In this Issue:
Cost of Living Increases and One-Time Supplement Payment for Benefit Recipients Approved
For TSERS and LGERS retirees, a Cost of Living Adjustment (COLA) is a periodic adjustment to monthly benefit payments based on such factors as changes in the Consumer Price Index (CPI), the availability of funds, investment gains, and actuarial experience. In North Carolina, COLAs are only granted to retirees when certain conditions are met. Last month, we notified you of the LGERS COLA. This month, we’re letting you know about the TSERS one-time supplement payment and the Transfer Benefit COLA.
TSERS benefit recipients will receive a one-time pension supplement payment
The North Carolina General Assembly approved a one-time, non-recurring pension supplement payment to TSERS benefit recipients whose retirement began on or before September 1, 2016, equal to 1.6% of the recipient’s annual retirement allowance as of September 1, 2016. To determine the amount of the one-time supplement, the benefit recipient’s September 2016 regular monthly benefit amount will be multiplied times 12 to determine the annual retirement allowance, and then multiplied times 1.6%. This one-time pension supplement will be included in the October 25, 2016 retirement benefit payment.
COLA granted for Transfer Benefit recipients who chose the COLA option
Transfer Benefit recipients are TSERS or LGERS retirees who transferred NC 401(k) or NC 457 balances at or after retirement to TSERS or LGERS to receive an additional monthly lifetime benefit. When these members elected to use the Transfer Benefit, they were given the option to receive COLAs. Based on the North Carolina General Statutes, when a member elects the COLA option for the Transfer Benefit, the increase is equal to the increase in the U.S. Consumer Price Index (CPI).
The CPI data released by the Bureau of Labor Statistics of the U.S. Department of Labor on June 16, 2016, showed that the CPI increased by 1.0% for the 12-month period ending May, 2016.
Transfer Benefit amounts have been increased by 1.0% effective July 25, 2016, for members who were in receipt of their Transfer Benefit on or before July 1, 2015. If their Transfer Benefit became effective between August 1, 2015 and June 1, 2016, they received a pro-rated portion of 1.0%.
Benefit increases for DIPNC recipients
At their July 21, 2016 meeting, the TSERS Board of Trustees voted to increase the compensation upon which DIPNC short-term and long-term benefits are calculated by 1.5% effective July 1, 2016, for all disabled participants receiving DIPNC benefits on June 30, 2016. This action is based on the 1.5% increase granted by the General Assembly to most active State employees effective July 1, 2016.
Since the Board voted on July 21, 2016 to approve the increase, the recalculated DIPNC benefits paid by the Retirement Systems Division will be processed for the August 25 benefit, and will include a retroactive amount for July. Therefore, the August 2016 benefit will be larger to include a retroactive amount for July 2016, and the new regular benefit amount will be effective in September 2016.
For employers paying DIPNC short-term benefits, this 1.5% increase in compensation upon which DIPNC benefits are calculated applies uniformly to all employers, including local boards of education and educational institutions where employees may receive a different percentage compensation increase. If the member is receiving the monthly maximum short-term benefit of $3,000, the member will not receive an increase.
Compensation bonus is payable to certain DIPNC recipients who have not terminated employment
DIPNC short-term and extended short-term recipients will receive the one-time 0.50% bonus granted to most State employees if they have not terminated employment, and they otherwise meet the conditions to receive the bonus. The bonus will be paid by the employer and will not be reimbursed by DIPNC.
DIPNC long-term recipients are not eligible for the bonus.
Reminder of New TSERS Contribution Rates
The new TSERS contribution rate became effective July 1, 2016. Your July Contribution Summary Instruction (CSI) report should include the new required rate of 16.12%; otherwise your report will be out of balance. Please ensure that your software is updated to calculate the new rate prior to submission of your agency’s July 2016 ORBIT report.
An earlier edition of the TSERS Monitor contained an incorrect rate. The corrected amount is shown above in red. We apologize for any inconvenience or confusion this may have caused.
Penalty for Late Employer Contribution Report Submissions
The Retirement Systems Division (RSD) of the Department of State Treasurer administers the Local Governmental Employees’ Retirement System (LGERS) and the Teachers’ and State Employees’ Retirement System (TSERS). The viability of the Retirement System—and thus the pension benefits to which vested employees are entitled—depends on the timely submission of employer and employee contributions to the RSD.
It is critically important for all employers to remit payments through the Retirement Systems’ ORBIT process in order to correctly certify and allocate the contributions. Specifically, it is imperative that all participating employers timely submit not only the requisite monetary contributions, but also the Contribution Summary Instruction (CSI) in order to avoid significant administrative and fiscal burdens upon the Retirement Systems.
The Retirement Systems must receive employee and employer contributions no later than the fifth State government working day of the month following the month for which the contributions are required. Payments entered through the CSI are transferred to the Retirement Systems on the next State government working date. Therefore, payments that are to be received by the fifth State government working day must be transmitted by 4:30 p.m. on the fourth State government working day.
Payments received after the fifth State government working day of the month are delinquent, and will be assessed a penalty of 1% of the total contributions with a minimum penalty of $25. Employers who are late remitting payment to the Retirement Systems will begin to receive a penalty notification letter each month payment is delinquent.
For a copy of the Schedule for Submitting Contribution Summary Instructions, please visit our website:
If you have any questions regarding employer reporting or this penalty, please contact the Employer Reporting Team by e-mail (click below), or by phone at 1-877-627-3287, option 6.
Copyright © |
NC Open Book