Each person who becomes a member during the first year of his or her employer's participation, if and only if that participation begins prior to November 1, 2015, and who was an employee of the same employer at any time during the year immediately preceding the date of participation, shall file a detailed statement of all service rendered by him or her to that employer prior to the date of participation for which he or she claims credit.
With respect to a member retiring on or after July 1, 1967, the governing board of a participating unit may allow credit for any period of military service in the Armed Forces of the United States if the person returned to the service of the person's employer within two years after having been not dishonorably discharged, or becoming entitled to be discharged, released, or separated from such the Armed Forces of the United States; provided that, notwithstanding the above provisions, any member having credit for not less than 10 years of otherwise creditable service may be allowed credit for such military services which are not creditable in any other governmental retirement system; provided further, that a member will receive credit for military service under the provisions of this paragraph only if the member submits satisfactory evidence of the military service claimed and the participating unit of which the member is an employee agrees to grant credit for such military service prior to January 1, 1972.
1. The member did not, prior to leaving for military service, provide clear written notice of an intent not to return to work after military service.
2. The member was discharged from uniformed service and returned from the leave of absence for uniformed service to membership service in this system within the time limit mandated by federal law for reporting back to work.
3. The period of uniformed service, for which additional service credit is sought, has been verified by suitable documentation and is not eligible for receipt of benefits under any other retirement system or pension plan.
4. All service credit forfeited by a refund pursuant to the provisions of G.S. 128-27(f) has been purchased.
  1. Notwithstanding any other provision of this Chapter, on or before December 31, 2021, any person who withdrew his or her contributions in accordance with the provisions of G.S. 128-27(f) or 135-5(f) or the rules and regulations of the Law Enforcement Officers' Retirement System and who subsequently returns to service may, upon completion of five years of prior and current membership service, repay in a total lump sum any and all of the accumulated contributions previously withdrawn with interest compounded annually at the rate of six and one-half percent (6.5%) for each calendar year from the year of withdrawal to the year of repayment plus a fee to cover expense of handling which shall be determined by the Board of Trustees, and receive credit for the service forfeited at time of withdrawal(s). These provisions shall apply equally to retired members who had attained five years of prior and current membership service prior to retirement. The retirement allowance of a retired member who restores service under this subsection shall be increased the month following the month payment is received. The increase in the retirement allowance shall be the difference between the initial retirement allowance, under any optional allowance elected at the time of retirement, and the amount of the retirement allowance, under any optional allowance elected at the time of retirement, to which the retired member would have been entitled had the service not been previously forfeited, adjusted by any increases in the retirement accrual rate occurring between the member's date of retirement and the date of payment. The increase in the retirement allowance shall not include any adjustment for cost-of-living increases granted since the date of retirement.
In no case shall more than one year of service be creditable for all service in one calendar year.
, (d) Repealed by Session Laws 2020-29, s. 1(b), effective June 19, 2020.
Creditable service at retirement on which the retirement allowance of a member shall be based shall consist of the membership service rendered by the member since he or she last became a member, and also if the member has a prior service certificate which is in full force and effect, the amount of the service certified on the prior service certificate; and if the member has sick leave standing to the member's credit upon retirement on or after July 1, 1971, one month of credit for each 20 days or portion thereof, but not less than one hour; sick leave shall not be counted in computing creditable service for the purpose of determining eligibility for disability retirement or for a vested deferred allowance. Creditable service for unused sick leave shall be allowed only for sick leave accrued monthly during employment under a duly adopted sick leave policy and for which the member may be able to take credits and be paid for sick leave without restriction. However, in no instance shall unused sick leave be credited to a member's account at retirement if the member's last day of actual service is more than 365 days prior to the effective date of the member's retirement. Days of sick leave standing to a member's credit at retirement shall be determined by dividing the member's total hours of sick leave at retirement by the hours per month such leave was awarded under the employer's duly adopted sick leave policy as the policy applied to the member when the leave was accrued.
On and after January 1, 1986, the creditable service of a member who was a member of the Law Enforcement Officers' Retirement System at the time of the transfer of law enforcement officers employed by participating employers from that System to this Retirement System and whose accumulated contributions are transferred from that System to this Retirement System, includes service that was creditable in the Law Enforcement Officers' Retirement System; and membership service with that System is membership service with this Retirement System; provided, notwithstanding any provisions of this Article to the contrary, any inchoate or accrued rights of such a member to purchase creditable service for military service, withdrawn service and prior service under the rules and regulations of the Law Enforcement Officers' Retirement System may not be diminished and may be purchased as creditable service with this Retirement System under the same conditions that would have otherwise applied.
Repealed by Session Laws 2020-29, s. 1(b), effective June 19, 2020.
During periods when a member is on leave of absence and is receiving less than his full compensation, he will be deemed to be in service only if he is contributing to the Retirement System as provided in G.S. 128-30(b)(4). If he is so contributing, the annual rate of compensation paid to such employee immediately before the leave of absence began will be deemed to be the actual compensation rate of the employee during the leave of absence.
Creditable service at retirement shall include any service rendered by a member while on leave of absence to serve as a member or officer of the General Assembly which is not creditable toward retirement under the Legislative Retirement Fund provided the allowance of such credit shall be contingent upon the cancellation of service credit in the fund and the transfer of the member's contributions plus accumulated interest from the fund to this System.
Any member may purchase creditable service for service as a member of the General Assembly not otherwise creditable under this section, provided the service is not credited in the Legislative Retirement Fund nor the Legislative Retirement System, and further provided the member pays a lump sum amount equal to the full cost of the additional service credits calculated on the basis of the assumptions used for the purposes of the actuarial valuation of the System's liabilities, taking into account the additional retirement allowance arising on account of the additional service credits commencing at the earliest age at which a member could retire on an unreduced retirement allowance as determined by the Board of Trustees upon the advice of the consulting actuary, plus an administrative fee to be set by the Board of Trustees. Notwithstanding the foregoing provisions of this subsection that provide for the purchase of service credits, the terms "full cost", "full liability", and "full actuarial cost" include assumed annual post-retirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service allowance.
North Carolina Withdrawn Service Purchased On and After January 1, 2022. Notwithstanding any other provision of this Article to the contrary, on and after January 1, 2022, any member who withdrew his or her contributions in accordance with the provisions of G.S. 128-27(f) or G.S. 135-5(f) or the rules of the Law Enforcement Officers' Retirement System, and who subsequently returns to service and completes five years of membership service upon that return, while in service may purchase an amount of creditable service totaling the amount of the membership service associated with the withdrawn contributions, provided that the total of the creditable service purchased under this subsection may not exceed a total of five years. The member shall purchase this service by paying a lump sum amount to the Annuity Savings Fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. The calculation of the amount payable shall also include an administrative fee to be set by the Board.
Repealed by Session Laws 1987, c. 617, s. 3.
Notwithstanding any other provision of this Chapter, any member and any retired member as herein described may purchase creditable service for service in the Armed Forces of the United States, not otherwise allowed, by paying a total lump sum payment determined as follows:
1. For members who completed 10 years of membership service, and retired members who completed 10 years of membership service prior to retirement, and whose membership began on or prior to January 1, 1988, and who make such purchase within three years after first becoming eligible, the cost shall be an amount equal to the monthly compensation the member earned when the member first entered membership service times the employee contribution rate at that time times the months of service to be purchased multiplied by a factor equivalent to the investment return assumptions determined by the Board of Trustees, compounded annually, from the initial year of membership to the year of payment so as to equal one-half of the cost of allowing such service, plus an administrative fee to be set by the Board of Trustees.
2. For members who complete five years of membership service, and retired members who complete five years of membership service prior to retirement, and eligible members and retired members covered by paragraph (1) of this subdivision, whose membership began on or before January 1, 1988, but who did not or do not make such purchase within three years after first becoming eligible, the cost shall be an amount equal to the full liability of the service credits calculated on the basis of the assumptions used for the purposes of the actuarial valuation of the System's liabilities and shall take into account the retirement allowance arising on account of the additional service credits commencing at the earliest age at which the member could retire on an unreduced allowance, as determined by the Board of Trustees upon the advice of the consulting actuary, plus an administrative fee to be set by the Board of Trustees. Notwithstanding the foregoing provisions of this subsection that provide for the purchase of service credits, the term "full liability" includes assumed post-retirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service retirement allowance.
Notwithstanding any other provision of this Chapter, on or before December 31, 2021, any member and any retired member as herein described may purchase creditable service previously rendered to the federal government or to any state, territory, or other governmental subdivision of the United States other than this State by paying a total lump-sum payment determined as follows:
1. For members who completed 10 years of prior and current membership service, and retired members who completed 10 years of prior and current membership service prior to retirement, and whose membership began on or before January 1, 1988, and who make such purchase within three years after first becoming eligible, the cost shall be an amount equal to the monthly compensation the member earned when the member first entered membership service, times the employee contribution rate at that time, times the months of service to be purchased, times two, multiplied by a factor equivalent to the investment return assumptions determined by the Board of Trustees, compounded annually, from the initial year of membership to the year of payment so as to equal the full cost of allowing such service, plus an administrative fee to be set by the Board of Trustees.
2. For members who complete five years of prior and current membership service, and retired members who complete five years of prior and current membership service prior to retirement, and eligible members and retired members covered by subdivision (1) of this subsection, whose membership began on or before January 1, 1988, but who did not or do not make such purchase within three years after first becoming eligible, the cost shall be an amount equal to the full liability of the service credits calculated on the basis of the assumptions used for the purposes of the actuarial valuation of the System's liabilities and shall take into account the retirement allowance arising on account of the additional service credits commencing at the earliest age at which the member could retire on an unreduced allowance, as determined by the Board of Trustees upon the advice of the consulting actuary, plus an administrative fee to be set by the Board of Trustees. Notwithstanding the foregoing provisions of this subsection that provide for the purchase of service credits, the term "full liability" includes assumed postretirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service retirement allowance. Notwithstanding the requirement of five years of current membership service, a member whose membership began prior to the service the member desires to purchase shall be eligible to purchase creditable service under this subdivision upon returning to service as an employee upon completion of a total of five years of membership service and upon completion of one year of current membership service.
Notwithstanding any provision of this Article to the contrary, on and after January 1, 2022, any member in service with five or more years of membership service may purchase creditable service previously rendered to the federal government or to any state, territory, or other governmental subdivision of the United States other than this State by paying a total lump sum payment. The amount of creditable service purchased under this subsection may not exceed a total of five years. The member shall purchase this service by paying a lump sum amount to the Annuity Savings Fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. The increases as set by the Board of Trustees upon the advice of the consulting actuary shall also include an administrative fee to be set by the Board.
Notwithstanding any language to the contrary of any provision of this section, or of any repealed provision of this section that was repealed with the inchoate and accrued rights preserved, all repayments and purchases of service credits, allowed under the provisions of this section or of any repealed provision of this section that was repealed with inchoate and accrued rights preserved, must be made within three years after the member first becomes eligible to make such repayments and purchases. Any member who does not repay or purchase service credits within said three years after first eligibility to make such repayments and purchases may, under the same conditions as are otherwise required, repay or purchase service credits provided that the repayment or purchase equals the full cost of the service credits calculated on the basis of the assumptions used for purchases of the actuarial valuation of the System's liabilities and shall take into account the additional retirement allowance arising on account of such additional service credit commencing at the earliest age at which such member could retire on an unreduced retirement allowance as determined by the Board of Trustees upon the advice of the consulting actuary. Notwithstanding the foregoing provisions of this subsection that provide for the purchase of service credits, the terms "full cost", "full liability", and "full actuarial cost" include assumed annual post-retirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service allowance. Notwithstanding the foregoing, on and after January 1, 2003, the provisions of this subsection shall not apply to the repayment of contributions withdrawn pursuant to subsection (i) of this section.
Notwithstanding any other provision of this Chapter, any member may purchase creditable service for periods of employer approved leaves of absence when in receipt of benefits under the North Carolina Workers' Compensation Act. This service shall be purchased by paying a cost calculated in the following manner:
