Join NCRGEA with Meals on Wheels NC!

March for Meals logo

January 2024

NCRGEA is teaming up with Meals on Wheels NC again this year to encourage our members to volunteer during their “Community Champions Week,” March 18-22.

We want MOWNC and our communities to know that NCRGEA members are active and engaged and care about their communities. If you register to volunteer before February 16, we’ll send you a t-shirt to wear during Community Champions week and anytime you are volunteering for MOWNC.

The “Power of a Knock” from a MOWNC volunteer can transform lives, bring hope, health, nutrition and care to seniors throughout North Carolina, so please volunteer for this worthwhile event.

To volunteer and receive your free t-shirt, sign up online at tinyurl.com/4XARK4AX.

Click the video below to view volunteers from our 2023 MOWNC Community Champions Week!

Meetings Designed to Meet Your Needs

NCRGEA’s Local Outreach was back on the road in September and October, and we held seven meetings throughout the state to provide information about open enrollment. As you all know, this is a very busy and sometimes confusing time with questions about medical, dental, and vision plans. Our goal was to provide members with helpful resources they may need to navigate the process.

Our meetings included representatives from Seniors’ Health Insurance Information Program (SHIIP), Humana, and our partner, AMBA. We value these relationships and the help they provide to the retirees in our state. All who attended said they learned something beneficial and enjoyed the meetings.

Please plan to attend future events, and be on the lookout for all the ways we communicate upcoming meetings:

  • Meeting announcements in Living Power
  • Postcard registration invitations
  • Online (www.ncrgea.com) and phone (919-834-4652) registration options
  • Email reminders for those who register

Our next meetings will be held in the spring of 2024 at a location near you. Check out the January edition of Living Power for dates, times, and locations, or go to our website for meeting details and how to register. You can also reach out if you have a group of state or local retirees and would like us to plan a meeting in your area. We’d be happy to arrange one!

How A New State Law Could Impact Pensions

by Paul Woolverton, Jan-April 2024 Living Power

pension piggybank

The new law, called the Transformational Investments in NC Health, was created for UNC Health and ECU Health. UNC Health and ECU Health are the regional healthcare systems based at The University of North Carolina at Chapel Hill and East Carolina University in Greenville. Both are state agencies.

The law prohibits new employees at UNC Health and ECU Health from participating in the traditional state retirement program—a system that guarantees retired state employees an income for the rest of their lives after they retire. Instead, new employees at UNC Health and ECU Health would enroll in an investment program to save for retirement, but that program doesn’t guarantee a post-retirement lifetime income.

The Transformational Investments in NC Health law was part of the state’s 2023–2025 biennial budget, which the General Assembly approved in September. The law allocates $420 million to UNC Health and ECU Health for the NC Care initiative. The initiative is for health clinic and hospital construction and other medical services for rural areas of eastern North Carolina.

According to the office of State Senate President Pro Tem Phil Berger, some of the $420 million for NC Care is coming from the $1.6 billion “sign-on bonus” that North Carolina is getting from the federal government for expanding Medicaid health insurance to several hundred thousand uninsured lower-income North Carolinians. Funding for NC Care also comes from the State Capital and Infrastructure Fund, a fund the legislature established to pay for public infrastructure and facilities.

But State Treasurer Dale Folwell says this law threatens the stability and long-term health of the pension plan for retired state employees and future retirees. “This is a torpedo to the pension system,” he says. He believes the law also would drive up the price of providing health insurance benefits for state employees, and the costs could be transferred to the employees through their premiums or to North Carolina taxpayers.

Folwell estimated the liabilities to the pension and state health benefits systems could exceed $1.5 billion. The new law could have the collateral damage of putting increased income taxes on state employees by canceling the tax-deferred status of their retirement contributions, according to Folwell. His office oversees the state pension system and the state health plan medical insurance benefits system.

Critical Choices

The normal pension offered to state employees is the Teachers’ and State Employees’ Retirement System. But there also is an optional retirement program for employees of the University of North Carolina System, which includes all the state universities and UNC Health and ECU Health hospital systems. While the state treasurer’s office oversees the traditional pension program, the UNC System manages the optional retirement program. Employees of those health systems may participate in either retirement program.

