2013 North Dakota Century Code Title 54 State Government Chapter 54-52 Public Employees Retirement System
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CHAPTER 54-52
PUBLIC EMPLOYEES RETIREMENT SYSTEM
54-52-01. (Effective through July 31, 2017) Definition of terms.
As used in this chapter, unless the context otherwise requires:
1. "Account balance" means the total contributions made by the employee, vested
employer contributions under section 54-52-11.1, the vested portion of the vesting fund
as of June 30, 1977, and interest credited thereon at the rate established by the board.
2. "Beneficiary" means any person in receipt of a benefit provided by this plan or any
person designated by a participating member to receive benefits.
3. "Correctional officer" means a participating member who is employed as a correctional
officer by a political subdivision.
4. "Eligible employee" means all permanent employees who meet all of the eligibility
requirements set by this chapter and who are eighteen years or more of age, and
includes appointive and elective officials under sections 54-52-02.5, 54-52-02.11, and
54-52-02.12, and nonteaching employees of the superintendent of public instruction,
including the superintendent of public instruction, who elect to transfer from the
teachers' fund for retirement to the public employees retirement system under section
54-52-02.13, and employees of the state board for career and technical education who
elect to transfer from the teachers' fund for retirement to the public employees
retirement system under section 54-52-02.14. Eligible employee does not include state
employees who elect to become members of the retirement plan established under
chapter 54-52.6.
5. "Employee" means any person employed by a governmental unit, whose
compensation is paid out of the governmental unit's funds, or funds controlled or
administered by a governmental unit, or paid by the federal government through any of
its executive or administrative officials; licensed employees of a school district means
those employees eligible to participate in the teachers' fund for retirement who, except
under subsection 2 of section 54-52-17.2, are not eligible employees under this
chapter.
6. "Employer" means a governmental unit.
7. "Funding agent" or "agents" means an investment firm, trust bank, or other financial
institution which the retirement board may select to hold and invest the employers' and
members' contributions.
8. "Governmental unit" means the state of North Dakota, except the highway patrol for
members of the retirement plan created under chapter 39-03.1, or a participating
political subdivision thereof.
9. "National guard security officer or firefighter" means a participating member who is:
a. A security police employee of the North Dakota national guard; or
b. A firefighter employee of the North Dakota national guard.
10. "Participating member" means all eligible employees who through payment into the
plan have established a claim against the plan.
11. "Peace officer" means a participating member who is a peace officer as defined in
section 12-63-01 and is employed as a peace officer by the bureau of criminal
investigation or by a political subdivision and, notwithstanding subsection 12, for
persons employed after August 1, 2005, is employed thirty-two hours or more per
week and at least twenty weeks each year of employment. Participating members of
the law enforcement retirement plan created by this chapter who begin employment
after August 1, 2005, are ineligible to participate concurrently in any other retirement
plan administered by the public employees retirement system.
12. "Permanent employee" means a governmental unit employee whose services are not
limited in duration and who is filling an approved and regularly funded position in an
eligible governmental unit, and is employed twenty hours or more per week and at
least twenty weeks each year of employment.
13. "Prior service" means service or employment prior to July 1, 1966.
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"Prior service credit" means such credit toward a retirement benefit as the retirement
board may determine under the provisions of this chapter.
15. "Public employees retirement system" means the retirement plan and program
established by this chapter.
16. "Retirement" means the acceptance of a retirement allowance under this chapter upon
either termination of employment or termination of participation in the retirement plan
and meeting the normal retirement date.
17. "Retirement board" or "board" means the seven persons designated by this chapter as
the governing authority for the retirement system created.
18. "Seasonal employee" means a participating member who does not work twelve
months a year.
19. "Service" means employment on or after July 1, 1966.
20. "Service benefit" means the credit toward retirement benefits as determined by the
retirement board under the provisions of this chapter.
21. "Temporary employee" means a governmental unit employee who is not eligible to
participate as a permanent employee, who is at least eighteen years old and not
actively contributing to another employer-sponsored pension fund, and, if employed by
a school district, occupies a noncertified teacher's position.
22. "Wages" and "salaries" means the member's earnings in eligible employment under
this chapter reported as salary on the member's federal income tax withholding
statements plus any salary reduction or salary deferral amounts under 26 U.S.C. 125,
401(k), 403(b), 414(h), or 457. "Salary" does not include fringe benefits such as
payments for unused sick leave, personal leave, vacation leave paid in a lump sum,
overtime, housing allowances, transportation expenses, early retirement incentive pay,
severance pay, medical insurance, workforce safety and insurance benefits, disability
insurance premiums or benefits, or salary received by a member in lieu of previously
employer-provided fringe benefits under an agreement between the member and
participating employer. Bonuses may be considered as salary under this section if
reported and annualized pursuant to rules adopted by the board.
(Effective after July 31, 2017) Definition of terms. As used in this chapter, unless the
context otherwise requires:
1. "Account balance" means the total contributions made by the employee, vested
employer contributions under section 54-52-11.1, the vested portion of the vesting fund
as of June 30, 1977, and interest credited thereon at the rate established by the board.
2. "Beneficiary" means any person in receipt of a benefit provided by this plan or any
person designated by a participating member to receive benefits.
3. "Correctional officer" means a participating member who is employed as a correctional
officer by a political subdivision.
4. "Eligible employee" means all permanent employees who meet all of the eligibility
requirements set by this chapter and who are eighteen years or more of age, and
includes appointive and elective officials under sections 54-52-02.5, 54-52-02.11, and
54-52-02.12, and nonteaching employees of the superintendent of public instruction,
including the superintendent of public instruction, who elect to transfer from the
teachers' fund for retirement to the public employees retirement system under section
54-52-02.13, and employees of the state board for career and technical education who
elect to transfer from the teachers' fund for retirement to the public employees
retirement system under section 54-52-02.14. Eligible employee does not include
nonclassified state employees who elect to become members of the retirement plan
established under chapter 54-52.6 but does include employees of the judicial branch
and employees of the board of higher education and state institutions under the
jurisdiction of the board.
5. "Employee" means any person employed by a governmental unit, whose
compensation is paid out of the governmental unit's funds, or funds controlled or
administered by a governmental unit, or paid by the federal government through any of
its executive or administrative officials; licensed employees of a school district means
those employees eligible to participate in the teachers' fund for retirement who, except
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under subsection 2 of section 54-52-17.2, are not eligible employees under this
chapter.
"Employer" means a governmental unit.
"Funding agent" or "agents" means an investment firm, trust bank, or other financial
institution which the retirement board may select to hold and invest the employers' and
members' contributions.
"Governmental unit" means the state of North Dakota, except the highway patrol for
members of the retirement plan created under chapter 39-03.1, or a participating
political subdivision thereof.
"National guard security officer or firefighter" means a participating member who is:
a. A security police employee of the North Dakota national guard; or
b. A firefighter employee of the North Dakota national guard.
"Participating member" means all eligible employees who through payment into the
plan have established a claim against the plan.
"Peace officer" means a participating member who is a peace officer as defined in
section 12-63-01 and is employed as a peace officer by the bureau of criminal
investigation or by a political subdivision and, notwithstanding subsection 12, for
persons employed after August 1, 2005, is employed thirty-two hours or more per
week and at least twenty weeks each year of employment. Participating members of
the law enforcement retirement plan created by this chapter who begin employment
after August 1, 2005, are ineligible to participate concurrently in any other retirement
plan administered by the public employees retirement system.
"Permanent employee" means a governmental unit employee whose services are not
limited in duration and who is filling an approved and regularly funded position in an
eligible governmental unit, and is employed twenty hours or more per week and at
least twenty weeks each year of employment.
"Prior service" means service or employment prior to July 1, 1966.
"Prior service credit" means such credit toward a retirement benefit as the retirement
board may determine under the provisions of this chapter.
"Public employees retirement system" means the retirement plan and program
established by this chapter.
"Retirement" means the acceptance of a retirement allowance under this chapter upon
either termination of employment or termination of participation in the retirement plan
and meeting the normal retirement date.
"Retirement board" or "board" means the seven persons designated by this chapter as
the governing authority for the retirement system created.
"Seasonal employee" means a participating member who does not work twelve
months a year.
"Service" means employment on or after July 1, 1966.
"Service benefit" means the credit toward retirement benefits as determined by the
retirement board under the provisions of this chapter.
"Temporary employee" means a governmental unit employee who is not eligible to
participate as a permanent employee, who is at least eighteen years old and not
actively contributing to another employer-sponsored pension fund, and, if employed by
a school district, occupies a noncertified teacher's position.
