Frequently Asked Questions

Why doesn’t the Retirement System credit my account with a higher rate of interest?

The basic purpose of the Retirement System is to provide monthly retirement benefits to career employees. The Retirement System is a “defined benefit plan” which means that the benefit you receive at retirement is based on a defined formula. The formula is (i) the average of your highest consecutive four years of salary (average final compensation), times (ii) an accrual rate established by the North Carolina General Assembly, times (iii) your years of creditable service. The contributions and interest accumulated in your account have no direct relationship to the basic benefit you will receive at retirement. Higher interest rates on contributions would benefit only those employees who terminate employment and withdraw their contributions. In order to pay a higher interest rate on member contributions, the Retirement System would have to use funds which would otherwise be used to enhance retirement benefits for career employees.

Why does the Retirement System not pay interest on my refund of contributions if I have less than 5 years of creditable service?

In 1981, the North Carolina General Assembly amended the general statutes to eliminate the payment of interest to persons withdrawing their contributions with less than five years of membership service. (Refer to question above for further explanation.)