Terms and Definitions

Alternate Address: Retirement applications require a current address because your first retirement benefit payment will be sent in the form of a paper check, even if you enroll in direct deposit (After the first payment, all future payments will be direct deposited.). If you spend time at an alternative address for part of the year or if you plan to move soon after retirement, be sure to list an address on your retirement application that you will have access to for at least six months after you retire. After you retire and receive your first check, you can log in to ORBIT to update your address at any time by clicking the "Maintain Personal Information" link in the left menu. At the bottom of the screen you will see a place to view and edit your primary address and an alternate address. 

Application Window: You must complete your retirement application within 120 days of beginning the online process, or you will have to start the process over and select a new retirement date. State law specifies that if a member fails to respond within 120 days after transmission of the benefit estimate or the retirement date, whichever is later, the application for retirement will be canceled. A new application must be completed establishing a new retirement date. The Retirement Systems Division is not liable for any benefits due a member because of a voided retirement application.

Average Final Compensation: The average of your salary during your four highest-paid years in a row. If your four highest-paid years in a row include a final payment for unused vacation leave and/or prorated longevity, your average final compensation may be increased by the extra payment(s). Final payments, if any, for unused sick leave or reimbursements for expenses are not includable in your AFC.

Date of Birth: The Retirement Systems Division needs your legal name, birth date and Social Security Number at retirement to ensure the retirement benefit is paid to the member that we have on file. A government-issued proof of these items can be a valid and up to date:

  • Driver's license
  • Passport
  • Military ID
  • State-issued ID

COLA: Cost of Living Adjustment for retirees and benefit recipients. TSERS pensions are funded in part by the General Assembly. The TSERS Board of Trustees works each year to make sure the TSERS pension plan is funded, and supports COLAs for TSERS retirees, when investment gains warrant one being granted. LGERS pensions are funded through the financial support of the governing bodies and employees of local governments. COLAs for LGERS are solely funded by participating LGERS employers.

Creditable Service: The total of all service credit that counts toward retirement. It includes membership service for any period you contribute to your system, provided you have not withdrawn your contributions. It also includes credit for eligible purchased service and eligible unused sick leave that is converted to creditable service at retirement.

Direct Deposit: Your first benefit payment will be a paper check and will be mailed to the address you provide. All payments after this check will be direct deposited into the bank account you provide. To learn more about the benefits of using direct deposit for your benefit payments, click here.   

Effective Retirement Date: The date you want your retirement to begin. You cannot apply for retirement until at least 120 days before your effective retirement date. If you apply for retirement one week before your effective retirement date, you will receive a retroactive retirement benefit check.

  • For TSERS, to be legally retired, you must end your employment, live until your effective date of retirement and generally not perform any work for a TSERS employer at any time during the six months immediately following your effective date of retirement (except as a school board member, a member of a board of trustees of a community college or of any constituent institution of the University of North Carolina, or an unpaid bona fide volunteer).
  • For LGERS, to be legally retired, you must end your employment, live until your effective date of retirement and perform no work for a participating LGERS employer, including part-time, temporary, substitute, or
    contract work at any time during the same month immediately following the effective first day of retirement.

Last Day of Work: The last day worked with your most recent state or local government employer, to include any leave that you may use. When determining your eligibility for retirement, this date is an important factor to consider if you want to retire at the moment you are eligible. For example, if the first day you are eligible for retirement is July 1st, you will need to remain on your employer’s payroll in to June. You cannot, for example, select May 1st as your last day of work unless you have sufficient vacation or other leave time to keep you in active employee status into June. Otherwise, you may not be eligible. For more information about eligibility requirements, talk to your employer or click here to read the member handbook for your retirement system.

Last Position Held: The last position title held with that employer.

Legal Name: The Retirement Systems Division needs your legal name, birth date and Social Security Number at retirement to ensure the retirement benefit is paid to the member that we have on file. A government-issued proof of these items can be a valid and up to date:

  • Driver's license
  • Passport
  • Military ID
  • State-issued ID

Plan type: The benefits through the North Carolina Retirement Systems are 401(a) Defined Benefit Plan Benefits qualified under the Internal Revenue Code. This means that:   

  • A Member’s monthly retirement benefit is based on a defined formula.
  • The Benefit is not based on the amount of the member’s contributions or interest.
  • The Benefit is not based on the amount of the employer’s contribution.
  • We are not a defined contribution plan.

Retirement Calculation: Retirement benefits are calculated using a standard formula established by the Boards of Trustees for the Retirement Systems. When you have worked for at least five years for a state or local government employer who participates in the Retirement Systems, you can log in to ORBIT to get a customized benefit estimate that takes your information and uses the calculation below to provide you with an estimate of what your retirement benefits might be. For more information on how to retirement benefits are calculated, including a video which provides an overview of the calculation, click here.

Accrual Rate/Retirement Factor: The retirement factor is determined by the North Carolina General Assembly. The current factors are: 

  • 1.82% for Teachers’ and State Employees’ Retirement System
  • 1.85% for Local Governmental Employees’ Retirement System

Social Security Number (SSN): The Retirement Systems Division needs your legal name, birth date and SSN at retirement to ensure the retirement benefit is paid to the member that we have on file. A copy of your Social Security card must be provided during the retirement application process if you need to make any changes to the SSN we have on file for you.