"Wages" and "salaries" means the member's earnings in eligible employment under
this chapter reported as salary on the member's federal income tax withholding
statements plus any salary reduction or salary deferral amounts under 26 U.S.C. 125,
401(k), 403(b), 414(h), or 457. "Salary" does not include fringe benefits such as
payments for unused sick leave, personal leave, vacation leave paid in a lump sum,
overtime, housing allowances, transportation expenses, early retirement incentive pay,
severance pay, medical insurance, workforce safety and insurance benefits, disability
insurance premiums or benefits, or salary received by a member in lieu of previously
employer-provided fringe benefits under an agreement between the member and
participating employer. Bonuses may be considered as salary under this section if
reported and annualized pursuant to rules adopted by the board.
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54-52-02. Formulation of plan - Exclusion of employees covered by plans in
existence.
All departments, boards, institutions, commissions, or agencies of the state of North Dakota,
the Garrison Diversion Conservancy District, district health units, the supreme court, and the
district courts, hereinafter referred to as agency, shall participate in a retirement system which
will provide for the payment of benefits to state and political subdivision employees or to their
beneficiaries thereby enabling the employees to care for themselves and their dependents and
which by its provisions will improve state and political subdivision employment, reduce
excessive personnel turnover, and offer career employment to high-grade men and women.
However, a city health department providing health services in a city-county health district
formed under chapter 23-35 is not required to participate in the public employees retirement
system but may participate in the public employees retirement system under section 54-52-02.1.
Employees presently covered by a pension plan or retirement plan to which the state is
contributing, except social security, are not eligible for duplicate coverage except as provided
under sections 39-03.1-14.1 and 54-52-17.2.
54-52-02.1. Political subdivisions authorized to join public employees retirement
system.
1. A political subdivision may, on behalf of its permanent employees, on behalf of its
peace officers and correctional officers separately from its other employees, and
permanent noncertified employees only in the case of school districts, enter into
agreements with the retirement board for the purpose of extending the benefits of the
public employees retirement system, as provided in this chapter, to those employees.
The agreement may, in accordance with this chapter, contain provisions relating to
benefits, contributions, effective date, modification, administration, and other
appropriate provisions as the retirement board and the political subdivision agree
upon, but the agreement must provide that:
a. The political subdivision will contribute on behalf of each eligible employee an
amount equal to that provided in section 54-52-06 or 54-52-06.3 for peace
officers and correctional officers participating separately from other political
subdivision employees.
b. A portion of the moneys paid by the political subdivision may be used to pay
administrative expenses of the retirement board.
2. Notwithstanding any other provision of law, a political subdivision having an existing
police pension plan may merge that plan into the public employees retirement system
under rules adopted by and in a manner determined by the board.
3. Notwithstanding any other provision of this chapter, a political subdivision of this state
not currently participating in the public employees retirement system may not become
a participant in the retirement system until an actuarial study is performed under the
direction of the board to calculate the required employer contribution for any past
service liability and the required employer contribution must be an amount determined
sufficient to amortize and fund any past service liability over a period not to exceed
thirty years as determined by the board. Any fees incurred in performing the actuarial
study must be paid for by the political subdivision in a manner determined by the
board.
54-52-02.2. Employee referendum - Authorization and supervision.
On their own motion or upon petition by twenty percent of the permanent political
subdivision employees or the permanent noncertified employees of any school district, the
political subdivision shall authorize and supervise a referendum of the permanent employees
employed by that political subdivision on the question whether the employees elect to
participate in the retirement system. If the majority of the employees vote in favor of participation
in the retirement system, the political subdivision, notwithstanding anything to the contrary in
chapter 40-46, may in its discretion enter into the agreement provided for in section 54-52-02.1.
Notwithstanding provisions to the contrary in chapters 18-05, 18-11, and 40-45, the police
department of any city, the fire department of any city, or both, may hold referendums among
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their employees on the question of whether their department should join the remaining city
employees in participation in the retirement system established by this chapter. If a majority of
the city police or city firefighters, or both, vote in favor of such participation, the governing body
of the city must include the police and firefighters within any agreement entered into pursuant to
section 54-52-02.1 and must arrange for discontinuance of any existing police or firefighters'
pension fund as provided by law.
54-52-02.3. Newly elected supreme and district court judges.
After July 1, 1973, any person elected or appointed to the office of judge of the supreme
court or judge of the district court for the first time must, from and after the date that person
qualifies and takes office, be a participating member of the public employees retirement system.
Any person so elected or appointed is not eligible for membership in or for receipt of benefits
from the retirement program provided by chapter 27-17. As used in this section, the phrase "for
the first time" means a person elected or appointed, who, after July 1, 1973, does not hold office
as a judge of the supreme court or the district court at the time of the person's election or
appointment.
54-52-02.4. Participation by certain employees - Requirements.
Repealed by S.L. 1987, ch. 651, § 1.
54-52-02.5. Newly elected and appointed state officials.
After December 31, 1999, a person elected or appointed to a state office for the first time
must, from and after the date that person qualifies and takes office, be a participating member
of the public employees retirement system unless that person makes an election at any time
during the first six months after the date the person takes office to participate in the retirement
plan established under chapter 54-52.6. As used in this section, the phrase "for the first time"
means a person appointed, who, after December 31, 1999, does not hold office as an appointed
official at the time of that person's appointment.
54-52-02.6. Repurchase of past service upon reemployment.
An individual who terminates participation in the plan may elect to receive a refund of the
member's account balance under subsection 7 of section 54-52-17 and thus forfeit all rights
under the retirement plan. An individual upon reemployment may elect to repurchase the
forfeited past service for retirement and the retiree health benefits program in accordance with
rules established by the board.
54-52-02.7. Purchase of service by former employees of mental health and retardation
centers.
Repealed by S.L. 1987, ch. 651, § 1.
54-52-02.8. Purchase of service.
Repealed by S.L. 1987, ch. 651, § 1.
54-52-02.9. Participation by temporary employees.
A temporary employee may elect, within one hundred eighty days of beginning employment,
to participate in the public employees retirement system and receive credit for service after
enrollment. The temporary employee shall pay monthly to the fund an amount equal to eight
and twelve-hundredths percent times the temporary employee's present monthly salary. The
amount required to be paid by a temporary employee increases by two percent times the
temporary employee's present monthly salary beginning with the monthly reporting period of
January 2012, and with an additional two percent increase, beginning with the reporting period
of January 2013, and with an additional increase of two percent, beginning with the monthly
reporting period of January 2014. The temporary employee shall also pay the required monthly
contribution to the retiree health benefit fund established under section 54-52.1-03.2. This
contribution must be recorded as a member contribution pursuant to section 54-52.1-03.2. An
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employer may not pay the temporary employee's contributions. A temporary employee may
continue to participate as a temporary employee in the public employees retirement system until
termination of employment or reclassification of the temporary employee as a permanent
employee. A temporary employee may not purchase any additional credit, including additional
credit under section 54-52-17.4 or past service under section 54-52-02.6.
54-52-02.10. Members of the legislative assembly.
Deleted by R.M. December 5, 1989.
54-52-02.11. Participation requirements for nonstate elected officials.
Elected officials of participating counties, at their individual option, may enroll in the defined
benefit plan within the first six months of their term.
54-52-02.12. Participation requirements for nonstate appointed officials.
Nonstate appointed officials of participating employers appointed on or after August 1, 1999,
who meet the participation requirements of this chapter must be enrolled in the defined benefit
plan effective within the first month of taking office.
54-52-02.13. Participation by nonteaching employees of the office of the
superintendent of public instruction.
Notwithstanding any other provision of law, between July 1, 2003, and five p.m. on
August 29, 2003, a nonteaching employee of the superintendent of public instruction, including
the superintendent of public instruction, who is otherwise eligible to participate in the public
employees retirement system may file an election with the staff of the retirement and investment
office to transfer from the teachers' fund for retirement to the public employees retirement
system. The teachers' fund for retirement shall certify the employees who are eligible to transfer.
An election to transfer is irrevocable for as long as the employee remains employed with the
superintendent of public instruction. The teachers' fund for retirement shall certify a transferring
employee's salary, service credit, contribution history, account balance, and any other
necessary information to the public employees retirement system. The amount to be transferred
is the greater of the actuarial present value of the employee's accrued benefit as of July 1,
2003, plus interest at the rate of seven and one-half percent from July 1, 2003, until the date the
amount is transferred to the public employees retirement system or the employee's account
balance as of the date of transfer. The public employees retirement system shall credit the
transferring employee with the service credit specified by the teachers' fund for retirement and
shall convert the annual salary history from the teachers' fund for retirement to a monthly salary
for the period. An employee becomes a member of the public employees retirement system as
of the date the funds are transferred. To be eligible to transfer, an employee must be employed
by the office of the superintendent of public instruction at the date of the transfer. The
superintendent of public instruction shall begin making retirement contributions, and the public
employees retirement system shall begin receiving those retirement contributions, on behalf of
employees who have elected to transfer to the public employees retirement system to that
system the first of the month following the date of transfer.
