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Bill Summary · HB 498

HB 498 — Military to Teacher Retirement Incentive (North Carolina)

Status: Filed 11/12/2024; Read 1st time 02/28/2025. Effective: when law; applies to members first hired as teachers on or after that date.

Purpose / Intent

To encourage individuals with prior active‑duty service in the U.S. Armed Forces to enter the teaching profession by allowing certain veterans who become teachers to receive pension service credit in the Teachers’ and State Employees’ Retirement System (TSERS) for prior active‑duty military service.

Key provisions

  • Adds a new subsection (g1) to G.S. 135‑4 (Creditable service) that permits a member with prior active‑duty service in the uniformed services who subsequently becomes a teacher to receive creditable service for that active‑duty time, subject to conditions.
  • Definitions: “Active duty” and related terms follow 38 U.S.C. §101, with limits (e.g., excludes active duty already creditable in another retirement system and excludes active duty for training).
  • Eligibility criteria (all required):
    • Not dishonorably discharged.
    • Active‑duty service occurred before the member’s employment as a teacher and was not concurrent with service already used for TSERS membership.
    • Member satisfies teacher licensure requirements under G.S. 115C‑270.20.
    • Member is currently employed as a teacher.
    • Veterans must submit satisfactory evidence of military service to the TSERS Board of Trustees prior to separation or retirement.
  • Amount of credit:
    • Up to a maximum of four (4) years of creditable service equal to the length of the veteran’s prior active duty.
    • Service beyond four years may be purchased under G.S. 135‑4.5 (subject to that statute’s rules).
  • Funding / employer obligation:
    • The teacher’s employer must remit a lump‑sum payment to the Pension Accumulation Fund equal to the full actuarial liability increase caused by the added service credit plus an administrative fee set by the TSERS Board of Trustees.
    • The liability calculation uses the system’s actuarial assumptions, except (i) the allowance is assumed to begin at the earliest unreduced retirement age and (ii) postretirement increases are assumed as set by the Board with actuary advice.
  • Technical/related changes:
    • Repeals G.S. 135‑4(f)(1) and (f)(2).
    • Amends provisions in G.S. 135‑5(a3)(1) and G.S. 128‑27(a3)(1) to reflect the treatment of armed service credit in benefit calculations.

Who is affected

  • Primary: Veterans with qualifying prior active‑duty service who become teachers (hired on or after the bill’s effective date).
  • Employers: local school units and other TSERS‑participating employers — responsible for paying the lump‑sum employer cost.
  • TSERS / Board of Trustees: administrative workload for verifying service, pricing liabilities, and processing lump‑sum payments.
  • Potential indirect impact on hiring: may improve recruitment of veterans into teaching by making public‑pension benefits more favorable.

Fiscal/administrative implications

  • Direct pension cost is funded by a one‑time employer lump‑sum payment (not paid from TSERS prefunding). Local employers (school districts) will incur the immediate cost to secure the additional pension credit.
  • Administrative tasks include service verification, actuarial liability calculations, and collection of payments; TSERS will set an administrative fee to help cover processing.

Effective date / Applicability

  • The act is effective upon becoming law and applies only to persons first hired as teachers on or after that date.

Bottom line

HB 498 creates a targeted pension incentive — up to four years of TSERS service credit for prior active‑duty veterans who later become licensed teachers — with the employer bearing the actuarially determined lump‑sum cost. The measure aims to attract veterans into teaching while ensuring the retirement system is funded for the added credit.

Compiled from official sources — confirm details with the bill’s official record.

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