LOCAL GOVERNMENTAL EMPLOYEES’ RETIREMENT SYSTEM

1 YourretirementbenefitsLOCAL GOVERNMENTAL EMPLOYEES RETIREMENT SYSTEMD epartment of State TreasurerRaleigh, NCRevised January 2014local GOVERNMENTAL employees RETIREMENT systemjanuary 2014 Your RETIREMENT BenefitsNORTH CAROLINADEPARTMENT OF STATE TREASURERRETIREMENT SYSTEMS DIVISIONJANET COWELLSTATE TREASURERSTEVEN C. TOOLEDIRECTORW elcome to the North Carolina RETIREMENT Systems!The Department of State Treasurer, which administers the RETIREMENT systems for state and LOCAL government employees, is committed to pro-viding you with information to help you make informed decisions about your financial future. I encourage you to become familiar with the ben-efits described in this handbook outlines the benefits available to you as a member of the LOCAL GOVERNMENTAL Employees RETIREMENT SYSTEM , including: Benefits you will receive at RETIREMENT once you meet the service and age requirements Benefits your beneficiary may receive if you die while you are an active employee or after you retire (death benefits) Qualifications for reemployment after retiringI also encourage you to visit our website, , for RETIREMENT resources, and to register on ORBIT, your safe and secure online access to your personal RETIREMENT ac-count information.

2 You can also contact the North Carolina RETIREMENT Systems if you have additional questions. Our customer service representatives can assist with the status of an application or answer questions about RETIREMENT , disability and death you for your service to North ,Janet Cowell1-877-627-3287 Toll-free919-807-3050 (Raleigh GOVERNMENTAL employees RETIREMENT systemjanuary 2014 Your RETIREMENT Benefits3 Your RETIREMENT BenefitsContents PageYour RETIREMENT SYSTEM Benefits in Brief ..4 Becoming a Member of the SYSTEM ..4 Who Pays for the SYSTEM ..5 Tax-Deferred Contributions ..5 How to Qualify for Benefits ..5 Becoming Vested ..5 Service RETIREMENT (Unreduced Benefits) ..5 Early RETIREMENT (Reduced Benefits) ..5 Disability RETIREMENT ..6 Reciprocity Between RETIREMENT Systems ..6 If You Leave the SYSTEM Before RETIREMENT ..6 How Your Beneficiaries are Protected.)

3 7 Death Benefit ..7 Survivor s Alternate Benefit ..7 How Your Benefit is Calculated ..8 Example of How a Benefit is Calculated ..9 At Service RETIREMENT ..9 At Early RETIREMENT ..10 Early RETIREMENT Percentages ..10 Examples of Benefits Paid ..11 RETIREMENT Benefit Payment Plans ..11 Maximum Allowance ..12 Payment Options ..12 How the Payment Options Work ..14 Creditable Service andService Purchase Provisions ..15 Rollovers to Purchase RETIREMENT Service Credit ..18 Transferring Service andContributions Between Systems ..18 Refund of Contributions ..18 Interest ..19 Applying for and Receiving Monthly Benefits ..19 RETIREMENT Application Process ..19 Your First Monthly Benefit ..20 Post- RETIREMENT Increases ..20NC 401(k) and NC 457 Transfer Benefit ..20 Income Tax ..20 RETIREMENT Benefits ..20 Refunds ..21 Death Benefits.

4 22 Reemployment after RETIREMENT ..22 Optional Supplemental Insurance ..23 Important Information to Remember ..24 Administration and Funding ..25 ORBIT (Online RETIREMENT Benefitsthrough Integrated Technology) ..26 How to Contact Us ..27 Contents PageDISCLAIMER: The availability and amount of all benefits you might be eligible to receive is governed by RETIREMENT Sys-tem law. The information provided in this handbook cannot alter, modify or otherwise change the controlling RETIREMENT SYSTEM law or other governing legal documents in any way, nor can any right accrue to you by reason of any information provided or omission of information provided herein. In the event of a conflict between this information and RETIREMENT SYSTEM law, RETIREMENT SYSTEM law GOVERNMENTAL employees RETIREMENT systemjanuary 2014 Your RETIREMENT Benefits4 Your RETIREMENT SYSTEM Benefits in Brief Automatic membership for eligible employees (see below).

5 Shared cost between you and your employer for benefits (see page 5). Monthly payments at RETIREMENT based on your salary, age, and years of credit (see page 5). Unreduced RETIREMENT benefit at age 65 with 5 years of credit, or at age 60 with 25 years of credit, or at any age with 30 years of credit; reduced benefit after age 50 and 20 years of credit, or at age 60 with 5 years of credit (see page 5). Disability benefits avail-able after 5 years of credit (see page 6). A right to a reduced benefit at age 60 after 5 years of credit, regardless of whether you are working (see page 6). Death benefit paid to your beneficiary if you die in active service after 1 year of credit, and if your employer has chosen to provide this benefit (see page 7). Survivor monthly income if you die in active service with 20 years of credit regardless of age; or after age 60 with 5 years of credit (see page 7).