54-52-02.14. Participation by employees of the state board for career and technical
education.
Notwithstanding any other provision of law, between July 1, 2007, and five p.m. on
August 31, 2007, an employee of the state board for career and technical education who is
otherwise eligible to participate in the public employees retirement system may file an election
with the staff of the retirement and investment office to transfer from the teachers' fund for
retirement to the public employees retirement system. The teachers' fund for retirement shall
certify the employees who are eligible to transfer. An election to transfer is irrevocable for as
long as the employee remains employed with the state board for career and technical
education. The teachers' fund for retirement shall certify a transferring employee's salary,
service credit, contribution history, account balance, and any other necessary information to the
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public employees retirement system. The amount to be transferred is the greater of the actuarial
present value of the employee's accrued benefit as of July 1, 2007, plus interest at the rate of
seven and one-half percent from July 1, 2007, until the date the amount is transferred to the
public employees retirement system or the employee's account balance on the date of transfer.
The public employees retirement system shall credit the transferring employee with the service
credit specified by the teachers' fund for retirement and shall convert the annual salary history
from the teachers' fund for retirement to a monthly salary for the period. An employee becomes
a member of the public employees retirement system as of the date the funds are transferred.
To be eligible to transfer, an employee must be employed by the state board for career and
technical education on the date of the transfer. The state board for career and technical
education shall begin making retirement contributions, and the public employees retirement
system shall begin receiving those retirement contributions, on behalf of employees who have
elected to transfer to the public employees retirement system to that system the first of the
month following the date of transfer.
54-52-03. Governing authority.
A state agency is hereby created to constitute the governing authority of the system to
consist of a board of seven persons known as the retirement board. No more than one elected
member of the board may be in the employ of a single department, institution, or agency of the
state or in the employ of a political subdivision. No employee of the public employees retirement
system or the state retirement and investment office may serve on the board.
1. One member of the board must be appointed by the governor to serve a term of five
years. The appointee must be a North Dakota citizen who is not a state or political
subdivision employee and who by experience is familiar with money management. The
citizen member is chairman of the board.
2. One member of the board must be appointed by the attorney general from the attorney
general's legal staff and shall serve a term of five years.
3. The state health officer appointed under section 23-01-05 is a member of the board.
4. Three board members must be elected by and from among the active participating
members, members of the retirement plan established under chapter 54-52.6,
members of the retirement plan established under chapter 39-03.1, and members of
the job service North Dakota retirement plan. Employees who have terminated their
employment for whatever reason are not eligible to serve as elected members of the
board under this subsection. Board members must be elected to a five-year term
pursuant to an election called by the board. Notice of board elections must be given to
all active participating members. The time spent in performing duties as a board
member may not be charged against any employee's accumulated annual or any other
type of leave.
5. One board member must be elected by and from among those persons who are
receiving retirement benefits under this chapter. The board shall call the election and
must give prior notice of the election to the persons eligible to participate in the
election pursuant to this subsection. The board member shall serve a term of five
years.
6. The members of the board are entitled to receive one hundred forty-eight dollars per
day compensation and necessary mileage and travel expenses as provided in sections
44-08-04 and 54-06-09. This is in addition to any other pay or allowance due the
chairman or a member, plus an allowance for expenses they may incur through
service on the board.
7. A board member shall serve a five-year term and until the board member's successor
qualifies. Each board member is entitled to one vote, and four of the seven board
members constitute a quorum. Four votes are necessary for resolution or action by the
board at any meeting.
54-52-04. Board authority.
1. The board shall adopt rules necessary to implement this chapter, and to manage the
system, subject to the limitations of this chapter. The board has the powers and
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privileges of a corporation, including the right to sue and be sued in its own name as
the board. The venue of all actions in which the board is a party must be Burleigh
County, North Dakota.
The board shall appoint an executive director to serve at its discretion. The executive
director shall perform such duties as assigned by the board.
The board shall authorize the creation of whatever staff it deems necessary for sound
and economical administration of the system. The executive director shall hire the
staff, subject to the approval of the board.
The board shall arrange for actuarial and medical advisers for the system. The board
shall cause a qualified, competent actuary to be retained on a consulting basis. The
actuary shall make an annual valuation of the liabilities and reserves of the system and
a determination of the contributions required by the system to discharge its liabilities
and pay the administrative costs under this chapter, and to recommend to the board
rates of employer and employee contributions required, based upon the entry age
normal cost method, to maintain the system on an actuarial reserve basis; once every
five years make a general investigation of the actuarial experience under the system
including mortality, retirement, employment turnover, and other items required by the
board, and recommend actuarial tables for use in valuations and in calculating
actuarial equivalent values based on such investigation; and perform other duties as
may be assigned by the board.
The state shall provide the board with the retirement systems office or offices to be
used for the meetings of the board and for the general purposes of the administrative
personnel.
The funds necessary for paying prior service and service benefits, consultant fees, and
making withdrawal payments and refunds are hereby appropriated from the retirement
fund for those purposes. The amount necessary to pay the consulting fees and
insurance benefits related to the uniform group insurance program is hereby
appropriated from the insurance premiums received by the board.
The board shall administer chapters 39-03.1, 54-52.1, and 54-52.2, and may
administer other optional employee benefit programs, including a flexible benefits plan,
an optional employee short-term disability plan, a long-term care plan, or other
optional employee benefit programs as the board deems appropriate. The board shall
also administer the retirement plan established in 1961 and frozen to new entrants in
1980 for employees of job service North Dakota under chapter 52-11.
The board shall annually report the investment performance of the fund and distribute
a copy to each participant.
The board may distribute the employer contribution and applicable interest for any
employee of any development foundation associated with a public institution of higher
education in this state who may previously have been included in the public
employees retirement system while employed by such foundation. Such employee is
entitled to have that employee's contribution and the contribution of the development
foundation, with interest.
The board may audit any books, papers, accounts, bills, vouchers, and other
documents or property of any and all departments, boards, commissions, political
subdivisions, financial institutions, contractors, health care organizations, and
consultants relating to their participation in services provided to programs administered
by the board.
The board shall fund the administrative expenses of chapter 54-52.2 from funds
collected under chapters 54-52, 54-52.1, and 54-52.3 and from fines and fees
collected from deferred compensation services providers, including any fees paid for
by participant funds, subject to appropriation by the legislative assembly.
Except as provided by section 54-52-17.7, the board may adjust service and make any
correction of member, retiree, or beneficiary records and benefits after an error or
inequity has been determined.
The board may use any amount credited to the separate uniform group insurance
program fund created by section 54-52.1-06 in excess of the costs of administration of
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the uniform group insurance program to reduce the amount of premium amounts paid
monthly by enrolled members of the uniform group insurance program, to reduce any
increase in premium amounts paid monthly by enrolled members, or to provide
increased insurance coverage to the members, as the board may determine.
The board may create and implement an Internal Revenue Code section 115 trust
health care savings plan for all supreme and district court judges participating in the
public employees retirement system if seventy-five percent of the total active
participating supreme and district court judges vote to approve the program. If
approved, the contribution level specified in the vote applies to all current and future
participating supreme and district court judges and must be paid pursuant to the plan
document developed by the board. The contribution level may only be changed by a
vote of seventy-five percent of the total active participating supreme and district court
judges at that time.
54-52-05. Membership and assessments - Employer payment of employee
contributions.
1. Every eligible governmental unit employee concurring in the plan must so state in
writing and all future eligible employees are participating members. An employee who
was not enrolled in the retirement system when eligible to participate must be enrolled
immediately upon notice of the employee's eligibility, unless the employee waives in
writing the employee's right to participate for the previous time of eligibility, to avoid
contributing to the fund for past service. An employee who is eligible for normal
retirement who accepts a retirement benefit under this chapter and who subsequently
becomes employed with a participating employer other than the employer with which
the employee was employed at the time the employee retired under this chapter may,
before reenrolling in the retirement plan, elect to permanently waive future participation
in the retirement plan and the retiree health program and maintain that employee's
retirement status. An employee making this election is not required to make any future
employee contributions to the public employees retirement system nor is the
employee's employer required to make any further contributions on behalf of that
employee.
