A BILL TO BE ENTITLED
AN ACT to provide for the purchase of creditable service in the armed forces of the united states for members of the teachers' and state employees' retirement system and members of the local governmental employees' retirement system.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 135‑4(f)(7) is repealed.
SECTION 2.  G.S. 135‑4(f) is amended by adding a new subdivision to read:
"(8)	Notwithstanding any other provision of this Chapter, any member who has completed 10 years of current membership service, and any retired member who has completed 10 years of current membership service prior to retirement, may purchase creditable service in the Armed Forces of the United States by making a lump-sum payment. The payment by the member shall be the sum of the six percent (6%) required employee contributions of the System plus the normal employer rate as determined by the System's most recent actuarial valuation times the greater of the following: 
a.	The reported compensation in the last 12 months of membership service; or
b.	The highest reported compensation the member has received during any calendar year; 
plus a twenty-five dollar ($25.00) administrative fee.
Creditable service allowed under this subdivision shall be only for the initial period of "active duty", as defined in 38 U.S. Code section 101(21), in the Armed Forces of the United States up to the date the member was first eligible to be separated and released and for subsequent periods of "active duty", as defined in 38 U.S. Code section 101(21), as required by the Armed Forces of the United States up to the date of first eligibility for separation or release, but shall not include periods of active duty in the Armed Forces of the United States creditable in any other retirement system except the national guard or any reserve component of the Armed Forces of the United States, and shall not include periods of "active duty for training", as defined in 38 U.S. Code section 101(22), or periods of "inactive duty training", as defined in 38 U.S. Code section 101(23), rendered in any reserve component of the Armed Forces of the United States. However, creditable service may be allowed only for active duty in the Armed Forces of the United States of a member that resulted in a general or honorable discharge from duty. The member shall submit satisfactory evidence of the service claimed. For purposes of this subdivision, membership service may include any membership or prior service credits transferred to this Retirement System pursuant to G.S. 135‑18.1.
The retirement allowance of a retired member who purchases creditable service under this subdivision shall be increased the month following the month payment is received. The increase in the retirement allowance shall be the difference between the initial retirement allowance, under any optional allowance elected at the time of retirement, and the amount of the retirement allowance, under any optional allowance elected at the time of retirement, to which the retired member would have been entitled had the purchased creditable service been creditable at the time of retirement, adjusted by any increases in the retirement accrual rate occurring between the member's date of retirement and the date of payment. The increase in the retirement allowance shall not include any adjustment for cost‑of‑living increases granted since the date of retirement.
Current membership service shall mean membership service earned after the military service was rendered."
SECTION 3.  G.S. 128‑26(j1) is repealed.
SECTION 4.  G.S. 128‑26 is amended by adding a new subsection to read:
"(w)	Purchase of Military Service. – Notwithstanding any other provision of this Chapter, any member who has completed 10 years of current membership service, and any retired member who has completed 10 years of current membership service prior to retirement, may purchase creditable service in the Armed Forces of the United States by making a lump-sum payment. The payment by the member shall be the sum of the six percent (6%) required employee contributions of the System plus the normal employer rate as determined by the System's most recent actuarial valuation times the greater of the following:
(1)	The reported compensation in the last 12 months of membership service; or
(2)	The highest reported compensation the member has received during any calendar year; 
plus a twenty-five dollar ($25.00) administrative fee.
Creditable service allowed under this subsection shall be only for the initial period of "active duty", as defined in 38 U.S. Code section 101(21), in the Armed Forces of the United States up to the date the member was first eligible to be separated and released and for subsequent periods of "active duty", as defined in 38 U.S. Code section 101(21), as required by the Armed Forces of the United States up to the date of first eligibility for separation or release, but shall not include periods of active duty in the Armed Forces of the United States creditable in any other retirement system except the national guard or any reserve component of the Armed Forces of the United States, and shall not include periods of "active duty for training", as defined in 38 U.S. Code section 101(22), or periods of "inactive duty training", as defined in 38 U.S. Code section 101(23), rendered in any reserve component of the Armed Forces of the United States. Provided, creditable service may be allowed only for active duty in the Armed Forces of the United States of a member that resulted in a general or honorable discharge from duty. The member shall submit satisfactory evidence of the service claimed. For purposes of this subsection, membership service may include any membership or prior service credits transferred to this Retirement System pursuant to G.S. 128‑24.
The retirement allowance of a retired member who purchases creditable service under this subsection shall be increased the month following the month payment is received. The increase in the retirement allowance shall be the difference between the initial retirement allowance, under any optional allowance elected at the time of retirement, and the amount of the retirement allowance, under any optional allowance elected at the time of retirement, to which the retired member would have been entitled had the purchased creditable service been creditable at the time of retirement, adjusted by any increases in the retirement accrual rate occurring between the member's date of retirement and the date of payment. The increase in the retirement allowance shall not include any adjustment for cost‑of‑living increases granted since the date of retirement.
Current membership service shall mean membership service earned after the military service was rendered."
SECTION 5.  This act becomes effective July 1, 2007, but does not diminish any inchoate or accrued rights of any member as of that date.