Legislators snuck into the recently passed state budget a requirement for UNC Health and ECU Health to move new employees hired after Jan. 1, 2024, to a new retirement system separate from the Teachers and State Employees Retirement System. Current employees have the option to leave TSERS for the new plan as well.

Forbes took a deep dive into the dangers of this change for the current system, the State Health Plan, retirees, and taxpayers. It could wind up costing the state billions of dollars.

Very few details about this new plan have been divulged. We know that a defined contribution plan (401k) will likely be a bad deal, particularly for current employees who will lose substantially if they make the switch.

Why should you stay with the State Pension System?

• The pension system is guaranteed. The state pension system promises a guaranteed income for the rest of your life upon retirement. There are no promises with a 401k system.
• The pension system is safer. A 401k system is completely dependent on the whims of the market. The state system is backed by the state.
• The state pays more into your pension system than you will receive in the new plan. The state contributes more than 17% each year. No specifics have been given about what contribution will be to the new system, but it’s safe to say it won’t be near that amount.
• You will lose health care at retirement by leaving the TSERS system if you are not vested.
• You may lose your health care if you are placed on long-term disability in the new system.
• Once you leave, there’s no coming back to TSERS.
• The new system only benefits very high-salary employees.

Questions to ask about this new plan

• If I have 20 years or more, can I retire from TSERS and then come back as a new employee under the new retirement plan? If this is allowed, will that not place an immediate strain on TSERS?
• If an employee on the new system leaves short-term disability and has to resign to go on long-term disability, do they have any health insurance provided?
• Who will be the Financial Administrator of the Plan?
• What are the deadlines and the details?
• The State of NC currently contributes over 17% to my retirement. What will UNC/ECU Health be contributing?
• If I go to the new plan, what happens to my contributions to TSERS?
• If I go to the new plan, is it like I am just a new employee, no matter how many years I have in TSERS? What happens to my time in TSERS, especially if I have less than 10 years?
• What guarantees are with the new retirement system?
• Even if I am vested in TSERS if I leave and come back, will I be able to be reinstated in TSERS?

STAY INFORMED! SIGN UP FOR ALERTS FROM SEANC