In the Teachers’ and State Employees’ Retirement System, employees put in 6% of their salaries (and this money is tax-deferred, so it reduces the employee’s taxable income). The employing agency also contributes. The treasurer’s office invests the money, and when the employee retires, he or she will get a monthly payment based on how long they worked and the average of their highest four years of salary, a state retirement document says. Approximately 85% of a retiree’s benefits from the pension are derived from their own contributions and earnings.

“More than 90% of those who make less than $40,000 a year choose the retirement plan because it provides them with the certainty that they need when they don’t have the income to be retirement-ready on their own,” Folwell says. Among university employees earning more than $100,000, 58% choose the pension plan, and 42% choose the investment plan, says Patrick Kinlaw, the director of policy, planning, and compliance for the Retirement Systems Division at the treasurer’s office.

People who would like more control of their retirement planning can use the Optional Retirement Program, according to a guide published by the UNC System. As with the normal plan, employees put in 6% of their income (tax-deferred). Employees can direct the money to various mutual funds and other investment tools.

Folwell says the optional retirement program can be more attractive to employees with higher incomes. Regardless of whether the employees choose the standard or the optional retirement program, the state already offers all of them supplemental investment options to help increase their retirement nest eggs.

According to the Retirement Systems Division at the treasurer’s office, as of December 2022 there were 298,000 state employees contributing to the Teachers’ and State Employees’ Retirement System, and 21,000 in the UNC optional retirement program.

The treasurer’s office says that if UNC Health or ECU Health produce a new retirement program that allows employees to put in an amount other than 6% of their income (for example, 4%), the Internal Revenue Service could cancel the tax break that the employees receive on their retirement contributions.

The tax break on the retirement contribution reduces the employees’ taxable income. If an employee had a $50,000 salary, the 6% contribution is $3,000 and lowers the taxable income to $47,000.

The IRS requires the retirement contributions offered to the employees to all be the same percentage, according to the treasurer’s office. If UNC Health offers existing employees both the current 6% program plus a new 4% contribution program, the IRS could revoke the tax break for everyone.

The Big Picture

Dan Doonan of the National Institute on Retirement Security says employers in the public and private sector sometimes withdraw from their pension plans, and there are three concerns when that happens.

First, when UNC Health and ECU Health reduce their participation in the retirement system by excluding new employees, the agencies’ share of payments going into the retirement system will decline more quickly than the amount retirees drawing pensions from the plan are paid.

“What that means is, with any unfunded liabilities, there’s going to be a cost shift to the rest of the employers still in the system,” Doonan says. In this case, the other tax-funded state agencies.

Second, after the employer departs from a pension program, the risks involved in running the pension plan will be more concentrated on the remaining employers and employees. “If you have a Great Recession-type event, the employers who leave aren’t going to be there to help get things back on track,” Doonan says.

The third concern, according to Doonan, is ending up with a pension fund with more retirees and fewer workers.

“And when you look at private sector multi-employer plans that have struggled—and particularly coming out of the Great Recession—they tend to be the ones that had a lot of retirees and few workers,” he says. “Because there’s no way to get back on track if you start to get really retiree-heavy.”

When an employer or state agency exits a pension plan, it normally makes a payment to the pension plan to cover the financial liabilities it leaves behind for its employees who have been in the system.

That’s not happening with UNC Health and ECU Health, according to Folwell. “It’s a divorce where one party leaves the family and doesn’t pay the liabilities and debts they’ve left behind,” he says. Fowell estimates the health systems would have to pay more than $1 billion to make the state health plan whole, and more than $500 million to make the pension plan whole.

A study that Doonan and Tyler Bond of the National Institute on Retirement Security published in 2019 looked at what happened when pensions were shut down for state workers in several states.

When Alaska shut down its pension for state employees and teachers in 2005, it still owed pensions to workers who had already been in the system, the report found. Those costs grew into the billions. Meanwhile, after the pensions were eliminated, the state had trouble recruiting teachers, state troopers and other public employees. And people retiring without a traditional pension were more likely to suffer financial hardship.