1. Leaves of Absence Terminated Prior to July 1, 1983. - The cost to a member whose employer approved leave of absence, when in receipt of benefits under the North Carolina Workers' Compensation Act, terminated upon return to service prior to July 1, 1983, shall be a lump sum amount payable to the Annuity Savings Fund equal to the full liability of the service credits calculated on the basis of the assumptions used for purposes of the actuarial valuation of the system's liabilities, and shall take into account the retirement allowance arising on account of the additional service credit commencing at the earliest age at which the member could retire on an unreduced retirement allowance, as determined by the board of trustees upon the advice of the consulting actuary, plus an administrative fee to be set by the Board of Trustees. Notwithstanding the foregoing provisions of this subdivision that provide for the purchase of service credits, the terms "full cost", "full liability", and "full actuarial cost" include assumed annual post-retirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service allowance.
2. Leaves of Absence Terminating On and After July 1, 1983. - The cost to a member whose employer approved leave of absence, when in receipt of benefits under the North Carolina Workers' Compensation Act, terminates on and after July 1, 1983, shall be a lump sum amount due and payable to the Annuity Savings Fund within six months from end of the leave of absence equal to the total employee and employer percentage rates of contribution in effect at the time of purchase and based on the annual rate of compensation of the member immediately prior to the leave of absence; Provided, however, the cost to a member whose amount due is not paid within six months from the end of the leave of absence shall be the amount due plus one percent (1%) per month penalty for each month or fraction thereof the payment is made beyond the six-month period.
Omitted Membership Service. - A member who had service as an employee as defined in G.S. 135-1(10) and G.S. 128-21(10) or as a teacher as defined in G.S. 135-1(25) and who was omitted from contributing membership through error may be allowed membership service, after submitting clear and convincing evidence of the error, as follows:
1. within 90 days of the omission, by the payment of employee and employer contributions that would have been paid; or
2. after 90 days and prior to three years of the omission, by the payment of the employee and employer contributions that would have been paid plus interest compounded annually at a rate equal to the greater of the average yield on the pension accumulation fund for the preceding calendar year or the actuarial investment rate-of-return assumption, as adopted by the Board of Trustees; or
3. after three years of the omission, by the payment of an amount equal to the full cost of the service credits calculated on the basis of the assumptions used for the purposes of the actuarial valuation of the System's liabilities, and shall take into account the additional retirement allowance arising on account of such additional service credit commencing at the earliest age at which a member could retire on an unreduced retirement allowance, as determined by the Board of Trustees upon the advice of the consulting actuary, plus an administrative fee to be set by the Board of Trustees. Notwithstanding the foregoing provisions of this subdivision that provide for the purchase of service credits, the terms "full cost", "full liability", and "full actuarial cost" include assumed annual post-retirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service allowance.
Repealed by Session Laws 2002-153, s. 3, effective January 1, 2003.
Credit at Full Cost for Federal Employment. Notwithstanding any other provisions of this Chapter, a member in service with five or more years of membership service may purchase creditable service for periods of federal employment, provided that the member is not receiving any retirement benefits resulting from this federal employment, and provided that the member is not vested in the particular federal retirement system to which the member may have belonged while a federal employee. The amount of creditable service purchased under this subsection may not exceed a total of five years. The member shall purchase this service by making a lump sum amount payable to the Annuity Savings Fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. The calculation of the amount payable shall also include an administrative fee to be set by the Board.
Repealed by Session Laws 2020-29, s. 1(b), effective June 19, 2020.
Part-Time Service Credit. Notwithstanding any other provision of this Article to the contrary, any member in service with five or more years of membership service may purchase service previously rendered as a part-time teacher or employee of an employer, as defined in G.S. 135-1(11) or G.S. 128-21(11), except the following service may not be purchased:
1. Part-time service rendered as a bus driver to a public school while a full-time high school student.
2. Temporary or part-time service rendered while a full-time student in pursuit of a degree or diploma in a degree-granting program, unless that service was rendered on a permanent part-time basis and required at least 20 hours of service per week.
Credit at Full Cost for Probationary Employment Purchased On or Before December 31, 2021. Notwithstanding any other provision of this Chapter, on or before December 31, 2021, a member may purchase creditable service, prior to retirement, for employment with an employer as defined in this Article when considered to be in a probationary or employer imposed waiting period status and thereby not regularly employed, between date of employment and date of membership service with the retirement system, provided that the employer or former employer of such a member has revoked this probationary employment or waiting period policy.
Credit at Full Cost for Probationary Employment Purchased On or After January 1, 2022. Notwithstanding any other provision of this Chapter, on and after January 1, 2022, a member in service with five or more years of service may purchase creditable service for employment with an employer as defined in this Article when considered to be in a probationary or employer-imposed waiting period status and thereby not regularly employed between date of employment and date of membership service with the retirement system. The amount of creditable service purchased under this subsection may not exceed five years.
Credit at Full Cost for Temporary Government Employment. Notwithstanding any other provisions of this Chapter, any member in service with five or more years of membership service may purchase creditable service for government employment when classified as a temporary employee subject to all the following conditions:
1. The member was employed by an employer as defined in G.S. 128-21(11) or G.S. 135-1(11).
2. The member's temporary employment met all other requirements of G.S. 128-21(10), or G.S. 135-1(10) or (25).
3. The member has completed five years or more of membership service.
4. The member has acquired from the employer such certifications of temporary employment as are required by the Board of Trustees.
Credit at Full Cost for Employment Not Otherwise Creditable. Notwithstanding any other provisions of this Chapter, any member in service with five or more years of membership service may purchase creditable service for any employment as an employee, as defined in G.S. 128-21(10), of a local government employer not creditable in any other retirement system or plan, provided that the employer is, at the time of purchase, a participating employer in the Retirement System but was not a participating employer in the Retirement System at the time the service was rendered by the member. The amount of creditable service purchased under this subsection may not exceed a total of five years. A member shall purchase this service by making a lump sum payment into the Annuity Savings Fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. The calculation of the amount payable shall also include an administrative fee to be set by the Board.
Purchase of Service Credits Through Rollover Contributions From Certain Other Plans. - Notwithstanding any other provision of this Article, and without regard to any limitations on contributions otherwise set forth in this Article, a member, who is eligible to restore or purchase membership or creditable service pursuant to the provisions of G.S. 128-26, may, subject to such rules and regulations established by the Board of Trustees, purchase such service credits through rollover contributions to the Annuity Savings Fund from (i) an annuity contract described in Section 403(b) of the Internal Revenue Code, (ii) an eligible plan under Section 457(b) of the Internal Revenue Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state, (iii) an individual retirement account or annuity described in Section 408(a) or 408(b) of the Internal Revenue Code that is eligible to be rolled over and would otherwise be includible in gross income, or (iv) a qualified plan described in Section 401(a) or 403(a) of the Internal Revenue Code. Notwithstanding the foregoing, the Retirement System shall not accept any amount as a rollover contribution unless such amount is eligible to be rolled over to a qualified trust in accordance with applicable law and the member provides evidence satisfactory to the Retirement System that such amount qualifies for rollover treatment. Unless received by the Retirement System in the form of a direct rollover, the rollover contribution must be paid to the Retirement System on or before the 60th day after the date it was received by the member.
Purchase of Service Credits Through Plan-to-Plan Transfers. - Notwithstanding any other provision of this Article, and without regard to any limitations on contributions otherwise set forth in this Article, a member, who is eligible to restore or purchase membership or creditable service pursuant to the provisions of G.S. 128-26, may, subject to such rules and regulations established by the Board of Trustees, purchase such service credits through a direct transfer to the Annuity Savings Fund of funds from (i) the Supplemental Retirement Income Plans A, B, or C of North Carolina or (ii) any other defined contribution plan qualified under Section 401(a) of the Internal Revenue Code which is maintained by the State of North Carolina, a political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state.
Expired.
Retroactive Membership Service. - A member who is reinstated to service as an employee as defined in G.S. 128-21(10) retroactively to the date of prior involuntary termination with back pay and associated benefits may be allowed membership service, after submitting clear and convincing evidence of the reinstatement, payment of back pay, and restoration of associated benefits, as follows:
1. When the reinstatement to service is by court order and is:
  1. Within 90 days of the involuntary termination, by the payment of employee and employer contributions that would have been paid; or
  2. After 90 days of the involuntary termination, by the payment of the employee and employer contributions that would have been paid plus interest compounded annually at a rate equal to the greater of the average yield on the pension accumulation fund for the preceding calendar year or the actuarial investment rate-of-return assumption, as adopted by the Board of Trustees.
2. When the reinstatement to service is by settlement agreement voluntarily entered into by the affected parties, by the payment of a lump-sum amount equal to the full liability of the service credits calculated on the basis of the assumptions used for purposes of the actuarial valuation of the system's liabilities, taking into account the retirement allowance arising on account of the additional service credit commencing at the earliest age at which the member could retire on an unreduced retirement allowance, as determined by the Board of Trustees upon the advice of the consulting actuary, plus an administrative fee to be set by the Board of Trustees. Notwithstanding the foregoing provisions of this subsection that provide for the purchase of service credits, the terms "full cost," "full liability," and "full actuarial cost" include assumed annual postretirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service allowance.
If a member who is an elected government official and has not vested in this System on July 1, 2007, is convicted of an offense listed in G.S. 128-38.4 for acts committed after July 1, 2007, then that member shall forfeit all benefits under this System, except for a return of member contributions plus interest. If a member who is an elected government official and has vested in this System on July 1, 2007, is convicted of an offense listed in G.S. 128-38.4 for acts committed after July 1, 2007, then that member is not entitled to any creditable service that accrued after July 1, 2007, regardless of whether that creditable service was earned by virtue of membership in the System, accrued by conversion of sick leave at the point of the member's retirement, accrued by transfer of service from another retirement system, purchased by the member in accordance with this Article, or accrued by any other means. No member shall forfeit any benefit or creditable service earned from a position not as an elected government official. For purposes of this subsection, creditable service attributable to the conversion of sick leave accrues in this System on the date of retirement, service transferred to this System from another system accrues in this System on the effective date of the transfer, and purchased service accrues in this System on the date of the purchase.
If a member who is in service and has not vested in this System on December 1, 2012, is convicted of an offense listed in G.S. 128-38.4A for acts committed after December 1, 2012, then that member shall forfeit all benefits under this System, except for a return of member contributions plus interest. If a member who is in service and has vested in this System on December 1, 2012, is convicted of an offense listed in G.S. 128-38.4A for acts committed after December 1, 2012, then that member is not entitled to any creditable service that accrued after December 1, 2012, regardless of whether that creditable service was earned by virtue of membership in the System, accrued by conversion of sick leave at the point of the member's retirement, accrued by transfer of service from another retirement system, purchased by the member in accordance with this Article, or accrued by any other means. For purposes of this subsection, creditable service attributable to the conversion of sick leave accrues in this System on the date of retirement, service transferred to this System from another system accrues in this System on the effective date of the transfer, and purchased service accrues in this System on the date of the purchase.
Contribution-Based Benefit Cap Purchase Provision. - If a member's retirement allowance is subject to an adjustment pursuant to the contribution-based benefit cap established in G.S. 128-27(a3), the retirement system shall notify the member and the member's employer that the member's retirement allowance has been capped. The retirement system shall compute and notify the member and the member's employer of the total additional amount the member would need to contribute in order to make the member not subject to the contribution-based benefit cap. This total additional amount shall be the actuarial equivalent of a single life annuity adjusted for the age of the member at the time of retirement, or when appropriate, the age at the time of the member's death that would have had to have been purchased to increase the member's benefit to the pre-cap level. Except as otherwise provided in this subsection, the member shall have until 90 days after notification regarding this additional amount or until 90 days after the effective date of retirement, whichever is later, to submit a lump sum payment to the annuity savings fund in order for the retirement system to restore the retirement allowance to the uncapped amount. Nothing contained in this subsection shall prevent an employer from paying all or part of the cost of the amount necessary to restore the member's retirement allowance to the pre-cap amount. Notwithstanding the requirement that the payment be made as a lump sum, the retirement system may allow an employer of a member who became a member before January 1, 2015, or who has not earned at least five years of membership service in the retirement system after January 1, 2015, to pay the lump-sum amount required in this subsection on an installment payment plan under one of the following two options:
1. Option one. - An installment payment plan ending no more than 15 months after the retirement of the member.
2. Option two. - An installment payment plan beginning no less than 90 days after the retirement of the member and ending no more than 27 months after the retirement of the member. Interest shall be assessed on the principal amount of the contribution-based benefit cap liability owed and applied to any installment payment plan term exceeding 12 months at a rate corresponding with the interest rate assumption based on the most recent actuarial valuation approved by the Board of Trustees.