2. Each member must be assessed and required to pay monthly four percent of the
monthly salary or wage paid to the member, and such assessment must be deducted
and retained out of such salary in equal monthly installments commencing with the first
month of employment. Member contributions increase by one percent of the monthly
salary or wage paid to the member beginning with the monthly reporting period of
January 2012, and with an additional increase of one percent, beginning with the
monthly reporting period of January 2013, and with an additional increase of one
percent, beginning with the monthly reporting period of January 2014.
3. Each employer, at its option, may pay all or a portion of the employee contributions
required by subsection 2 and sections 54-52-06.1, 54-52-06.2, 54-52-06.3, and
54-52-06.4 or the employee contributions required to purchase service credit on a
pretax basis pursuant to subsection 5 of section 54-52-17.4. Employees may not
receive the contributed amounts directly once the employer has elected to pay the
employee contributions. The amount paid must be paid by the employer in lieu of
contributions by the employee. If the state determines not to pay the contributions, the
amount that would have been paid must continue to be deducted from the employee's
compensation. If contributions are paid by the employer, they must be treated as
employer contributions in determining tax treatment under this code and the federal
Internal Revenue Code. If contributions are paid by the employer, they may not be
included as gross income of the employee in determining tax treatment under this
code and the Internal Revenue Code until they are distributed or made available. The
employer shall pay these employee contributions from the same source of funds used
in paying compensation to the employee or from the levy authorized by subsection 5 of
section 57-15-28.1. The employer shall pay these contributions by effecting an equal
cash reduction in the gross salary of the employee or by an offset against future salary
Page No. 9
4.
increases or by a contribution of a reduction in gross salary and offset against future
salary increases. If employee contributions are paid by the employer, they must be
treated for the purposes of this chapter in the same manner and to the same extent as
employee contributions made prior to the date on which employee contributions were
assumed by the employer. An employer exercising its option under this subsection
shall report its choice to the board in writing.
For compensation earned after August 1, 2009, all employee contributions required
under section 54-52-06.1 and the job service North Dakota retirement plan, and not
otherwise paid under subsection 3, must be paid by the employer in lieu of
contributions by the member. All contributions paid by the employer under this
subsection must be treated as employer contributions in determining tax treatment
under this code and the Internal Revenue Code. Contributions paid by the employer
under this subsection may not be included as gross income of the member in
determining tax treatment under this code and the Internal Revenue Code until the
contributions are distributed or made available. Contributions paid by the employer in
accordance with this subsection must be treated for the purposes of this chapter in the
same manner and to the same extent as member contributions made before the date
the contributions were assumed by the employer. The employer shall pay these
member contributions from the same source of funds used in paying compensation to
the employee. The employer shall pay these contributions by effecting an equal cash
reduction in the gross salary of the employee. The employer shall continue making
payments under this section unless otherwise specifically provided for under the
agency's biennial appropriation or by amendment to law.
54-52-06. Employer's contribution to retirement plan.
Each governmental unit shall contribute an amount equal to four and twelve-hundredths
percent of the monthly salary or wage of a participating member. Governmental unit
contributions increase by one percent of the monthly salary or wage of a participating member
beginning with the monthly reporting period of January 2012, and with an additional increase of
one percent, beginning with the reporting period of January 2013, and with an additional
increase of one percent, beginning with the monthly reporting period of January 2014. For those
members who elect to exercise their rights under section 54-52-17.14, the employing
governmental unit, or in the case of a member not presently under covered employment the
most recent employing governmental unit, shall pay the associated employer contribution. If the
employee's contribution is paid by the governmental unit under subsection 3 of section
54-52-05, the employer unit shall contribute, in addition, an amount equal to the required
employee's contribution. Each governmental unit shall pay the contribution monthly, or in the
case of an election made pursuant to section 54-52-17.14 a lump sum, into the retirement fund
from its funds appropriated for payroll and salary or any other funds available for these
purposes. Any governmental unit failing to pay the contributions monthly, or in the case of an
election made pursuant to section 54-52-17.14 a lump sum, is subject to a civil penalty of fifty
dollars and, as interest, one percent of the amount due for each month of delay or fraction
thereof after the payment became due. In lieu of assessing a civil penalty or one percent per
month, or both, interest at the actuarial rate of return may be assessed for each month the
contributions are delinquent. If contributions are paid within ninety days of the date they became
due, penalty and interest to be paid on delinquent contributions may be waived. An employer is
required to submit contributions for any past eligible employee who was employed after July 1,
1977, for which contributions were not made if the employee would have been eligible to
become vested had the employee participated and if the employee elects to join the public
employees retirement system. Employer contributions may not be assessed for eligible service
that an employee has waived pursuant to subsection 1 of section 54-52-05. The board shall
report to each session of the legislative assembly the contributions necessary, as determined by
the actuarial study, to maintain the fund's actuarial soundness.
Page No. 10
54-52-06.1. Contribution by supreme and district court judges - Employer
contribution.
Each judge of the supreme or district court who is a member of the public employees
retirement system must be assessed and required to pay monthly five percent of the judge's
monthly salary. Member contributions increase by one percent of the judge's monthly salary
beginning with the monthly reporting period of January 2012, and with an additional increase of
one percent, beginning with the reporting period of January 2013, and with an additional
increase of one percent, beginning with the monthly reporting period of January 2014. The
assessment must be deducted and retained out of the judge's salary in equal monthly
installments. The state shall contribute an amount equal to fourteen and fifty-two
one-hundredths percent of the monthly salary of a supreme or district court judge who is a
participating member of the system, which matching contribution must be paid from its funds
appropriated for salary, or from any other funds available for such purposes. State contributions
increase by one percent of the monthly salary of a supreme or district court judge who is a
participating member of the system beginning with the monthly reporting period of
January 2012, and with an additional increase of one percent, beginning with the monthly
reporting period of January 2013, and with an additional increase of one percent, beginning with
the monthly reporting period of January 2014. If the judge's contribution is paid by the state
under subsection 3 of section 54-52-05, the state shall contribute, in addition, an amount equal
to the required judge's contribution.
54-52-06.2. Contribution by national guard security officers or firefighters - Employer
contribution.
Each national guard security officer or firefighter who is a member of the public employees
retirement system is assessed and shall pay monthly four percent of the employee's monthly
salary. Member contributions increase by one-half of one percent of the member's monthly
salary beginning with the monthly reporting period of January 2014. The assessment must be
deducted and retained out of the employee's salary in equal monthly installments. The national
guard security officer's or firefighter's employer shall contribute an amount determined by the
board to be actuarially required to support the level of benefits specified in section 54-52-17.
The employer's contribution must be paid from funds appropriated for salary or from any other
funds available for such purposes. If the security officer's or firefighter's assessment is paid by
the employer under subsection 3 of section 54-52-05, the employer shall contribute, in addition,
an amount equal to the required national guard security officer's or firefighter's assessment.
54-52-06.3. Contribution by peace officers and correctional officers employed by
political subdivisions - Employer contribution.
Each peace officer or correctional officer employed by a political subdivision that enters into
an agreement with the retirement board on behalf of its peace officers and correctional officers
separately from its other employees and who is a member of the public employees retirement
system is assessed and shall pay monthly four percent of the employee's monthly salary. Peace
officer or correctional officer contributions increase by one-half of one percent of the member's
monthly salary beginning with the monthly reporting period of January 2012, and with an
additional increase of one-half of one percent, beginning with the monthly reporting period of
January 2013, and with an additional increase of one-half of one percent, beginning with the
monthly reporting period of January 2014. The assessment must be deducted and retained out
of the employee's salary in equal monthly installments. The peace officer's or correctional
officer's employer shall contribute an amount determined by the board to be actuarially required
to support the level of benefits specified in section 54-52-17. If the peace officer's or correctional
officer's assessment is paid by the employer under subsection 3 of section 54-52-05, the
employer shall contribute, in addition, an amount equal to the required peace officer's or
correctional officer's assessment.
Page No. 11
54-52-06.4. Contribution by peace officers employed by the bureau of criminal
investigation - Employer contribution.
Each peace officer employed by the bureau of criminal investigation who is a member of the
public employees retirement system is assessed and shall pay monthly four percent of the
employee's monthly salary. Peace officer contributions increase by one percent of the member's
monthly salary beginning with the monthly reporting period of January 2012, and with an
additional increase of one percent, beginning with the reporting period of January 2013. The
assessment must be deducted and retained out of the employee's salary in equal monthly
installments. The peace officer's employer shall contribute an amount determined by the board
to be actuarially required to support the level of benefits specified in section 54-52-17. The
employer's contribution must be paid from funds appropriated for salary or from any other funds
available for such purposes. If the peace officer's assessment is paid by the employer under
subsection 3 of section 54-52-05, the employer shall contribute, in addition, an amount equal to
the required peace officer's assessment.