The Alaska Beacon reported this past February that Alaska was considering reviving its pensions for state employees. It said a state study found that Alaskan government retirees relying on investment-based retirement programs were getting significantly less income than they would have if Alaska had not done away with its pensions.

Elsewhere, Michigan cut off new employees from pension eligibility in 1997. The burden on taxpayers grew to pay the retirements to the workers that had been in the system. And workers in the new, non-pension 401(k) were projected to receive only $300 per month on average, vs. $1,849 under the old pension plan, the study found.

Differing Opinions

But the two health systems say Folwell’s dire predictions for the retirement system and state health plan are wrong.

“ECU Health does not anticipate these changes will negatively impact the state of North Carolina,” ECU Health says in a statement. As of early November, details about the new retirement programs for UNC Health and ECU Health were unavailable.

In a statement to Living Power, UNC Health also defended the Transformational Investments in NC health law.

“These new benefits will mirror what other similarly sized health care systems in the state offer their employees,” says Alan Wolf, a spokesman for UNC Health. “That will allow UNC Health to better compete with the private sector on hiring and retaining employees by allowing for new retirement benefits, outside the ones normally offered by the state.”

The law also allows UNC Health to let existing employees switch to the new benefits plans, although there are no current plans to do so. “That is a new policy we could consider offering, but we are not obligated to do so,” Wolf says.

ECU Health says it “does not anticipate any impacts to existing state employees” based on its participation in the new law’s benefits programs. Of the 14,000 people at ECU Health, only 1,200 are state employees. The rest are private-sector employees operating under ECU Health and do not participate in the State Health Plan or state retirement system.

UNC Health has 30,000 people, with 13,500 state employees and 16,500 private sector employees, according to Wolf.

But NCRGEA executive director Tim O’Connell shares concern with this new law. He believes it will increase costs over time to these healthcare entities, those seeking healthcare, and even the taxpayers.

“There is some great empirical research highlighting the fact that defined benefit plans like a pension are nearly twice as efficient as defined contribution plans,” O’Connell says. “Pensions plans have distinct advantages by design with longevity pooling, portfolio diversification, and lower management fees. If these two state healthcare systems do away with the current pension and health benefits, they will either need to absorb these higher personnel costs that are then passed on to patients or reduce the employee benefits. Neither are great options.”

North Carolina Taxpayers Could Be Liable For Billions If Lawmakers Fail To Remedy Provisions Of The ’24 Budget

November 28, 2023

This Forbes article warns of the threat to the stability of the Teachers’ and State Employees’ Retirement System and State Health Plan with 2024 budget provision. The provision will make new UNC Health and East Carolina University Health employees ineligible for the state pension plan beginning January 1, 2024.

UNC Healthcare and ECU Health Weaken Pension

November 8, 2023
by Tim O’Connell

dollar bills

The decision to no longer extend State pension and health plan benefits to new employees of UNC Healthcare and ECU Health is detrimental to all North Carolinians.

NCRGEA will continue to work with elected officials to move to a more fiscally sound solution to protect the pension and health plans so as not to increase the risk of retirement insecurity among healthcare workers and their retirees, especially its lowest-paid.

The inaugural Digital Holiday Dessert Cookbook is here, presented by your peers!

It’s the holidays and time for good food and lots of desserts!

NCRGEA members are spreading a little joy and comfort during this holiday season by sharing some of their best dessert recipes with you. Just click this link for the flipbook or download a copy. Then, heat up the oven and click on the music!

Thank you to all who submitted your amazing recipes to help jumpstart the holidays and bring a little warmth into the season!!

Enjoy and Happy Holidays!

Deryl Davis Fulmer, PhD.
NCRGEA Community Liaison

State loses their latest fight against Lake Case

In June of 2023, the State of North Carolina, including the State Health Plan for Teachers and State Employees and State Treasurer Dale Folwell, filed a Writ of Prohibition with the North Carolina Supreme Court seeking to overturn and prohibit the March 2022 Supreme Court decision on Lake v.  NC State Health Plan from moving forward at the trial court level.  The North Carolina Supreme Court’s March 2022 decision determined that eligible State employees have a contractually vested right in a noncontributory health plan for life, equivalent to the plan in place when a class member’s rights are vested.