A participating employer may allow prior service credit to any of its employees on account of: their earlier service to the aforesaid employer; or, their earlier service to any other employer as the term employer is defined in G.S. 128-21(11); or, their earlier service to any state, territory, or other governmental subdivision of the United States other than this State.

A participating employer may allow prior service credit to any of its employees on account of service, as defined in G.S. 135-1(23), to the State of North Carolina to the extent of such service prior to the establishment of the Teachers' and State Employees' Retirement System on July 1, 1941; provided that employees allowed such prior service credit pay in a total lump sum an amount calculated on the basis of compensation the employee earned when the employee first entered membership and the employee contribution rate at that time together with interest thereon from year of first membership to year of payment shall be one half of the calculated cost.

A member retiring on or after July 1, 1971, who is not granted credit for military service under the provisions of the preceding paragraph will be allowed credit for any period of qualifying service in the Armed Forces of the United States, as defined for purposes of reemployment rights under federal law, provided that the member was an employee as defined in G.S. 128-21(10) at the time the member entered military service, and either (i) the returning member is in service, with the employer by whom the member was employed when the member entered military service, for a period of not less than 10 years after the member is separated or released from that military service under other than dishonorable conditions or (ii) the following conditions are met, in the conjunctive:

The uniformed service credit allowed under this subsection shall be limited to a maximum of five years unless otherwise specifically exempted from that durational limitation by federal law. The salary or compensation of such an employee during the period of qualifying military service shall be deemed to be that salary or compensation the employee would have received but for the period of service had the employee remained continuously employed, if the determination of that salary or compensation is reasonably certain. If the determination of the salary or compensation is not reasonably certain, then it shall be deemed to be that employee's average rate of compensation during the 12-month period immediately preceding the period of service.

Pursuant to 38 U.S.C. § 4318(b)(1), when a member who has been on military leave returns to work consistent with the provisions of this subsection concerning return to service within two years after the member's earliest eligibility for separation or release from military service, then the member's employer must remit to the System all the employer and employee contributions for the full period of that member's military service.

Creditable service allowed under this subdivision shall be only for the initial period of "active duty", as defined in 38 U.S. Code Section 101(21), in the Armed Forces of the United States up to the date the member was first eligible to be separated and released and for subsequent periods of "active duty", as defined in 38 U.S. Code Section 101(21), as required by the Armed Forces of the United States up to the date of first eligibility for separation or release, but shall not include periods of active duty in the Armed Forces of the United States creditable in any other retirement system except the National Guard or any reserve component of the Armed Forces of the United States, and shall not include periods of "active duty for training", as defined in 38 U.S. Code Section 101(22), or periods of "inactive duty training", as defined in 38 U.S. Code Section 101(23), rendered in any reserve component of the Armed Forces of the United States. Provided, creditable service may be allowed only for active duty in the Armed Forces of the United States of a member that resulted in a general or honorable discharge from duty. The member shall submit satisfactory evidence of the service claimed. For purposes of this subsection, membership service may include any membership or prior service credits transferred to this Retirement System pursuant to G.S. 128-24.

Current membership service shall mean membership service earned since the service previously rendered to any state, territory, or other governmental subdivision of the United States other than this State. Creditable service under this subsection shall be allowed only at the rate of one year of out-of-state service for each year of service in this State, with a maximum allowable of 10 years of out-of-state service. Such service is limited to full-time service which would be allowable under the laws governing this System. Credit will be allowed only if no benefit is allowable in another public retirement system as a result of the service.

Creditable service under this subsection shall be allowed only at the rate of one year of out-of-state service for each year of membership service in this State, with a maximum allowable of five years of out-of-state service. Such service is limited to full-time service that would be allowable under the laws governing this Retirement System. Credit will be allowed only if no benefit is allowable in another public retirement system as a result of the service.

Whenever the creditable service purchased pursuant to this subsection is for a period that occurs during the four consecutive calendar years that would have produced the highest average annual compensation pursuant to G.S. 128-21(5) had the member not been on leave of absence without pay, then the compensation that the member would have received during the purchased period shall be included in calculating the member's average final compensation. In such cases, the compensation that the member would have received during the purchased period shall be based on the annual rate of compensation of the member immediately prior to the leave of absence.

In the case of a law enforcement officer electing to purchase service under this section who is in receipt of benefits under the North Carolina Workers' Compensation Act due to serious bodily injury suffered in the line of duty as a result of an intentional or unlawful act of another, as certified by the head of the employing law enforcement agency, and whose approved leave of absence terminates on or before a return to service on and after August 1, 2006, the employer percentage rate of contribution payable under subdivision (2) of this subsection shall be made by the employer that granted the leave of absence. The cost to the law enforcement officer shall be reduced by the amount paid by the employer. For purposes of this subsection, "serious bodily injury" means bodily injury that creates a substantial risk of death, or that causes serious permanent disfigurement, coma, a permanent or protracted condition that causes extreme pain, or permanent or protracted loss or impairment of the function of any bodily member or organ, or that results in prolonged hospitalization.