54-52-06.5. Reduction in member and employer contributions.
The required increase in the amount of member and employer contributions under sections
54-52-02.9, 54-52-05, 54-52-06, 54-52-06.1, 54-52-06.2, 54-52-06.3, 54-52.6-02, and
54-52.6-09 must be reduced to the rate in effect on July 1, 2013, effective on the July first that
follows the first valuation of the public employees retirement system main system showing a
ratio of the actuarial value of assets to the actuarial accrued liability of the public employees
retirement system main system that is equal to or greater than one hundred percent.
54-52-07. Governmental unit contribution is retirement contribution.
The governmental unit contribution to a retirement plan must be considered a retirement
contribution and not an additional compensation. This applies specifically to elected and
appointed officials whose maximum annual compensation is set by statute or by state, county,
city, or school district governing bodies, boards, or commissions. The retirement contribution
may not be considered by the employee as income in computing the employee's net income for
purposes of state income tax until the moneys come under the control of the employee.
54-52-08. State income tax deductions.
For the purposes of state income tax, the assessment imposed by this chapter on the
employee must be treated in accordance with existing state statutes on state income tax.
54-52-09. Exemption from state premium tax.
Premiums, consideration for annuities, and membership fees are exempt from premium
taxes payable pursuant to section 26.1-03-17.
54-52-10. Allocation of funds.
The board shall maintain such funds and accounts as may be necessary to administer the
provisions of this chapter. Any and all expenses incurred by or for the operation of the retirement
plan must be paid from the funds contributed pursuant to sections 54-52-06 and 54-52-06.1.
54-52-10.1. Payment of benefits and other costs.
The board shall use funds under its control both before and after July 1, 1977, to administer
this chapter and pay benefits authorized by this chapter.
54-52-11. Vesting - Vesting schedule of agency, county, city, or school district
contribution.
Repealed by S.L. 1977, ch. 499, § 17.
54-52-11.1. Vesting of employer contributions.
Except for supreme and district court judges, who are not eligible for benefits under this
section, a member's account balance includes vested employer contributions equal to the
Page No. 12
member's contributions to the deferred compensation plan for public employees under chapter
54-52.2, or member contributions to other participating employer supplemental Internal
Revenue Code section 457 or 403(b) retirement programs as approved by the board, with the
minimum member contribution being twenty-five dollars. However, the vested employer
contribution may not exceed:
1. For months one through twelve of service credit, twenty-five dollars or one percent of
the member's monthly salary, whichever is greater.
2. For months thirteen through twenty-four of service credit, twenty-five dollars or two
percent of the member's monthly salary, whichever is greater.
3. For months twenty-five through thirty-six of service credit, twenty-five dollars or three
percent of the member's monthly salary, whichever is greater.
4. For service exceeding thirty-six months, twenty-five dollars or four percent of the
member's monthly salary, whichever is greater.
5. The vested employer contribution may not exceed four percent of the member's
monthly salary.
Vested employer contributions must be credited monthly to the member's account balance.
54-52-12. Exemption from taxation and judicial process - Prohibition of assignment.
Repealed by S.L. 1987, ch. 386, § 2.
54-52-13. Deposit of moneys - Appropriation.
All moneys, including but not limited to employers' contributions, employees' contributions,
grants, donations, legacies, and devises for the benefit of the fund, must be deposited in the
public employees retirement fund account with the Bank of North Dakota. All of said moneys,
not otherwise appropriated, are hereby appropriated for the purpose of making investments for
the employees retirement fund and to make payments to beneficiaries under the program.
54-52-13.1. Retirement benefits - Continuing appropriation.
The funds necessary for paying prior service and service benefits, consultant fees, and
making withdrawal payments and refunds, are hereby appropriated from the retirement fund for
those purposes.
54-52-14. Acceptance of money and property by the board.
The board may take by gift, grant, devise, or bequest, any money or real or personal
property or any other thing of value for the benefit of the employees retirement fund, and when
received, said property becomes a part of such fund.
54-52-14.1. Investment of moneys in fund.
Investment of the fund is under the supervision of the state investment board in accordance
with chapter 21-10. Such moneys must be placed for investment only with a firm or firms whose
endeavor is money management, and only after a trust agreement or contract has been
executed. Investment costs may be paid directly from the fund, and are hereby appropriated for
that purpose, in accordance with section 21-10-06.2.
54-52-14.2. Interest and earnings attributable to administered funds.
All interest and earnings on funds administered by the retirement board established under
chapters 39-03.1, 54-52, 54-52.1, 54-52.2, and 54-52.3 must be credited to the respective fund.
54-52-14.3. Public employee retirement funds - Use and investment.
Any provision of law relating to the use and investment of public employee retirement funds
must be deemed a part of the employment contracts of the employees participating in any public
employee retirement system. All moneys from any source paid into any public employee
retirement system fund created by the laws of this state must be used and invested only for the
exclusive benefit of the members, retirees, and beneficiaries of that system, including the
payment of system administrative costs.
Page No. 13
54-52-15. Accounting requirements.
Repealed by S.L. 1969, ch. 458, § 1.
54-52-16. Insurance contracts - Trust agreements.
For the purpose of establishing the funding agent or agents, the board may enter into an
insurance contract, agreement, or purchase an insurance policy or policies covering all or any
part of the retirement plan adopted, provided the assuring company is a North Dakota
corporation or authorized to do business in the state of North Dakota, or may enter into a
contract with any qualified trust company or companies, or combinations of insurance contracts
and trust contracts.
54-52-17. Formulation of plan.
Participating members shall receive benefits according to this section and according to rules
adopted by the board, not inconsistent with this chapter. No person is entitled to receive a prior
service benefit if the person was not continuously employed by a governmental unit in North
Dakota for a period of not less than two years immediately prior to eligibility for retirement.
1. Participating members shall receive credit for full-time employment or its equivalent
from the date they attain eligibility until their normal retirement date, postponed
retirement date, or early retirement date, as defined in this section. Part-time
employment will be recognized as full-time employment on a prorated basis as the
board may prescribe.
2. Retirement benefits are calculated from the participating member's final average
salary, which is the average of the highest salary received by the member for any
thirty-six months employed during the last one hundred twenty months of employment.
For members who terminate employment on or after August 1, 2010, final average
salary is the average of the highest salary received by the member for any thirty-six
months employed during the last one hundred eighty months of employment. For
members who terminate employment between July 31, 2005, and August 1, 2010, final
average salary is the average of the highest salary received by the member for any
thirty-six months employed during the period for which the board has appropriate and
accurate salary records on its electronic database, but that period may not be more
than the last one hundred eighty months of employment. Months not employed are
excluded in arriving at the thirty-six months to be used for the purpose of computing an
average. If the participating member has worked for less than thirty-six months at the
normal retirement date, the final average salary is the average salary for the total
months of employment.
3. Retirement dates are defined as follows:
a. Normal retirement date, except for a national guard security officer or firefighter or
a peace officer or correctional officer employed by the bureau of criminal
investigation or by a political subdivision, is:
(1) The first day of the month next following the month in which the member
attains the age of sixty-five years; or
(2) When the member has a combined total of years of service credit and years
of age equal to eighty-five and has not received a retirement benefit under
this chapter.
b. Normal retirement date for a national guard security officer or firefighter is the first
day of the month next following the month in which the national guard security
officer or firefighter attains the age of fifty-five years and has completed at least
three eligible years of employment as a national guard security officer or
firefighter.
c. Normal retirement date for a peace officer or correctional officer employed by a
political subdivision is:
(1) The first day of the month next following the month in which the peace
officer or correctional officer attains the age of fifty-five years and has
completed at least three eligible years of employment as a peace officer or
correctional officer; or
Page No. 14
(2)
4.