On October 20, 2023, the North Carolina Supreme Court denied the Writ of Prohibition, allowing the case to continue to be adjudicated in the Gaston County, North Carolina Superior Court.

Use this link for more official NCRGEA information about the Lake Case: Lake Class Case – Gray Layton Kersh.

NCDHHS Joins Allies Nationwide in Acknowledgement of Ageism Awareness Day

Press Release/ October 2023

All Ages, All Stages NC logo

For the first time, North Carolina’s Department of Health and Human Services is joining with the American Society on Aging to acknowledge the newly established Ageism Awareness Day on Oct. 7, 2023. Modeled after the United Nation’s International Day of Older Persons, Ageism Awareness Day provides an opportunity to draw attention to the existence and impact of ageism in our society.

NCDHHS is hosting a virtual webinar event on Oct. 5 at 10 a.m. to help bring attention to the existence and impact of ageism in our society. To learn how to reframe aging in our communities, join the virtual Zoom event online.

The most widespread and socially accepted form of prejudice, ageism is defined by the World Health Organization as “the stereotypes (how we think), prejudices (how we feel) and discrimination (how we act) towards others or oneself based on age.”

“Ageism hurts us all. Getting older is something to celebrate — we have to learn to find joy in every stage of our lives,” said Joyce Massey-Smith, Director of the NCDHHS Division of Aging and Adult Services. “Older people are one of North Carolina’s greatest natural resources, and we are one of the most age-friendly states in the country. We are committed to honoring people of all ages through initiatives such as All Ages, All Stages NC and through our collective efforts, we will continue to stand up for older North Carolinians in the face of ageism.”

North Carolina has seen significant demographic changes in the 21st century, with a national ranking of 9th in population aged 65 and older. In 2021, one in six people in North Carolina were over the age of 65. That number represents 1.8 million adults, or 17% of the total population, in North Carolina. By 2031, there will be more individuals aged 65 and older than children under 18 in the state, according to the North Carolina State Center for Health Statistics.

“We live in an aging society, which is a wonderful, remarkable thing,” says ASA’s Interim President Leanne Clark-Shirley. “But too many of us view aging with fear, denial and even hostility. We are all growing older. We can’t afford to limit ourselves and other people with such negative and harmful views, and why would we want to? Let’s lean into the opportunities, diversity and full range of experiences that come with aging.”

Evidence shows ageism is widespread in society and can be found everywhere, from our workplaces and health systems to stereotypes we see on TV, advertising and in the media:

  • There are many forms of ageism, including internalized, cultural, implicit and benevolent
  • Ageism decreases quality of life and can shorten lifespan by 7.5 years
  • Although it is universal, people do not always take ageism as seriously as they do other forms of inequity
  • Ageism intersects with, and exacerbates, all other discriminatory “isms”
  • In the media, underrepresented older adults most often reflect negative stereotypes
  • According to the United Nations, on a global scale, one in two people are ageist

Statement on Budget from NCRGEA Executive Director Tim O’Connell

September 20, 2023

Tuesday night, legislative leadership from both the House and Senate chambers announced that they had reached a $30 billion budget agreement after a weeks-long stalemate between the two chambers. The budget includes a 4 percent bonus for retired teachers and state government employees. This 4 percent bonus will be distributed in November 2023. Retirees may receive an additional bonus or a cost-of-living adjustment next year in the 2024 legislative short session. The 2020-2022 biennium budget included bonuses totaling 6 percent for state employees, including the additional 4% awarded in the legislature’s short session last year.

The executive leadership and board of NCRGEA wish to thank the legislature for its work to provide inflation-negating money for our state’s deserving retirees. We also want to thank the many legislative champions who fought determinedly on behalf of more than 250,000 state retirees who taught, served, or protected the people of North Carolina and continue to contribute to society and their local economies in meaningful ways. While it looks like this chapter is successfully ending, our work for local government retirees continues in conjunction with the Local Government Employees’ Trustees Board and related organizations. We will never cease to strongly advocate for all government retirees in North Carolina.