6 Several payment options available to continue income to your beneficiary following your death after RETIREMENT (see pages 11-14).This section only highlights the SYSTEM . The fol-lowing pages describe it in a Member of the SystemYou become a contributing member of the Sys-tem on your date of hire (or after a required LOCAL unit waiting period) if you are employed by a par-ticipating unit in a regular position that requires 1,000 hours or more of service per participating unit is any county, city, town or other LOCAL government that has agreed to partici-pate in the , if you are an Agricultural Extension Service employee and a member of the Federal Employees RETIREMENT SYSTEM , you may not join this SYSTEM . You can get more details from your after your employer enrolls you in the SYSTEM , you will be asked to name your beneficiary(ies) to receive a return of your retire-ment contributions and a death benefit, if appli-cable, should you die before RETIREMENT .

7 You can change your beneficiary(ies) at any time before RETIREMENT by completing Form 2RC, Des-ignating Beneficiary(ies) for RETIREMENT SYSTEM Return of Contributions, and if appli cable, Form 2DB, Designating Beneficiary(ies) for the Death Benefit. These forms are available on the ORBIT GOVERNMENTAL employees RETIREMENT systemjanuary 2014 Your RETIREMENT Benefits5 Tax-Deferred ContributionsBeginning July 1, 1982, if your employer adopted a resolution to have your contributions made on a before-tax basis, your contributions are deduct-ed from your pay before taxes are calculated. As a result, your taxable income is lowered and the amount of annual taxes you pay is less than if you made contributions on an after-tax Pays for the SystemYou and your employer, and the investment earn-ings on total contributions, pay the cost of pro-viding your RETIREMENT share of the cost, which is automatically deducted from your paycheck, is 6 percent of your compensation.

8 Your compensation includes all salaries and wages paid to you, from public funds, which you earn at your covered job while working for your employer. Your employer s share of the cost is based on the calculations prepared by an actuary, so that ben-efits will be funded to Qualify for BenefitsBecoming VestedYou become vested in the RETIREMENT SYSTEM once you have completed a minimum of 5 years of creditable service. This means that you are eligible to apply for lifetime monthly RETIREMENT benefits based on the formula, and the age and service requirements described in this handbook, provided you do not withdraw your RETIREMENT (Unreduced Benefits)You may retire with an unreduced service retire-ment benefit after you: reach age 65 and complete 5 years of credit-able service reach age 60 and complete 25 years of credit-able service complete 30 years of creditable service at any ageEarly RETIREMENT (Reduced Benefits)You may retire early with a reduced RETIREMENT benefit after you.

9 Reach age 50 and complete 20 years of credit-able service reach age 60 (age 55 if you are a firefighter) and complete 5 years of creditable serviceYour early RETIREMENT benefit is calculated using the same formula as a service RETIREMENT benefit, multiplied by a reduction percentage based on your age and/or service at early RETIREMENT . Since your benefits may be paid over a longer period of time than if you had waited until you were eligible for service RETIREMENT , they will be reduced. The table on page 10 shows the effect these reduc-tions would have on your GOVERNMENTAL employees RETIREMENT systemjanuary 2014 Your RETIREMENT Benefits6 Disability RetirementYou become eligible to apply for disability retire-ment benefits after 5 years of creditable service if you become totally and permanently disabled for your job, as approved by the Medical Review Board.

10 If you are a firefighter or rescue squad worker who becomes disabled as a result of a line-of-duty in-jury, you are eligible to apply for disability retire-ment regardless of the amount of your creditable service. Your disability benefit under the Maximum Al-lowance is calculated using the same formula as a service RETIREMENT benefit and you may choose any payment option except Option 4. (See pag-es 11-14 for descriptions of RETIREMENT payment plans.) If you choose a survivorship option, it will be calculated using disability reduction percent-ages. Your average final compensation is calculated as of your disability RETIREMENT date, but creditable service is counted as though you continue work-ing to the earliest date you would have qualified for an unreduced service RETIREMENT allowance, whether it be age 65, or with 30 years of service, or age 60 with 25 years of you die after you have filed an application for disability RETIREMENT but before its effective date, and you have otherwise met all requirements for disability RETIREMENT benefits, your beneficiary may elect to receive a monthly RETIREMENT allow-ance provided by Option 2, instead of a return of your RETIREMENT contributions and interest, pro-vided the following conditions apply.