In this Issue:
Reminder: Correcting Employer ORBIT Reporting Errors
The Retirement Systems Employer Reporting team indicates that almost 70% of state and local employers have at least one error that will prohibit one or more of their employees from receiving their Annual Benefits Statement next year.
To help us provide an accurate ABS for your employees next year, please correct all outstanding ORBIT reporting errors no later than February 5, 2016. If errors are not corrected in a timely manner, your employees may not receive their ABS, or may receive an incorrect statement.
We appreciate your important role and continuing support in providing timely and accurate information about your employees to the Retirement Systems Division through ORBIT reporting.
2016 Earnable Allowance Limits to be Announced in late January
The re-employment earnable allowance limits for 2016 will be adjusted to the equivalent of the change in the national Consumer Price Index (CPI) for the period from January 1, 2015, to December 31, 2015. The CPI information for this period will be made available to the Retirement Systems Division (RSD) in mid-January, and the change in the earnable allowance limits for 2016 will then be approved by the Retirement Systems’ Boards of Trustees. The 2016 limits will be announced in a Retirement Monitor article in late January. This change is for any retiree who has returned to work with an employer participating in the same retirement system from which the employee retired, but in a position that does not require retirement system membership.
Pension Spiking Update
On October 22, 2015, the Teachers’ and State Employees’ Retirement System (TSERS) and the Local Governmental Employees’ Retirement System (LGERS) Boards of Trustees voted to select the new Contribution-Based Benefit Cap factors for retirements effective on and after January 1, 2016. The TSERS Board selected a factor of 4.5, and the LGERS Board selected a factor of 4.7. RSD anticipates that both of these new factors may result in an increase in the number of people meeting the criteria to be evaluated for the Contribution-Based Benefit Cap, as well as a slight increase in the number of people who will require an additional lump-sum payment upon retirement.
In addition, the threshold for the minimum average final compensation (AFC) necessary to be evaluated for the Contribution-Based Benefit Cap is scheduled to be adjusted in mid-January, in accordance with statutory requirements. RSD expects this adjustment may result in a small increase in the minimum AFC for members evaluated for the Contribution-Based Benefit Cap. Although the adjusted minimum AFC will not become available until mid-January, it will apply retroactively to all retirements effective on and after January 1, 2016. Thus, some retirements occurring between January 1, 2016, and the date of the adjustment may need to be re-calculated accordingly. This adjustment is contingent on the percent difference in the Consumer Price Index in December of the year prior to retirement (December 2015) and the Consumer Price Index in December of the year most recently ended prior to retirement (December 2014).
For additional information regarding the Contribution-Based Benefit Cap (also known as the Anti-Pension-Spiking Law), RSD has posted pension spiking presentations for TSERS and LGERS on our website that have been updated to reflect the new Benefit Cap factors set by the Boards of Trustees, along with updated examples of pension spiking and useful information regarding how employers and employees will be responsible for off-setting the additional liability generated as a result of the pension spike.
To access the updated presentations:
LGERS Pension Spiking PresentationTSERS Pension Spiking Presentation
December Employer Spotlight
The North Carolina Department of State Treasurer would like to commend the City of Fayetteville, which passed a board resolution to begin making a one percent automatic employer contribution to the NC 401(k) Plan beginning January 2016. To launch this new program, the city required all employees to attend a retirement readiness seminar to learn more about saving for retirement. Employees attended one of 23 meetings during one week in September, providing them with an opportunity to better understand the NC 401(k) Plan. Of the 600+ employees who enrolled, 75 percent chose to make voluntary contributions in addition to the city’s one percent contribution. To further enhance this program, the city invited their local retirement education counselor to attend all future new-hire orientations, conveying the message that saving for retirement is a high priority to city leadership. City Manager Ted Voorhees was instrumental in implementing this new benefit that will help his employees save more for retirement. In addition, the staff at the NC Total Retirement Plans appreciates everything that Benefits Analyst Kimberly Bowen did to coordinate all of the meetings.
NC Open Book