Nothing in this subsection prevents an employer from voluntarily paying all or a part of the employee portion of the total cost of the service credit purchased, and the employer does not discriminate against any eligible law enforcement officer in this subsection employed by the employer by paying that portion of cost. To the extent paid by the employer, the employee portion paid by the employer shall be credited to the Pension Accumulation Fund; to the extent paid by the member, the employee portion paid by the member shall be credited to the member's annuity savings account. A member shall pay any part of the employee portion of the total cost not paid by the employer.

Nothing contained in this subsection shall prevent an employer or member from paying all or a part of the cost of the omitted membership service; and to the extent paid by the employer, the cost paid by the employer shall be credited to the pension accumulation fund; and to the extent paid by the member, the cost paid by the members shall be credited to the member's annuity savings account; provided, however, an employer does not discriminate against any member or group of members in his employ in paying all or any part of the cost of the omitted membership service. In the event an employer pays all or a part of the full actuarial cost as determined in subdivision (3) of this subsection, the employer may, at its option, pay such amount either in a lump sum or by increasing its "accrued liability contribution" for the remainder of its accrued liability period. In the event an employer has satisfied its accrued liability contribution, the employer may amortize its portion of the full actuarial cost over a period not to exceed ten years. The expense of making an actuarial valuation to determine the accrued liability contribution or the additional accrued liability contribution, required to amortize the portion of the full actuarial cost paid by the employer, shall be paid by the employer in a lump sum at the time of the actuarial valuation.

On or before December 31, 2021, members may also purchase creditable service for periods of employment with public community service entities within the State funded entirely with federal funds, other than the federal government, that are not covered by the provisions of G.S. 128-21(11) or G.S. 135-1(11), under the same terms and conditions that are applicable to the purchase of creditable service for periods of federal employment in accordance with this subsection. "Public community service entities" as used in this subsection shall mean community action, human relations, manpower development, and community development programs as defined in Articles 19 and 21 of Chapter 160A and Article 18 of Chapter 153A of the General Statutes.

Payment for service purchased under this subsection shall be made in a single lump sum in an amount calculated by applying the ratio of actual gross compensation earned as a part-time employee to the gross compensation that would have been earned as a full-time employee to the period of service rendered in months. The member shall purchase this service by paying a lump sum amount to the Annuity Savings Fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. The calculation of the amount payable shall also include an administrative fee to be set by the Board.

The Board of Trustees shall adopt rules regarding how much service in any year, as based on compensation, is equivalent to one year of service in proportion to earnable compensation, but in no case shall more than one year of service be creditable for all service in one year. Service rendered for the regular school year in any district shall be equivalent to one year of service.

Provided, the member shall purchase this service by making a lump sum amount payable to the Annuity Savings Fund equal to the full liability of the service credits calculated on the basis of the assumptions used for purposes of the actuarial valuation of the liabilities of the retirement system, and the calculation of the amount payable shall take into account the retirement allowance arising on account of the additional service credit commencing at the earliest age at which the member could retire on an unreduced retirement allowance, as determined by the Board of Trustees upon the advice of the consulting actuary, plus an administrative fee to be set by the Board of Trustees. In no instance shall the amount payable be less than the contributions a member would have made during the employment plus four percent (4%) interest compounded annually.

Notwithstanding the foregoing provisions of this subsection that provide for the purchase of service credits, the terms "full cost", "full liability", and "full actuarial cost" include assumed annual post-retirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service allowance.

Nothing contained in this subsection shall prevent an employer or member from paying all or a part of the cost of the probationary employment; and to the extent paid by the employer, the cost paid by the employer shall be credited to the pension accumulation fund; and to the extent paid by the member, the cost paid by the member shall be credited to the member's annuity savings account; provided, however, an employer does not discriminate against any member or group of members in its current employ in paying all or any part of the cost of the probationary employment. In the event an employer pays all or a part of the full actuarial cost, the employer may, at its option, pay such amount either in a lump sum or by increasing its "accrued liability contribution" for the remainder of its accrued liability period. In the event an employer has satisfied its accrued liability contribution, the employer may amortize its portion of the full actuarial cost over a period not to exceed 10 years. The expense of making an actuarial valuation to determine the accrued liability contribution or the additional accrued liability contribution, required to amortize the portion of the full actuarial cost paid by the employer, shall be paid by the employer in a lump sum at the time of the actuarial valuation.

The member shall purchase this service by paying a lump sum amount to the Annuity Savings Fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. The increases as set by the Board of Trustees upon the advice of the consulting actuary shall also include an administrative fee to be set by the Board.

The amount of creditable service purchased under this subsection may not exceed a total of five years. A member shall purchase this service by making a lump sum payment into the Annuity Savings Fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. The calculation of the amount payable shall also include an administrative fee to be set by the Board.

Purchase of Service Credits Through Plan-to-Plan Transfers. - Notwithstanding any other provision of this Article, and without regard to any limitations on contributions otherwise set forth in this Article, a member, who is eligible to restore or purchase membership or creditable service pursuant to the provisions of G.S. 128-26, may, subject to such rules and regulations established by the Board of Trustees, purchase such service credits through a direct transfer to the Annuity Savings Fund of funds from (i) an annuity contract described in Section 403(b) of the Internal Revenue Code or (ii) an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state.

Nothing contained in this subsection shall prevent an employer or member from paying all or a part of the cost of the retroactive membership service; and to the extent paid by the employer, the cost paid by the employer shall be credited to the pension accumulation fund; and to the extent paid by the member, the cost paid by the member shall be credited to the member's annuity savings account; provided, however, an employer does not discriminate against any member or group of members in his employ in paying all or any part of the cost of the retroactive membership service.

In the event a member received a return of accumulated contributions subsequent to an involuntary termination as provided in G.S. 128-27(f), the member may redeposit, within 90 days of reinstatement retroactive to the date of prior involuntary termination, in the annuity savings fund by single payment, an amount equal to the total amount he previously withdrew plus regular interest and restore the creditable service forfeited upon receiving his return of accumulated contributions.

Payment under both installment plans must be completed regardless of whether the member continues to receive a recurring monthly retirement benefit through the end of the installment period.

History

(1939, c. 390, s. 6; 1941, c. 357, s. 5; 1943, c. 535; 1945, c. 526, s. 3; 1951, c. 274, s. 3; 1955, c. 1153, s. 3; 1967, c. 978, ss. 11, 12; 1969, c. 442, s. 6; 1971, c. 325, ss. 9-11, 19; 1973, c. 243, s. 2; c. 667, s. 1; c. 816, s. 3; c. 1310, ss. 1-4; 1975, c. 205, s. 1; c. 485, ss. 1-3; 1977, c. 973; 1979, c. 866, s. 1; c. 868, ss. 1, 2; c. 1059, s. 1; 1981, c. 557, s. 3; 1981 (Reg. Sess., 1982), c. 1283, s. 1; c. 1396, s. 3; 1983, c. 533, s. 2; 1983 (Reg. Sess., 1984), c. 1034, s. 231; 1985, c. 407, s. 1; c. 479, s. 196(h); c. 649, ss. 1, 4; 1987, c. 533, s. 2; c. 617, ss. 1-4; c. 717, s. 1; 1987 (Reg. Sess., 1988), c. 1088, ss. 5, 6; c. 1110, s. 8; 1989, c. 255, ss. 1-10; c. 762, s. 2; 1989 (Reg. Sess., 1990), c. 1024, s. 28; 1991, c. 753, s. 1; 1991 (Reg. Sess., 1992), c. 1017, s. 1; 1995, c. 507, s. 7.23D(a); 1998-71, ss. 1, 2; 1998-214, s. 1; 1999-158, s. 1; 2001-487, s. 82; 2002-71, s. 3; 2002-153, ss. 1-3; 2003-359, ss. 17-19, 22; 2005-91, s. 8; 2006-29, s. 1; 2007-179, s. 2(b); 2007-304, s. 1; 2009-281, s. 1; 2009-392, s. 1; 2010-72, s. 5(b); 2011-183, ss. 97(a), (b); 2011-294, s. 5(b); 2012-130, s. 3(a); 2012-193, s. 4; 2013-288, ss. 2(a), 11; 2013-405, s. 6(b); 2014-88, s. 1(d); 2015-168, ss. 6, 7(b); 2016-56, s. 3; 2017-128, s. 2(b); 2017-129, s. 9(b); 2020-29, s. 1(b); 2020-48, ss. 4.4(c), (d); 2021-57, ss. 2.2(b), 2.3, 2.4(a); 2021-72, s. 3.1(a).)

Editor's Note. - Session Laws 1987, c. 617, s. 3 directed the deletion of the last paragraph of subsection (j). However, subsection (j) only contained one paragraph. Thus it would appear that the intent of the act was to delete all of subsection (j).

Session Laws 1987, c. 617, s. 5 provided, inter alia: "For the purposes of Section 3 of this act, members of the Retirement System who are members before January 1, 1988, shall retain all rights and privileges to purchase military and out-of-state service credits under the same conditions that existed prior to the effective date of that section."