When the peace officer or correctional officer has a combined total of years
of service credit and years of age equal to eighty-five and has not received a
retirement benefit under this chapter.
d. Normal retirement date for a peace officer employed by the bureau of criminal
investigation is:
(1) The first day of the month next following the month in which the peace
officer attains the age of fifty-five years and has completed at least three
eligible years of employment as a peace officer; or
(2) When the peace officer has a combined total of years of service credit and
years of age equal to eighty-five and has not received a retirement benefit
under this chapter.
e. Postponed retirement date is the first day of the month next following the month
in which the member, on or after July 1, 1977, actually severs or has severed the
member's employment after reaching the normal retirement date.
f. Early retirement date, except for a national guard security officer or firefighter or a
peace officer or correctional officer employed by the bureau of criminal
investigation or by a political subdivision, is the first day of the month next
following the month in which the member attains the age of fifty-five years and
has completed three years of eligible employment. For a national guard security
officer or firefighter, early retirement date is the first day of the month next
following the month in which the national guard security officer or firefighter
attains the age of fifty years and has completed at least three years of eligible
employment. For a peace officer or correctional officer employed by the bureau of
criminal investigation or by a political subdivision, early retirement date is the first
day of the month next following the month in which the peace officer or
correctional officer attains the age of fifty years and has completed at least three
years of eligible employment.
g. Disability retirement date is the first day of the month after a member becomes
permanently and totally disabled, according to medical evidence called for under
the rules of the board, and has completed at least one hundred eighty days of
eligible employment. For supreme and district court judges, permanent and total
disability is based solely on a judge's inability to perform judicial duties arising out
of physical or mental impairment, as determined pursuant to rules adopted by the
board or as provided by subdivision a of subsection 3 of section 27-23-03. A
member is eligible to receive disability retirement benefits only if the member:
(1) Became disabled during the period of eligible employment; and
(2) Applies for disability retirement benefits within twelve months of the date the
member terminates employment.
A member is eligible to continue to receive disability benefits as long as the
permanent and total disability continues and the member submits the necessary
documentation and undergoes medical testing required by the board, or for as
long as the member participates in a rehabilitation program required by the board,
or both. If the board determines that a member no longer meets the eligibility
definition, the board may discontinue the disability retirement benefit. The board
may pay the cost of any medical testing or rehabilitation services it deems
necessary and these payments are appropriated from the retirement fund for
those purposes.
The board shall calculate retirement benefits as follows:
a. Normal retirement benefits for all retirees, except supreme and district court
judges, reaching normal retirement date equal an annual amount, payable
monthly, comprised of a service benefit and a prior service benefit, as defined in
this chapter, which is determined as follows:
(1) Service benefit equals two percent of final average salary multiplied by the
number of years of service employment.
(2) Prior service benefit equals two percent of final average salary multiplied by
the number of years of prior service employment.
Page No. 15
b.
5.
6.
Normal retirement benefits for all supreme and district court judges under the
public employees retirement system reaching normal retirement date equal an
annual amount, payable monthly, comprised of a benefit as defined in this
chapter, determined as follows:
(1) Benefits must be calculated from the time of appointment or election to the
bench and must equal three and one-half percent of final average salary
multiplied by the first ten years of judicial service, two and eighty hundredths
percent of final average salary multiplied by the second ten years of judicial
service, and one and one-fourth percent of final average salary multiplied by
the number of years of judicial service exceeding twenty years.
(2) Service benefits must include, in addition, an amount equal to the percent
specified in subdivision a of final average salary multiplied by the number of
years of nonjudicial employee service and employment.
c. Postponed retirement benefits are calculated as for single life benefits for those
members who retired on or after July 1, 1977.
d. Early retirement benefits are calculated as for single life benefits accrued to the
date of termination of employment, but must be actuarially reduced to account for
benefit payments beginning prior to the normal retirement date, which is the
earlier of age sixty-five or the age at which current service plus age equals
eighty-five. A retiree, other than a supreme or district court judge, is eligible for
early retirement benefits only after having completed three years of eligible
employment. A supreme or district court judge retiree is eligible for early
retirement benefits only after having completed five years of eligible employment.
e. Except for supreme and district court judges, disability retirement benefits are
twenty-five percent of the member's final average salary. Disability retirement
benefits for supreme and district court judges are seventy percent of final average
salary reduced by the member's primary social security benefits and by any
workforce safety and insurance benefits paid. The minimum monthly disability
retirement benefit under this section is one hundred dollars.
Upon termination of employment after completing three years of eligible employment,
except for supreme and district court judges, who must complete five years of eligible
employment, but before normal retirement date, a member who does not elect to
receive early retirement benefits is eligible to receive deferred vested retirement
benefits payable commencing on the member's normal retirement date in one of the
optional forms provided in subsection 9. Members who have delayed or inadvertently
failed to apply for retirement benefits to commence on their normal retirement date
may choose to receive either a lump sum payment equal to the amount of missed
payments, or an actuarial increase to the form of benefit the member has selected,
which increase must reflect the missed payments.
If before retiring a member dies after completing three years of eligible employment,
except for supreme and district court judges, who must have completed five years of
eligible employment, the board shall pay the member's account balance to the
member's designated beneficiary as provided in this subsection. If the member has
designated an alternate beneficiary with the surviving spouse's written consent, the
board shall pay the member's account balance to the named beneficiary. If the
member has named more than one primary beneficiary, the board shall pay the
member's account balance to the named primary beneficiaries in the percentages
designated by the member or, if the member has not designated a percentage for the
beneficiaries, in equal percentages. If one or more of the primary beneficiaries has
predeceased the member, the board shall pay the predeceased beneficiary's share to
the remaining primary beneficiaries. If any beneficiary survives the member, yet dies
before distribution of the beneficiary's share, the beneficiary must be treated as if the
beneficiary predeceased the member. If there are no remaining primary beneficiaries,
the board shall pay the member's account balance to the contingent beneficiaries in
the same manner. If there are no remaining designated beneficiaries, the board shall
pay the member's account balance to the member's estate. If the member has not
Page No. 16
7.
8.
9.
designated an alternate beneficiary or the surviving spouse is the beneficiary, the
surviving spouse of the member may select a form of payment as follows:
a. If the member was a supreme or district court judge, the surviving spouse may
select one of the following optional forms of payment:
(1) A lump sum payment of the member's retirement account as of the date of
death.
(2) Payments as calculated for the deceased member as if the member was of
normal retirement age at the date of death, payable until the spouse dies.
b. The surviving spouse of all other members may select one of the following
options:
(1) A lump sum payment of the member's retirement account as of the date of
death.
(2) Payment of a monthly retirement benefit equal to fifty percent of the
deceased member's accrued single life retirement benefits until the spouse
dies.
(3) If the member dies on or after the member's normal retirement date, the
payment of a monthly retirement benefit equal to an amount that would have
been paid to the surviving spouse if the member had retired on the day of
the member's death and had selected a one hundred percent joint and
survivor annuity, payable until the spouse dies. A surviving spouse who
received a benefit under this subsection as of July 31, 1995, is entitled to
the higher of that person's existing benefit or the equivalent of the accrued
benefit available under the one hundred percent joint and survivor provision
as if the deceased member were of normal retirement age, with the increase
payable beginning August 1, 1995.
If a member not coming under the provisions of subsection 6 terminates employment
because of death, permanent and total disability, or any voluntary or involuntary
reason prior to retirement, the member or the member's designated beneficiary is
entitled to the member's account balance at termination. The board automatically shall
refund a member's account balance if the member has completed less than three
years of eligible employment, has an account balance of less than one thousand
dollars, and was not a supreme or district court judge. If the member was a supreme
or district court judge, the board automatically shall refund a member's account
balance if the member completed less than five years of eligible employment. A
member may waive the refund if the member submits a written statement to the board,
within thirty days after termination, requesting that the member's account balance
remain in the fund.
The surviving spouse of a member receiving retirement benefits must be the member's
primary beneficiary unless there is no surviving spouse or the surviving spouse
designates an alternate beneficiary in writing. If a member receiving retirement
benefits or the member's surviving spouse receiving retirement benefits dies before
the total amount of benefits paid to either or both equals the amount of the member's
account balance at retirement, the difference must be paid to the named beneficiary of
the recipient or, if there is no named beneficiary, to the recipient's estate.
The board shall adopt rules providing for the receipt of retirement benefits in the
following optional forms:
a. Single life.
b. An actuarially equivalent joint and survivor option, with fifty percent or one
hundred percent options.
c. Actuarially equivalent life with ten-year or twenty-year certain options.
d. An actuarially equivalent partial lump sum distribution option with a twelve-month
maximum lump sum distribution.
e. An actuarially equivalent graduated benefit option with either a one percent or two
percent increase to be applied the first day of January of each year.
Except for supreme and district court judges, unless a member specifically requests
that the member receive benefits according to one of these options at the time of
Page No. 17
10.
11.
