Wednesday, May 3, 2023

Treasurer Folwell Expresses Support for House Bill 201

Bill Would Allow Retirement Systems' Flexibility in Recovering Overpayments
Raleigh, NC
May 3, 2023

State Treasurer Dale R. Folwell, CPA, announced today his support for House Bill 201, the Retirement Administrative Changes Act. The bill makes administrative and conforming changes to the retirement systems. Of particular importance to the Retirement Systems Division (RSD) is the ability to negotiate recoupment of overpayments with plan beneficiaries.

Both overpayments and underpayments happen in the administering of retirement plans, especially on the scale of the RSD, which currently sends monthly checks to 348,809 retirees with a total value of almost $600 million. Overpayments and underpayments can occur because of system errors, manual calculation errors, incorrect information submitted to RSD or other causes.

RSD is required by statute (G.S.143-64.80/G.S. 128-31(b)/G.S.135-9 (c)) to recoup any funds paid to any person in a state-funded position. Additionally, “[N]o State department, agency, or institution, or other State-funded entity may forgive repayment of an overpayment of State funds, but shall have a duty to pursue the repayment of State funds by all lawful means available.”

In short, these statutes require RSD to recoup any overpayment regardless of who is at fault with little ability of RSD to mitigate the impact on the retiree. Section 8 of House Bill 201 would allow some flexibility for RSD to adjust retiree payments if the overpayment was a result of an administrative error by RSD. Rather than offsetting the full amount of a recurring monthly benefit, the changes would allow RSD to offset not less than 25% of a recurring monthly benefit reduce the overpayment.

“One in 10 North Carolinians is on one of these pension plans,” Treasurer Folwell said. “Sometimes things happen resulting in an overpayment or an underpayment to beneficiaries. When I learn of an underpayment, those we owe are paid immediately. When an overpayment occurs, we want to work with the beneficiary to recoup the cost which we are required by law to do. Even under the best of circumstances, the retirement systems end up losing millions despite our efforts. Section 8 of House Bill 201 will give us an extra tool to help work out a reasonable schedule while still complying with the law. I look forward to the bill being favorably reposted out of committees and heard on the floor.”

The North Carolina Retirement Systems is the ninth-largest public pension fund in the country and regarded as one of the best funded in the nation. It has won accolades for proactive management, efficiency and funding discipline and was recently ranked as the most efficient public pension plan in North America. It provides retirement benefits and savings for more than 1 million North Carolinians, including teachers, state employees, local government workers, firefighters, police officers and other public workers. It is currently valued at $113.8 billion.