Session Laws 1987, c. 617, s. 3, effective January 1, 1988, deleted the last paragraph of subsection (a), which, as amended by c. 617, ss. 1 and 4, read:

"Notwithstanding any other provision of this Chapter, members not otherwise allowed service credit for service in the armed forces of the United States may, upon completion of 10 years of prior and current membership service, purchase such service credit by paying in a total lump sum an amount, based on the compensation the member earned when he first entered membership and the employee contribution rate at that time, with sufficient interest added thereto so as to equal one half the cost of allowing such service, plus a fee to cover expense of handling payment to be determined by the Board of Trustees and assessed the member at the time of payment; provided that credit will be allowed only for the initial period of active duty in the armed forces of the United States up to the time the member was first eligible to be separated or released therefrom, and subsequent periods of such active duty as required by the armed forces of the United States up to the date of first eligibility for separation or release therefrom; and further provided that the member submit satisfactory evidence of the service claimed and that service credit be allowed only for that period of active service in the armed forces of the United States not creditable in any other retirement system, except the national guard or any reserve component of the armed forces of the United States. These provisions shall apply equally to retired members who had attained 10 years of prior and current membership service prior to retirement. Cost as used in this subsection shall mean the amount of money required to provide additional retirement benefits based on service credit allowed at the time any adjustment to the service credit of a member is made."

Session Laws 1987, c. 617, s. 3, effective January 1, 1988, also deleted subsection (j), which, as amended by c. 617, ss. 2 and 4, read:

"(j) Notwithstanding any other provision of this Chapter, any member may, upon completion of 10 years of prior and current membership service, purchase credit for service previously rendered to any state, territory or other governmental subdivision of the United States other than this State at the rate of one year of out-of-state service for each two years of service in this State with a maximum allowable of 10 years of out-of-state service. Such service is limited to full-time service which would be allowable under the laws governing this System. Credit will be allowed only if no benefit is allowable in another public retirement system as the result of the service. Payment shall be permitted only on a total lump sum an amount, based on the compensation the member earned when he first entered membership and the employee contribution rate at that time and shall be equal to the full cost of providing credit for such service plus a fee to cover expense of handling which shall be determined by the Board of Trustees. These provisions shall apply equally to retired members who had attained 10 years of prior and current membership service prior to retirement. Cost as used in this subsection shall mean the amount of money required to provide additional retirement benefits based on service credit allowed at the time any adjustment to the service credit of an individual is made."

Session Laws 2002-71, which added subsections (t) and (u), in s. 9, provides, in part, that s. 3 of the act becomes effective January 1, 2003, except that G.S. 128-26(u), as enacted by s. 3, becomes effective the later of January 1, 2003, or the date upon which the Department of State Treasurer receives a ruling from the Internal Revenue Service approving the direct transfers provided for in that subsection. The Revisor of Statutes is informed that a favorable letter of determination has been received.

Session Laws 2006-29, s. 1, which amended subdivision ( l )(2), is effective August 1, 2006, and applicable to members who return to service from an approved leave of absence on or after that date.

Session Laws 2009-392 added subsection (u1) to this section, and in s. 2 provided: "This act becomes effective July 1, 2009, and applies to nonqualified employment with an economic development organization performed on or before December 31, 2009. This act expires December 31, 2009, provided that any inchoate rights that may accrue to a member under this act shall not be diminished."

Session Laws 2020-29, s. 10, is a severability clause.

Session Laws 2020-48, s. 6.1, is a severability clause.

Effect of Amendments. - Session Laws 2005-91, s. 8, effective July 1, 2005, inserted "not less than one hour;" near the end of the first paragraph of subsection (e).

Session Laws 2007-304, s. 1, effective July 28, 2007, in subsection (q), deleted the first sentence of the third paragraph related to employer payment of pension fund, and added the fourth paragraph.

Session Laws 2009-281, s. 1, effective July 10, 2009, substituted "National Guard" for "national guard" in the first sentence of the last paragraph of subsection (j1).

Session Laws 2009-392, s. 1, effective July 31, 2009, added subsection (u1). For applicability and expiration date, see editor's note.

Session Laws 2010-72, s. 5(b), effective July 1, 2010, added the exception at the end of the first sentence of subsection (w).

Session Laws 2011-183, s. 97(a) and (b), effective June 20, 2011, throughout subsection (a) and in subdivision (j1)(1), made gender-neutralizing changes; in subsection (a), in the first paragraph, twice inserted "or her" and inserted "or she," in the fourth paragraph, substituted "Armed Forces" for "armed forces" and "from such the Armed Forces of the United States" for "from such armed services," in the fifth paragraph, substituted "Armed Forces" for "armed services"; and in subdivision (a)(2), substituted "Armed Forces of the United States" for "armed services."

Session Laws 2011-294, s. 5(b), effective July 1, 2011, added the last paragraph in subsection (a).

Session Laws 2012-130, s. 3(a), effective July 1, 2012, added the last two sentences to the first paragraph, and deleted the last sentence of the third paragraph in subsection (e).

Session Laws 2012-193, s. 4, effective December 1, 2012, added subsection (x).

Session Laws 2013-288, ss. 2(a) and (11), effective July 1, 2013, redesignated former subsection (a) as subsections (a) and (a1); and, in subsection (a1), rewrote the second paragraph and added the third paragraph; and in subsection (x), substituted "128-38.4A" for "126-38.5" twice.

Session Laws 2013-405, s. 6(b), effective July 1, 2013, in subsection (v), in the introductory paragraph, substituted "with back pay and associated benefits" for "(with backpay and benefits)" and inserted "payment of back pay, and restoration of associated benefits"; added the introductory paragraph of subdivision (v)(1); inserted the subdivision (v)(1)a. designation; redesignated former subdivision (v)(2) as (v)(1)b; and added subdivision (v)(2).

Session Laws 2014-88, s. 1(d), effective January 1, 2015, added subsection (y).

Session Laws 2015-168, ss. 6 and 7(b), effective July 23, 2015, inserted "if and only if that participation begins prior to November 1, 2015" in subsection (a); and in subsection (y), in the fourth sentence, added "Except as otherwise provided" at the beginning and made a minor stylistic change, and added the last two sentences.

Session Laws 2016-56, s. 3, effective January 1, 2017, in subsection (a1), substituted "not dishonourably" for "honorably" in the first paragraph and, inserted "and employee" near the end of the last undesignated paragraph.

Session Laws 2017-128, s. 2(b), effective July 20, 2017, in subsection (y), substituted "under one of the following two options" for "beginning no less than 90 days after the retirement of the member and" in the introductory paragraph, added the subdivision (y)(1) designation and rewrote subdivision (y)(1), added subdivision (y)(2), and substituted "both installment plans" for "such an installment plan" in the last paragraph.

Session Laws 2017-129, s. 9(b), effective January 1, 2018, in the first paragraph of subsection (e), made gender-neautralizing changes, and added the present last sentence.

Session Laws 2020-29, s. 1(b), effective June 19, 2020, rewrote the section.

Session Laws 2020-48, s. 4.4(c), (d), effective June 26, 2020, in subsections (w) and (x), added "regardless of whether that creditable service was earned by virtue of membership in the System, accrued by conversion of sick leave at the point of the member's retirement, accrued by transfer of service from another retirement system, purchased by the member in accordance with this Article, or accrued by any other means" at the end of the second sentence, and added the last sentence.

CASE NOTES

"Creditable Service." - Superior court erred in granting partial summary judgment awarding a sheriff a special separation allowance for 36 years of creditable service through two North Carolina retirement systems, state and local, because the sheriff was not a member of the state system when he retired where, prior to his retirement from the sheriff's department, he began receiving retirement benefits from that system, and the sheriff was only entitled to credit for his 12 years of service under the local system where the county never issued the sheriff a prior service certificate, the sheriff never transferred membership of his state service to the local system, and the county never gave the sheriff credit for prior service. Lovin v. Cherokee Cnty., 248 N.C. App. 527, 789 S.E.2d 869 (2016).

Forfeiture of Sick Leave. - Respondent was only able to convert her unused sick leave into creditable service time upon her retirement effective April 2017, and her retirement occurred after the effective forfeiture date of December 2012 in G.S.128-38.4A; respondent forfeited all 2.5833 years of creditable service converted from unused sick leave, not just the 1.25 years of creditable service forfeited after December 2012. N.C. Dep't of State Treasurer v. Riddick, - N.C. App. - , - S.E.2d - (Nov. 3, 2020).

Forfeiture of Vested Service. - Respondent worked for the North Carolina Department of Natural and Cultural Resources in an unelected position, and this vested and earned her creditable time in the retirement system, which she was allowed to transfer to another retirement system; respondent could not forfeit vested service she had already accrued as an unelected state official prior to her criminal acts. N.C. Dep't of State Treasurer v. Riddick, - N.C. App. - , - S.E.2d - (Nov. 3, 2020).

Opinions of Attorney General

Effect of Purchase of Service Credits. - The purchase of prior credit service for the period of July 10, 1984 and the enrollment in November, 1984 of several public safety officers would not give those officers five years' service standing to their credit as of August 12, 1989; therefore, they would not thereby have a right to receive their retirement benefits tax-free. See Opinion of Attorney General to Mr. Ralph D. Karpinos, Town Attorney, Town of Chapel Hill, 2000 N.C. AG LEXIS 12 (10/2/2000).

§ 128-26. Allowance for service.