12.
applying for retirement, all retirement benefits must be in the form of a single life
benefit. For supreme and district court judges, unless a member specifically requests
that the member receive benefits according to one of these options at the time of
applying for retirement, all retirement benefits must be in the form of a lifetime monthly
pension with fifty percent of the benefit continuing for the life of the surviving spouse, if
any.
The fund may accept rollovers from other eligible plans under rules adopted by the
board for the purchase of additional service credit, but only to the extent the transfer is
a rollover contribution that meets the requirement of section 408 of the Internal
Revenue Code.
The board may accept trustee-to-trustee transfers as permitted by Internal Revenue
Code section 403(b)(13) and section 457(e)(17) from an Internal Revenue Code
section 403(b) annuity or Internal Revenue Code section 457 deferred compensation
plan for the purchase of permissive service credit, as defined in Internal Revenue
Code section 415(n)(3)(A) or as repayment of a cashout from a governmental plan
under Internal Revenue Code section 415(k)(3).
The board may establish individual retirement accounts and individual retirement
annuities as permitted under section 408(q) of the Internal Revenue Code to allow
employees to make voluntary employee contributions. The board may adopt rules to
implement and administer the accounts and annuities under this section.
54-52-17.1. Actuarial studies required.
Before making changes in benefit levels the legislative assembly and the board shall have
an actuarial study conducted to determine the total cost of such changes.
54-52-17.2. Multiple plan membership - Eligibility for benefits - Amount of benefits.
1. a. For the purpose of determining eligibility for benefits under this chapter, an
employee's years of service credit is the total of the years of service credit earned
in the public employees retirement system and the years of service credit earned
in any number of the following:
(1) The teachers' fund for retirement.
(2) The highway patrolmen's retirement system.
(3) The teachers' insurance and annuity association of America - college
retirement equities fund (TIAA-CREF), for service credit earned while
employed by North Dakota institutions of higher education.
Service credit may not exceed twelve months of credit per year.
b. Pursuant to rules adopted by the board, an employee who has service credit in
the system and in any of the plans described in paragraphs 1 and 2 of
subdivision a is entitled to benefits under this chapter. The employee may elect to
have benefits calculated using the benefit formula in section 54-52-17 under
either of the following methods:
(1) The average of the highest salary received by the member for any thirty-six
months employed during the last one hundred twenty months of
employment in the public employees retirement system. If the participating
member has worked for less than thirty-six months at retirement, the final
average salary is the average salary for the total months of employment.
(2) The average of the highest salary received by the member for any thirty-six
consecutive months during the last one hundred twenty months of
employment with any of the three eligible employers under this subdivision,
with service credit not to exceed one month in any month when combined
with the service credit earned in the alternate retirement system.
The board shall calculate benefits for an employee under this subsection by using only
those years of service credit earned under this chapter.
2. a. If an employee who is eligible to participate in the public employees retirement
system is also employed in any position when membership in an alternate
retirement system is required, then, for purposes of current participation, the
Page No. 18
b.
employee is a member of each applicable retirement system. The employer shall
pay over to each retirement system the member assessment and employer
contributions at the rates currently existing for that retirement system.
If an employee described in subdivision a was employed prior to August 1, 2003,
and has dual membership rights, the employee may elect to begin participation in
the alternate plan pursuant to the plan provisions on August 1, 2003, or may
continue participation according to the plan provisions in effect on July 31, 2003.
An employee's election under this subdivision is ineffective unless delivered to
the public employees retirement system administrative offices by five p.m. on
October 31, 2003. If an election is not received by the public employees
retirement system, the participation and benefit calculation requirements in effect
on July 31, 2003, apply to that employee.
54-52-17.3. Purchase of legislative service credit.
A member may purchase service credit for the time during each legislative session spent
serving as a member of the legislative assembly while holding eligible employment under this
chapter. The member shall pay for this service credit an amount equal to the required member
assessments and employer contributions plus interest as established by the board. Service
credit for legislative sessions prior to July 1, 1985, must be purchased before January 1, 1986.
Service credit for each later legislative session must be purchased within one year after the
adjournment of that legislative session.
54-52-17.4. Purchase of additional credit.
1. A participating member may elect to purchase credit for years of service and prior
service for which the participating member is not presently receiving credit. A
participating member is entitled to purchase additional credit under this section for the
following service or prior service, except this service is not eligible for credit if the
years claimed also qualify for retirement benefits from another retirement system:
a. Active prior employment in the armed forces of the United States, except as
provided in section 54-52-17.14, for up to four years of credit.
b. Employment as a permanent employee by a public employer either within or
outside the state of North Dakota.
c. Employment as a permanent employee by a political subdivision participating in
the public employees retirement system which did not pay the cost of past service
benefits under section 54-52-02.1.
d. Service the participating member did not elect to repurchase upon reemployment
under section 54-52-02.6.
e. Service of an eligible employee, who exercised the privilege to withdraw from the
predecessor plan to the public employees retirement system under subsection 10
of section 54-52-17 as created by section 13 of chapter 499 of the 1977 Session
Laws.
f. Employment as a permanent employee by the federal government.
2. A participating member may elect to purchase credit for the following absences for
which the participating member is not receiving service credit:
a. Employer-approved leave of absence; or
b. Months away from work while participating as a seasonal employee.
3. Supreme and district court judges under the public employees retirement system may
elect to purchase credit for the following years of service:
a. Except as provided in section 54-52-17.14, for up to four years of credit for active
employment in the armed forces of the United States.
b. As a county judge in a county or counties that did not participate in the public
employees retirement system under this chapter.
c. Participation in the public employees retirement system as a county judge may be
converted to credit in the judges' retirement system.
4. The participating member may purchase credit under this section, or the participating
member's employer may purchase for the participating member, by paying to the
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5.
6.
board an amount equal to the actuarial cost to the fund of providing the credit. If the
participating member purchases credit pursuant to subdivision d of subsection 1, the
participating member must pay to the board an amount equal to the greater of the
actuarial cost to the fund of providing the credit, or the amount the participating
member received upon taking a refund of the participating member's account balance,
plus interest at the actuarial rate of return from the time the participating member was
issued the refund. If the participating member is not repurchasing all of the credit
originally refunded, the participating member must pay a pro rata amount of the
refunded amount determined by dividing the refunded amount by the number of
months of credit refunded, multiplying that amount times the number of months of
credit the participating member seeks to repurchase, and adding interest at the
actuarial rate of return. The participating member or the participating member's
employer shall also pay to the retiree health benefits fund established under section
54-52.1-03.2 an amount equal to the actuarial cost to that fund for the additional credit.
This contribution must be recorded as a member contribution pursuant to section
54-52.1-03.2. The board shall adopt rules governing the purchase of additional credit
under this section.
Pursuant to rules adopted by the board, the board may allow a participating member to
purchase service credit with either pretax or aftertax moneys, at the board's discretion.
If the participating member elects to purchase service credit using pretax moneys, the
requirements and restrictions in subsection 3 of section 54-52-05 apply to the
purchase arrangement.
In addition to service credit identified in this section, a vested participating member
may purchase up to five years of service credit unrelated to any other eligible service.
54-52-17.5. Postretirement adjustments.
An individual or the individual's beneficiary who, on July 31, 2001, is receiving retirement
benefits under subdivision a, c, d, or e of subsection 4 of section 54-52-17 is entitled to receive
an increase in benefits equal to six percent of the individual's present benefits with the increase
payable beginning August 1, 2001.
54-52-17.6. Benefit payments to alternate payee under qualified domestic relations
order.
1. The board shall pay retirement benefits in accordance with the applicable
requirements of any qualified domestic relations order. The board shall review a
domestic relations order submitted to it to determine if the domestic relations order is
qualified under this section and under rules established by the board for determining
the qualified status of domestic relations orders and administering distributions under
the qualified orders. Upon determination that a domestic relations order is qualified,
the board shall notify the participating member and the named alternate payee of its
receipt of the qualified domestic relations order.
2. A "qualified domestic relations order" for purposes of this section means any judgment,
decree, or order, including approval of a property settlement agreement, which relates
to the provision of child support, spousal support, or marital property rights to a
spouse, former spouse, child, or other dependent of a participating member, is made
pursuant to a North Dakota domestic relations law, and which creates or recognizes
the existence of an alternate payee's right to, or assigns to an alternate payee the right
to, receive all or a part of the benefits payable to the participating member. A qualified
domestic relations order may not require the board to provide any type or form of
benefit, or any option, not otherwise provided under the public employees retirement
system, or to provide increased benefits as determined on the basis of actuarial value.
