(Raleigh, N.C.) — State and local government retirees could be more likely to receive pension benefit improvements such as a cost-of-living increase (COLA) or one-time supplement following today’s vote by the North Carolina Retirement Systems (NCRS) Boards of Trustees (BOT). The new policy will take effect in 2027.
Among other components, the policy directs how to determine the “required employer contribution rate” recommended to the General Assembly to fund the Teachers’ and State Employees’ Retirement System (TSERS). The policy would also authorize the BOT to recommend legislative approval of a permanent COLA or one-time payment if the gain on investments measured over five years is greater than the cost of providing the benefit improvement. The current policy mandates that all investment gains be allocated to reduce the pension plan’s unfunded liability, which is currently $12 billion. A similar policy applies to the Local Governmental Employees’ Retirement System (LGERS), which has an unfunded liability of $6 billion.
The policies would take effect July 1, 2027, and be in force through 2032. The approval comes after the BOTs voted in January to approve pension contribution rates paid by government agency employers, and directed staff to develop the new policies adopted today. Legislative action is necessary to enact COLAs for TSERS beneficiaries. The LGERS BOT may approve benefit increases in some circumstances without General Assembly approval.
In a separate vote, trustees approved adding the Metropolitan Public Transportation Authority, (MPTA) serving the greater Charlotte area, to participate as an employer in the LGERS pension plan, effective July 1. The MPTA was created to expand and modernize the Charlotte Area Transit System (CATS), which served the city. The new regional governing body represents additional communities and stakeholders. CATS, which was operated by Charlotte, had 622 employees participating in LGERS. Since they now work for the new authority, which is not a taxing body, state statute requires MPTA to post a surety bond of about $9.6 million to cover LGERS pension payout costs should the authority later withdraw from participation in the system.
In other matters on the agenda, the BOT:
- Received various financial and vendor reports, as well as an annual report on inactive employers who no longer have employees qualifying for membership in NCRS. Four LGERS employers were determined to be inactive: Monroe-Union County Economic Development Commission; Mount Olive Housing Authority; the town of Cooleemee and the town of Pollocksville. Employers that remain on the inactive list after one year may be required to pay a withdrawal liability to the retirement system.
- Welcomed new LGERS trustees. They are Winston-Salem Mayor James Allen Joines and Corey Mercer, a retired local government employee, both gubernatorial appointees. They replaced former Greensboro Mayor Nancy Vaughan and Jeffrey Morse, respectively. The outgoing members were honored with resolutions of appreciation for their service.