Each person who becomes a member during the first year of his or her employer's participation, if and only if that participation begins prior to November 1, 2015, and who was an employee of the same employer at any time during the year immediately preceding the date of participation, shall file a detailed statement of all service rendered by him or her to that employer prior to the date of participation for which he or she claims credit.
With respect to a member retiring on or after July 1, 1967, the governing board of a participating unit may allow credit for any period of military service in the Armed Forces of the United States if the person returned to the service of the person's employer within two years after having been not dishonorably discharged, or becoming entitled to be discharged, released, or separated from such the Armed Forces of the United States; provided that, notwithstanding the above provisions, any member having credit for not less than 10 years of otherwise creditable service may be allowed credit for such military services which are not creditable in any other governmental retirement system; provided further, that a member will receive credit for military service under the provisions of this paragraph only if the member submits satisfactory evidence of the military service claimed and the participating unit of which the member is an employee agrees to grant credit for such military service prior to January 1, 1972.
1. The member did not, prior to leaving for military service, provide clear written notice of an intent not to return to work after military service.
2. The member was discharged from uniformed service and returned from the leave of absence for uniformed service to membership service in this system within the time limit mandated by federal law for reporting back to work.
3. The period of uniformed service, for which additional service credit is sought, has been verified by suitable documentation and is not eligible for receipt of benefits under any other retirement system or pension plan.
4. All service credit forfeited by a refund pursuant to the provisions of G.S. 128-27(f) has been purchased.
  1. Notwithstanding any other provision of this Chapter, on or before December 31, 2021, any person who withdrew his or her contributions in accordance with the provisions of G.S. 128-27(f) or 135-5(f) or the rules and regulations of the Law Enforcement Officers' Retirement System and who subsequently returns to service may, upon completion of five years of prior and current membership service, repay in a total lump sum any and all of the accumulated contributions previously withdrawn with interest compounded annually at the rate of six and one-half percent (6.5%) for each calendar year from the year of withdrawal to the year of repayment plus a fee to cover expense of handling which shall be determined by the Board of Trustees, and receive credit for the service forfeited at time of withdrawal(s). These provisions shall apply equally to retired members who had attained five years of prior and current membership service prior to retirement. The retirement allowance of a retired member who restores service under this subsection shall be increased the month following the month payment is received. The increase in the retirement allowance shall be the difference between the initial retirement allowance, under any optional allowance elected at the time of retirement, and the amount of the retirement allowance, under any optional allowance elected at the time of retirement, to which the retired member would have been entitled had the service not been previously forfeited, adjusted by any increases in the retirement accrual rate occurring between the member's date of retirement and the date of payment. The increase in the retirement allowance shall not include any adjustment for cost-of-living increases granted since the date of retirement.
In no case shall more than one year of service be creditable for all service in one calendar year.
, (d) Repealed by Session Laws 2020-29, s. 1(b), effective June 19, 2020.
Creditable service at retirement on which the retirement allowance of a member shall be based shall consist of the membership service rendered by the member since he or she last became a member, and also if the member has a prior service certificate which is in full force and effect, the amount of the service certified on the prior service certificate; and if the member has sick leave standing to the member's credit upon retirement on or after July 1, 1971, one month of credit for each 20 days or portion thereof, but not less than one hour; sick leave shall not be counted in computing creditable service for the purpose of determining eligibility for disability retirement or for a vested deferred allowance. Creditable service for unused sick leave shall be allowed only for sick leave accrued monthly during employment under a duly adopted sick leave policy and for which the member may be able to take credits and be paid for sick leave without restriction. However, in no instance shall unused sick leave be credited to a member's account at retirement if the member's last day of actual service is more than 365 days prior to the effective date of the member's retirement. Days of sick leave standing to a member's credit at retirement shall be determined by dividing the member's total hours of sick leave at retirement by the hours per month such leave was awarded under the employer's duly adopted sick leave policy as the policy applied to the member when the leave was accrued.
On and after January 1, 1986, the creditable service of a member who was a member of the Law Enforcement Officers' Retirement System at the time of the transfer of law enforcement officers employed by participating employers from that System to this Retirement System and whose accumulated contributions are transferred from that System to this Retirement System, includes service that was creditable in the Law Enforcement Officers' Retirement System; and membership service with that System is membership service with this Retirement System; provided, notwithstanding any provisions of this Article to the contrary, any inchoate or accrued rights of such a member to purchase creditable service for military service, withdrawn service and prior service under the rules and regulations of the Law Enforcement Officers' Retirement System may not be diminished and may be purchased as creditable service with this Retirement System under the same conditions that would have otherwise applied.
Repealed by Session Laws 2020-29, s. 1(b), effective June 19, 2020.
During periods when a member is on leave of absence and is receiving less than his full compensation, he will be deemed to be in service only if he is contributing to the Retirement System as provided in G.S. 128-30(b)(4). If he is so contributing, the annual rate of compensation paid to such employee immediately before the leave of absence began will be deemed to be the actual compensation rate of the employee during the leave of absence.
(Repealed effective July 1, 2022) Creditable service at retirement shall include any service rendered by a member while on leave of absence to serve as a member or officer of the General Assembly which is not creditable toward retirement under the Legislative Retirement Fund provided the allowance of such credit shall be contingent upon the cancellation of service credit in the fund and the transfer of the member's contributions plus accumulated interest from the fund to this System.
Prior to January 1, 2023, any member may purchase creditable service for service as a member of the General Assembly not otherwise creditable under this section, provided the service is not credited in the Legislative Retirement Fund nor the Legislative Retirement System, and further provided the member pays a lump sum amount equal to the full cost of the additional service credits calculated on the basis of the assumptions used for the purposes of the actuarial valuation of the System's liabilities, taking into account the additional retirement allowance arising on account of the additional service credits commencing at the earliest age at which a member could retire on an unreduced retirement allowance as determined by the Board of Trustees upon the advice of the consulting actuary, plus an administrative fee to be set by the Board of Trustees. Notwithstanding the foregoing provisions of this subsection that provide for the purchase of service credits, the terms "full cost", "full liability", and "full actuarial cost" include assumed annual post-retirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service allowance.
Notwithstanding any provision of this Chapter to the contrary on and after January 1, 2023, any member in service with five or more years of membership service may purchase creditable service for service as a member of the General Assembly not otherwise creditable under this section, provided the service is not created in the Legislative Retirement Fund nor the Legislative Retirement System, by paying a total lump sum payment. The amount of creditable service purchased under this subsection may not exceed a total of five years. The member shall purchase this service by paying a lump sum amount to the Annuity Savings Fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. Subject to the requirements of this subsection, an employer may pay all or part of the cost of a service purchase of a member in service. To the extent that the purchase is paid by the employer, the cost paid by the employer shall be credited to the pension accumulation fund. To the extent that the purchase is paid by the member, the cost paid by the member shall be credited to the member's annuity savings account.
North Carolina Withdrawn Service Purchased On and After January 1, 2022. Notwithstanding any other provision of this Article to the contrary, on and after January 1, 2022, any member who withdrew his or her contributions in accordance with the provisions of G.S. 128-27(f) or G.S. 135-5(f) or the rules of the Law Enforcement Officers' Retirement System, and who subsequently returns to service and completes five years of membership service upon that return, while in service may purchase an amount of creditable service totaling the amount of the membership service associated with the withdrawn contributions, provided that the total of the creditable service purchased under this subsection may not exceed a total of five years. The member shall purchase this service by paying a lump sum amount to the Annuity Savings Fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. The calculation of the amount payable shall also include an administrative fee to be set by the Board.
Repealed by Session Laws 1987, c. 617, s. 3.
Notwithstanding any other provision of this Chapter, any member and any retired member as herein described may purchase creditable service for service in the Armed Forces of the United States, not otherwise allowed, by paying a total lump sum payment determined as follows:
1. For members who completed 10 years of membership service, and retired members who completed 10 years of membership service prior to retirement, and whose membership began on or prior to January 1, 1988, and who make such purchase within three years after first becoming eligible, the cost shall be an amount equal to the monthly compensation the member earned when the member first entered membership service times the employee contribution rate at that time times the months of service to be purchased multiplied by a factor equivalent to the investment return assumptions determined by the Board of Trustees, compounded annually, from the initial year of membership to the year of payment so as to equal one-half of the cost of allowing such service, plus an administrative fee to be set by the Board of Trustees.
2. For members who complete five years of membership service, and retired members who complete five years of membership service prior to retirement, and eligible members and retired members covered by paragraph (1) of this subdivision, whose membership began on or before January 1, 1988, but who did not or do not make such purchase within three years after first becoming eligible, the cost shall be an amount equal to the full liability of the service credits calculated on the basis of the assumptions used for the purposes of the actuarial valuation of the System's liabilities and shall take into account the retirement allowance arising on account of the additional service credits commencing at the earliest age at which the member could retire on an unreduced allowance, as determined by the Board of Trustees upon the advice of the consulting actuary, plus an administrative fee to be set by the Board of Trustees. Notwithstanding the foregoing provisions of this subsection that provide for the purchase of service credits, the term "full liability" includes assumed post-retirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service retirement allowance.
Notwithstanding any other provision of this Chapter, on or before December 31, 2021, any member and any retired member as herein described may purchase creditable service previously rendered to the federal government or to any state, territory, or other governmental subdivision of the United States other than this State by paying a total lump-sum payment determined as follows:
1. For members who completed 10 years of prior and current membership service, and retired members who completed 10 years of prior and current membership service prior to retirement, and whose membership began on or before January 1, 1988, and who make such purchase within three years after first becoming eligible, the cost shall be an amount equal to the monthly compensation the member earned when the member first entered membership service, times the employee contribution rate at that time, times the months of service to be purchased, times two, multiplied by a factor equivalent to the investment return assumptions determined by the Board of Trustees, compounded annually, from the initial year of membership to the year of payment so as to equal the full cost of allowing such service, plus an administrative fee to be set by the Board of Trustees.
2. For members who complete five years of prior and current membership service, and retired members who complete five years of prior and current membership service prior to retirement, and eligible members and retired members covered by subdivision (1) of this subsection, whose membership began on or before January 1, 1988, but who did not or do not make such purchase within three years after first becoming eligible, the cost shall be an amount equal to the full liability of the service credits calculated on the basis of the assumptions used for the purposes of the actuarial valuation of the System's liabilities and shall take into account the retirement allowance arising on account of the additional service credits commencing at the earliest age at which the member could retire on an unreduced allowance, as determined by the Board of Trustees upon the advice of the consulting actuary, plus an administrative fee to be set by the Board of Trustees. Notwithstanding the foregoing provisions of this subsection that provide for the purchase of service credits, the term "full liability" includes assumed postretirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service retirement allowance. Notwithstanding the requirement of five years of current membership service, a member whose membership began prior to the service the member desires to purchase shall be eligible to purchase creditable service under this subdivision upon returning to service as an employee upon completion of a total of five years of membership service and upon completion of one year of current membership service.
Notwithstanding any provision of this Article to the contrary, on and after January 1, 2022, any member in service with five or more years of membership service may purchase creditable service previously rendered to the federal government or to any state, territory, or other governmental subdivision of the United States other than this State by paying a total lump sum payment. The amount of creditable service purchased under this subsection may not exceed a total of five years. The member shall purchase this service by paying a lump sum amount to the Annuity Savings Fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. The increases as set by the Board of Trustees upon the advice of the consulting actuary shall also include an administrative fee to be set by the Board.
Notwithstanding any language to the contrary of any provision of this section, or of any repealed provision of this section that was repealed with the inchoate and accrued rights preserved, all repayments and purchases of service credits, allowed under the provisions of this section or of any repealed provision of this section that was repealed with inchoate and accrued rights preserved, must be made within three years after the member first becomes eligible to make such repayments and purchases. Any member who does not repay or purchase service credits within said three years after first eligibility to make such repayments and purchases may, under the same conditions as are otherwise required, repay or purchase service credits provided that the repayment or purchase equals the full cost of the service credits calculated on the basis of the assumptions used for purchases of the actuarial valuation of the System's liabilities and shall take into account the additional retirement allowance arising on account of such additional service credit commencing at the earliest age at which such member could retire on an unreduced retirement allowance as determined by the Board of Trustees upon the advice of the consulting actuary. Notwithstanding the foregoing provisions of this subsection that provide for the purchase of service credits, the terms "full cost", "full liability", and "full actuarial cost" include assumed annual post-retirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service allowance. Notwithstanding the foregoing, on and after January 1, 2003, the provisions of this subsection shall not apply to the repayment of contributions withdrawn pursuant to subsection (i) of this section.
Notwithstanding any other provision of this Chapter, any member may purchase creditable service for periods of employer approved leaves of absence when in receipt of benefits under the North Carolina Workers' Compensation Act. This service shall be purchased by paying a cost calculated in the following manner:
1. Leaves of Absence Terminated Prior to July 1, 1983. - The cost to a member whose employer approved leave of absence, when in receipt of benefits under the North Carolina Workers' Compensation Act, terminated upon return to service prior to July 1, 1983, shall be a lump sum amount payable to the Annuity Savings Fund equal to the full liability of the service credits calculated on the basis of the assumptions used for purposes of the actuarial valuation of the system's liabilities, and shall take into account the retirement allowance arising on account of the additional service credit commencing at the earliest age at which the member could retire on an unreduced retirement allowance, as determined by the board of trustees upon the advice of the consulting actuary, plus an administrative fee to be set by the Board of Trustees. Notwithstanding the foregoing provisions of this subdivision that provide for the purchase of service credits, the terms "full cost", "full liability", and "full actuarial cost" include assumed annual post-retirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service allowance.
