20 NCAC 02C .1504. COMPUTATION OF COST

The cost of a delayed purchase of service credit is computed as follows:

(1)           Determine earliest retirement dates;

(2)           Determine estimated average final compensation (with purchase) and (without purchase) by multiplying the total compensation actually paid for the period for which 12 months' service credit will have been earned through the current month by the factor determined from the table of Salary Factors using the member's nearest age on the last day of the current month and at the earliest retirement date (with purchase) and (without purchase).  Provided that if the member is out of service but not retired, has passed his 65th birthday, or has 30 years of service credit without the purchase, the estimated average final compensation will be calculated in the normal manner for the compensation and service recorded by the Retirement System;

(3)           Determine estimated allowance (with purchase);

(4)           Determine required reserve on estimated allowance (with purchase) by multiplying the estimated allowance (with purchase) by the reserve factor found in the Table of Reserve Factors for the nearest ages at purchase date and at earliest retirement date;

(5)           Determine estimated allowance (without purchase);

(6)           Determine available reserve on estimated allowance (without purchase) by multiplying the estimated allowance (without purchase) by the reserve factor for the nearest ages at purchase date and at earliest retirement date;

(7)           The cost of purchasing service credit is the difference between the required reserve (with purchase) and the available reserve (without purchase).  Provided that if the difference between the required reserve and the available reserve is zero, the cost of purchasing the service credit is the estimated average final compensation (with purchase) times the number of years service purchased, times the statutory service factor, times the reserve factor for the nearest ages at the last day of the last month for which the compensation used was recorded and at earliest retirement date (with purchase).

 

History Note:        Authority G.S. 128‑26(k); 128‑28(g);

Eff. December 1, 1981;

Amended Eff. June 1, 1982.