2. Leaves of Absence Terminating On and After July 1, 1983. - The cost to a member whose employer approved leave of absence, when in receipt of benefits under the North Carolina Workers' Compensation Act, terminates on and after July 1, 1983, shall be a lump sum amount due and payable to the Annuity Savings Fund within six months from end of the leave of absence equal to the total employee and employer percentage rates of contribution in effect at the time of purchase and based on the annual rate of compensation of the member immediately prior to the leave of absence; Provided, however, the cost to a member whose amount due is not paid within six months from the end of the leave of absence shall be the amount due plus one percent (1%) per month penalty for each month or fraction thereof the payment is made beyond the six-month period.
Omitted Membership Service. - A member who had service as an employee as defined in G.S. 135-1(10) and G.S. 128-21(10) or as a teacher as defined in G.S. 135-1(25) and who was omitted from contributing membership through error may be allowed membership service, after submitting clear and convincing evidence of the error, as follows:
1. within 90 days of the omission, by the payment of employee and employer contributions that would have been paid; or
2. after 90 days and prior to three years of the omission, by the payment of the employee and employer contributions that would have been paid plus interest compounded annually at a rate equal to the greater of the average yield on the pension accumulation fund for the preceding calendar year or the actuarial investment rate-of-return assumption, as adopted by the Board of Trustees; or
3. after three years of the omission, by the payment of an amount equal to the full cost of the service credits calculated on the basis of the assumptions used for the purposes of the actuarial valuation of the System's liabilities, and shall take into account the additional retirement allowance arising on account of such additional service credit commencing at the earliest age at which a member could retire on an unreduced retirement allowance, as determined by the Board of Trustees upon the advice of the consulting actuary, plus an administrative fee to be set by the Board of Trustees. Notwithstanding the foregoing provisions of this subdivision that provide for the purchase of service credits, the terms "full cost", "full liability", and "full actuarial cost" include assumed annual post-retirement allowance increases, as determined by the Board of Trustees, from the earliest age at which a member could retire on an unreduced service allowance.
Repealed by Session Laws 2002-153, s. 3, effective January 1, 2003.
(Repealed effective July 1, 2022) Credit at Full Cost for Federal Employment. Notwithstanding any other provisions of this Chapter, a member in service with five or more years of membership service may purchase creditable service for periods of federal employment, provided that the member is not receiving any retirement benefits resulting from this federal employment, and provided that the member is not vested in the particular federal retirement system to which the member may have belonged while a federal employee. The amount of creditable service purchased under this subsection may not exceed a total of five years. The member shall purchase this service by making a lump sum amount payable to the Annuity Savings Fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. The calculation of the amount payable shall also include an administrative fee to be set by the Board.
Repealed by Session Laws 2020-29, s. 1(b), effective June 19, 2020.
Part-Time Service Credit. Notwithstanding any other provision of this Article to the contrary, any member in service with five or more years of membership service may purchase service previously rendered as a part-time teacher or employee of an employer, as defined in G.S. 135-1(11) or G.S. 128-21(11), except the following service may not be purchased:
1. Part-time service rendered as a bus driver to a public school while a full-time high school student.
2. Temporary or part-time service rendered while a full-time student in pursuit of a degree or diploma in a degree-granting program, unless that service was rendered on a permanent part-time basis and required at least 20 hours of service per week.
Credit at Full Cost for Probationary Employment Purchased On or Before December 31, 2021. Notwithstanding any other provision of this Chapter, on or before December 31, 2021, a member may purchase creditable service, prior to retirement, for employment with an employer as defined in this Article when considered to be in a probationary or employer imposed waiting period status and thereby not regularly employed, between date of employment and date of membership service with the retirement system, provided that the employer or former employer of such a member has revoked this probationary employment or waiting period policy.
Credit at Full Cost for Probationary Employment Purchased On or After January 1, 2022. Notwithstanding any other provision of this Chapter, on and after January 1, 2022, a member in service with five or more years of service may purchase creditable service for employment with an employer as defined in this Article when considered to be in a probationary or employer-imposed waiting period status and thereby not regularly employed between date of employment and date of membership service with the retirement system. The amount of creditable service purchased under this subsection may not exceed five years.
Credit at Full Cost for Temporary Government Employment. Notwithstanding any other provisions of this Chapter, any member in service with five or more years of membership service may purchase creditable service for government employment when classified as a temporary employee subject to all the following conditions:
1. The member was employed by an employer as defined in G.S. 128-21(11) or G.S. 135-1(11).
2. The member's temporary employment met all other requirements of G.S. 128-21(10), or G.S. 135-1(10) or (25).
3. The member has completed five years or more of membership service.
4. The member has acquired from the employer such certifications of temporary employment as are required by the Board of Trustees.
Credit at Full Cost for Employment Not Otherwise Creditable. Notwithstanding any other provisions of this Chapter, any member in service with five or more years of membership service may purchase creditable service for any employment as an employee, as defined in G.S. 128-21(10), of a local government employer not creditable in any other retirement system or plan, provided that the employer is, at the time of purchase, a participating employer in the Retirement System but was not a participating employer in the Retirement System at the time the service was rendered by the member. The amount of creditable service purchased under this subsection may not exceed a total of five years. A member shall purchase this service by making a lump sum payment into the Annuity Savings Fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. The calculation of the amount payable shall also include an administrative fee to be set by the Board.
Purchase of Service Credits Through Rollover Contributions From Certain Other Plans. - Notwithstanding any other provision of this Article, and without regard to any limitations on contributions otherwise set forth in this Article, a member, who is eligible to restore or purchase membership or creditable service pursuant to the provisions of G.S. 128-26, may, subject to such rules and regulations established by the Board of Trustees, purchase such service credits through rollover contributions to the Annuity Savings Fund from (i) an annuity contract described in Section 403(b) of the Internal Revenue Code, (ii) an eligible plan under Section 457(b) of the Internal Revenue Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state, (iii) an individual retirement account or annuity described in Section 408(a) or 408(b) of the Internal Revenue Code that is eligible to be rolled over and would otherwise be includible in gross income, or (iv) a qualified plan described in Section 401(a) or 403(a) of the Internal Revenue Code. Notwithstanding the foregoing, the Retirement System shall not accept any amount as a rollover contribution unless such amount is eligible to be rolled over to a qualified trust in accordance with applicable law and the member provides evidence satisfactory to the Retirement System that such amount qualifies for rollover treatment. Unless received by the Retirement System in the form of a direct rollover, the rollover contribution must be paid to the Retirement System on or before the 60th day after the date it was received by the member.
Purchase of Service Credits Through Plan-to-Plan Transfers. - Notwithstanding any other provision of this Article, and without regard to any limitations on contributions otherwise set forth in this Article, a member, who is eligible to restore or purchase membership or creditable service pursuant to the provisions of G.S. 128-26, may, subject to such rules and regulations established by the Board of Trustees, purchase such service credits through a direct transfer to the Annuity Savings Fund of funds from (i) the Supplemental Retirement Income Plans A, B, or C of North Carolina or (ii) any other defined contribution plan qualified under Section 401(a) of the Internal Revenue Code which is maintained by the State of North Carolina, a political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state.
Expired.
Retroactive Membership Service. - A member who is reinstated to service as an employee as defined in G.S. 128-21(10) retroactively to the date of prior involuntary termination with back pay and associated benefits may be allowed membership service, after submitting clear and convincing evidence of the reinstatement, payment of back pay, and restoration of associated benefits, as follows:
1. When the reinstatement to service is by court order and is:
  1. Within 90 days of the involuntary termination, by the payment of employee and employer contributions that would have been paid; or
  2. After 90 days of the involuntary termination, by the payment of the employee and employer contributions that would have been paid plus interest compounded annually at a rate equal to the greater of the average yield on the pension accumulation fund for the preceding calendar year or the actuarial investment rate-of-return assumption, as adopted by the Board of Trustees.
2. When the reinstatement to service is by settlement agreement voluntarily entered into by the affected parties, by the payment of a lump-sum amount. The member shall purchase this service by paying a lump sum amount to the annuity savings fund equal to the full liability increase due to the additional service credits on the basis of the assumptions used for the purposes of the actuarial valuation of the liabilities of the Retirement System, except for the following assumptions specific to this calculation: (i) the allowance shall be assumed to commence at the earliest age at which the member could retire on an unreduced retirement allowance and (ii) assumed annual postretirement allowance increases as set by the Board of Trustees upon the advice of the consulting actuary. The calculation of the amount payable shall also include an administrative fee to be set by the Board.
If a member who is an elected government official and has not vested in this System on July 1, 2007, is convicted of an offense listed in G.S. 128-38.4 for acts committed after July 1, 2007, then that member shall forfeit all benefits under this System, except for a return of member contributions plus interest. If a member who is an elected government official and has vested in this System on July 1, 2007, is convicted of an offense listed in G.S. 128-38.4 for acts committed after July 1, 2007, then that member is not entitled to any creditable service that accrued after July 1, 2007, regardless of whether that creditable service was earned by virtue of membership in the System, accrued by conversion of sick leave at the point of the member's retirement, accrued by transfer of service from another retirement system, purchased by the member in accordance with this Article, or accrued by any other means. No member shall forfeit any benefit or creditable service earned from a position not as an elected government official. For purposes of this subsection, creditable service attributable to the conversion of sick leave accrues in this System on the date of retirement, service transferred to this System from another system accrues in this System on the effective date of the transfer, and purchased service accrues in this System on the date of the purchase.
If a member who is in service and has not vested in this System on December 1, 2012, is convicted of an offense listed in G.S. 128-38.4A for acts committed after December 1, 2012, then that member shall forfeit all benefits under this System, except for a return of member contributions plus interest. If a member who is in service and has vested in this System on December 1, 2012, is convicted of an offense listed in G.S. 128-38.4A for acts committed after December 1, 2012, then that member is not entitled to any creditable service that accrued after December 1, 2012, regardless of whether that creditable service was earned by virtue of membership in the System, accrued by conversion of sick leave at the point of the member's retirement, accrued by transfer of service from another retirement system, purchased by the member in accordance with this Article, or accrued by any other means. For purposes of this subsection, creditable service attributable to the conversion of sick leave accrues in this System on the date of retirement, service transferred to this System from another system accrues in this System on the effective date of the transfer, and purchased service accrues in this System on the date of the purchase.
(Effective until July 1, 2022) Contribution-Based Benefit Cap Purchase Provision. - If a member's retirement allowance is subject to an adjustment pursuant to the contribution-based benefit cap established in G.S. 128-27(a3), the retirement system shall notify the member and the member's employer that the member's retirement allowance has been capped. The retirement system shall compute and notify the member and the member's employer of the total additional amount the member would need to contribute in order to make the member not subject to the contribution-based benefit cap. This total additional amount shall be the actuarial equivalent of a single life annuity adjusted for the age of the member at the time of retirement, or when appropriate, the age at the time of the member's death that would have had to have been purchased to increase the member's benefit to the pre-cap level. Except as otherwise provided in this subsection, the member shall have until 90 days after notification regarding this additional amount or until 90 days after the effective date of retirement, whichever is later, to submit a lump sum payment to the annuity savings fund in order for the retirement system to restore the retirement allowance to the uncapped amount. Nothing contained in this subsection shall prevent an employer from paying all or part of the cost of the amount necessary to restore the member's retirement allowance to the pre-cap amount. Notwithstanding the requirement that the payment be made as a lump sum, the retirement system may allow an employer of a member who became a member before January 1, 2015, or who has not earned at least five years of membership service in the retirement system after January 1, 2015, to pay the lump-sum amount required in this subsection on an installment payment plan under one of the following two options:
1. Option one. - An installment payment plan ending no more than 15 months after the retirement of the member.
2. Option two. - An installment payment plan beginning no less than 90 days after the retirement of the member and ending no more than 27 months after the retirement of the member. Interest shall be assessed on the principal amount of the contribution-based benefit cap liability owed and applied to any installment payment plan term exceeding 12 months at a rate corresponding with the interest rate assumption based on the most recent actuarial valuation approved by the Board of Trustees.
(Effective July 1, 2022) Contribution-Based Benefit Cap Purchase Provision. - If a member's retirement allowance is subject to an adjustment pursuant to the contribution-based benefit cap established in G.S. 128-27(a3), except as otherwise provided under this subsection, the retirement system shall notify the member and the member's employer that the member's retirement allowance has been capped. The retirement system shall compute and notify the member and the member's employer of the total additional amount the member would need to contribute in order to make the member not subject to the contribution-based benefit cap. This total additional amount shall be the actuarial equivalent of a single life annuity adjusted for the age of the member at the time of retirement, or when appropriate, the age at the time of the member's death that would have had to have been purchased to increase the member's benefit to the pre-cap level. If the member's employer did not report to the retirement system any compensation paid to the member during the period used to compute the member's average final compensation, the retirement system shall not notify the member's employer, but instead shall notify the employer or employers who reported compensation during the member's average final compensation period, with the notification for each such employer specifying that employer's share of the amount that would have had to have been purchased to increase the member's benefit to the pre-cap level, allocated proportionally to each employer based on the total amount of compensation to the member that each employer reported during the period used to compute the member's average final compensation. Except as otherwise provided in this subsection, the member shall have until 90 days after notification regarding this additional amount or until 90 days after the effective date of retirement, whichever is later, to submit a lump sum payment to the annuity savings fund in order for the retirement system to restore the retirement allowance to the uncapped amount. Nothing contained in this subsection shall prevent an employer or former employer from paying all or part of the cost of the amount necessary to restore the member's retirement allowance to the pre-cap amount. Notwithstanding the requirement that the payment be made as a lump sum, and notwithstanding Chapter 150B of the General Statutes, the retirement system may allow an employer or former employer of a member who became a member before January 1, 2015, or who has not earned at least five years of membership service in the retirement system after January 1, 2015, to pay the additional amount required in this subsection over an extended period using one of the following three options:
1. Option one. - An installment payment plan ending no more than 15 months after the retirement of the member.
2. Option two. - An installment payment plan beginning no less than 90 days after the retirement of the member and ending no more than 27 months after the retirement of the member. Interest shall be assessed on the principal amount of the contribution-based benefit cap liability owed and applied to any installment payment plan term exceeding 12 months at a rate corresponding with the interest rate assumption based on the most recent actuarial valuation approved by the Board of Trustees.
3. Option three. - An adjustment to the required employer contribution rate for the employer as provided in G.S. 128-30(d)(4b).

Subject to the requirements of this subsection, an employer may pay all or part of the cost of a service purchase of a member in service. To the extent that the purchase is paid by the employer, the cost paid by the employer shall be credited to the pension accumulation fund. To the extent the purchase is paid by the member, the cost paid by the member shall be credited to the member's annuity savings account; provided, however, that an employer does not discriminate against any employed member or group of employed members in paying all or any part of the cost of the retroactive membership service.

In the event a member received a return of accumulated contributions subsequent to an involuntary termination as provided in G.S. 128-27(f), the member may redeposit, within 90 days after reinstatement retroactive to the date of prior involuntary termination, in the annuity savings fund by single payment, an amount equal to the total amount the member previously withdrew plus regular interest and restore the creditable service forfeited upon receiving the return of accumulated contributions.

Payment under both installment plans must be completed regardless of whether the member continues to receive a recurring monthly retirement benefit through the end of the installment period.

Payment under the selected option must be completed regardless of whether the member continues to receive a recurring monthly retirement benefit through the end of the extended payment period. An employer's continuing compliance with a payment option selected from the three options above will be deemed payment of the employer's additional contribution required by this subsection for purposes of G.S. 128-30(b)(3).

History

Subsection (y) Set Out Twice. - The first version of subsection (y) set out above is effective until July 1, 2022. The second version of subsection (y) set out above is effective July 1, 2022.

Session Laws 1987, c. 617, s. 3, effective January 1, 1988, deleted the last paragraph of subsection (a), which, as amended by c. 617, ss. 1 and 4, read:

Session Laws 1987, c. 617, s. 3, effective January 1, 1988, also deleted subsection (j), which, as amended by c. 617, ss. 2 and 4, read:

Session Laws 2006-29, s. 1, which amended subdivision ( l )(2), is effective August 1, 2006, and applicable to members who return to service from an approved leave of absence on or after that date.

Session Laws 2020-29, s. 10, is a severability clause.

Session Laws 2020-48, s. 6.1, is a severability clause.

Session Laws 2021-57, s. 4.1, made the amendments to this section by Session Laws 2021-57, ss. 2.2 and 2.3, effective January 1, 2022, and applicable to purchases of creditable service occurring on or after that date.

Session Laws 2021-72, s. 1.1(e), made the amendments to subsection (y) by Session Laws 2021-72, s. 1.1(c), effective July 1, 2022, and applicable to assessments imposed on or after that date.

Session Laws 2021-72, s. 6.1, is a severability clause.