However, a qualified domestic relations order may require the payment of benefits at
the early retirement date notwithstanding that the participating member has not
terminated eligible employment. A qualified domestic relations order must specify:
a. The name and the last-known mailing address of the participating member and
the name and mailing address of each alternate payee covered by the order;
Page No. 20
b.
c.
d.
The amount or percentage of the participating member's benefits to be paid by
the plan to each alternate payee;
The number of payments or period to which the order applies; and
Each retirement plan to which the order applies.
54-52-17.7. Employment records.
The years of service and prior service credit for each member as indicated in the records of
the public employees retirement system as of July 1, 1991, are deemed correct and recognized
as creditable years of service and prior service credit for purposes of calculating retirement
benefits under this chapter and may not be reduced. However, the records may be corrected to
reflect additional months of creditable service and prior service credit upon proper verification.
54-52-17.8. Benefit limitations.
Repealed by S.L. 2003, ch. 498, § 22.
54-52-17.9. Prior service retiree adjustment.
Repealed by S.L. 2001, ch. 494, § 10.
54-52-17.10. Prior service retiree adjustment.
Prior service retirees who are receiving benefits under this chapter on July 31, 2001, are
entitled to receive an increase in benefits equal to six percent of the individual's present benefit,
with the increased benefits payable beginning August 1, 2001. A prior service retiree is a former
participating employee who receives a supplemental monthly payment from the retirement
system based upon the original prior service credit system.
54-52-17.11. Judges postretirement adjustments.
A supreme or district court judge or that person's beneficiary who, on December 31, 2007, is
receiving retirement benefits under subdivision b of subsection 4 of section 54-52-17, is entitled
to receive an increase in benefits equal to two percent of the individual's present benefits with
the increase payable beginning January 1, 2008. A supreme or district court judge or that
person's beneficiary who, on December 31, 2008, is receiving retirement benefits under
subdivision b of subsection 4 of section 54-52-17, is entitled to receive an increase in benefits
equal to two percent of the individual's present benefits with the increase payable beginning
January 1, 2009. The increases allowed by this section may only be given if the public
employees retirement board determines there is actuarial margin sufficient to pay the increases.
54-52-17.12. Judges postretirement adjustments.
Repealed by S.L. 2001, ch. 495, § 5.
54-52-17.13. Supplemental retiree benefit payment.
If the board determines that the fund has obtained a total return on investments of nine and
six hundredths percent or higher for the fiscal year ending June 30, 2007, or June 30, 2008, the
board shall authorize an additional payment equal to seventy-five percent of the January
retirement allowance following the fiscal yearend to each eligible retiree in pay status as of that
January, excluding judicial retirees and beneficiaries, but including joint and survivor and term
certain beneficiaries, under this chapter. The board may only make one payment to each retiree
under this section.
54-52-17.14. Military service under the Uniformed Services Employment and
Reemployment Rights Act - Member retirement credit.
A member reemployed under the Uniformed Services Employment and Reemployment
Rights Act of 1994, as amended [Pub. L. 103-353; 108 Stat. 3150; 38 U.S.C. 4301-4333], is
entitled to receive retirement credit for the period of qualified military service. The required
contribution for the credit, including payment for retiree health benefits, must be made in the
same manner and by the same party as would have been made had the employee been
Page No. 21
continuously employed. If the salary the member would have received during the period of
service is not reasonably certain, the member's average rate of compensation during the
twelve-month period immediately preceding the member's period of service or, if shorter, the
period of employment immediately preceding that period, times the number of months of credit
being purchased must be used. Employees must be allowed up to three times the period of
military service or five years, whichever is less, to make any required payments. This provision
applies to all qualifying periods of military service since October 1, 1994. Any payments made
by the member to receive qualifying credit inconsistent with this provision must be refunded.
Employees shall make application to the employer for credit and provide a DD Form 214 to
verify service.
54-52-18. Apportionment of benefits.
Repealed by S.L. 1977, ch. 499, § 17.
54-52-19. Prior service.
Repealed by S.L. 1977, ch. 499, § 17.
54-52-19.1. Continuance of prior service benefits earned under former plan.
Any retired employee receiving prior service benefits under former section 54-52-19 is
entitled to continue to receive those benefits. For the purposes of this section only, section
54-52-19 is deemed to remain in effect. The amount of benefits to which the employee is
entitled is double that computed under original section 54-52-19.
54-52-19.2. Grant of prior service credit after refund.
Repealed by S.L. 2005, ch. 531, § 19.
54-52-20. Prior service - Register - Benefits.
Repealed by S.L. 1977, ch. 499, § 17.
54-52-21. Plan not employment contract.
The adoption of or participation in a retirement plan may not be deemed to give an
employee the right to be retained in the employ of a governmental unit or to interfere with the
right of the governmental unit to discharge any employee at any time.
54-52-22. Interpretation clause.
This chapter may not be construed so as to commit the state of North Dakota, or any
county, city, or school district or the agency to any liability either moral or legal for any benefits
to any beneficiary under the plan or plans resulting from enactment of this chapter, nor as
exemption from any regulatory laws of the state of North Dakota.
54-52-23. Savings clause - Plan modifications.
If the board determines that any section of this chapter does not comply with applicable
federal statutes or rules, the board shall adopt appropriate terminology with respect to that
section as will comply with those federal statutes or rules, subject to the approval of the
employee benefits programs committee. Any plan modifications made by the board pursuant to
this section are effective until the effective date of any measure enacted by the legislative
assembly providing the necessary amendments to this chapter to ensure compliance with the
federal statutes or rules.
54-52-24. Planning and organizing funds.
Repealed by S.L. 1969, ch. 456, § 13; S.L. 1969, ch. 457, § 12.
54-52-25. Limitation of powers.
Repealed by S.L. 1989, ch. 667, § 13.
Page No. 22
54-52-26. Confidentiality of records.
All records relating to the retirement benefits of a member or a beneficiary under this
chapter, chapter 54-52.2, and chapter 54-52.6 are confidential and are not public records.
Information and records may be disclosed, under rules adopted by the board, only to:
1. A person to whom the member has given written consent to have the information
disclosed.
2. A person legally representing the member, upon proper proof of representation, and
unless the member specifically withholds consent.
3. A person authorized by a court order.
4. A member's participating employer, limited to information concerning the member's
years of service credit and years of age. The board may share other types of
information as needed by the employer to validate the employer's compliance with
existing state or federal laws. Any information provided to the member's participating
employer under this subsection must remain confidential except as provided under
subsection 6.
5. The administrative staff of the retirement and investment office for purposes relating to
membership and benefits determination.
6. State or federal agencies for purposes of reporting on a service provider's provision of
services or when the employer must supply information to an agency to validate the
employer's compliance with existing state or federal laws.
7. Member interest groups approved by the board on a third-party blind list basis, limited
to information concerning the member's participation, name, and address.
8. The member's spouse or former spouse, that individual's legal representative, and the
judge presiding over the member's dissolution proceeding for purposes of aiding the
parties in drafting a qualified domestic relations order under section 54-52-17.6. The
information disclosed under this subsection must be limited to information necessary
for drafting the order.
9. Beneficiaries designated by a participating member or a former participating member
to receive benefits after the member's death, but only after the member's death.
Information relating to beneficiaries may be disclosed to other beneficiaries of the
same member.
10. The general public, but only after the board has been unable to locate the member for
a period in excess of two years, and limited to the member's name and the fact that
the board has been unable to locate the member.
11. Any person if the board determines disclosure is necessary for treatment, operational,
or payment purposes, including the completion of necessary documents.
12. A government child support enforcement agency for purposes of establishing paternity
or establishing, modifying, or enforcing a child support obligation of the member.
13. A person if the information relates to an employer service purchase, but the
information must be limited to the member's name and employer, the retirement
program in which the member participates, the amount of service credit purchased by
the employer, and the total amount expended by the employer for that service credit
purchase, and that information may only be obtained from the member's employer.
54-52-27. Purchase of sick leave credit.
A member is entitled to credit in the retirement system for each month of unused sick leave,
as certified by the member's employer, if the member or the member's employer pays an
amount equal to the member's final average salary, times the number of months of sick leave
converted, times the percent of employer and employee contributions to the retirement program
of the member, plus the required contribution for the retiree health benefits program. Hours of
sick leave equal to a fraction of a month are deemed to be a full month for purposes of
conversion to service credit. A member may convert all of the member's certified sick leave or a
part of the member's certified sick leave.
Page No. 23
54-52-28. Internal Revenue Code compliance.
The board shall administer the plan in compliance with the following sections of the Internal
Revenue Code in effect on August 1, 2013, as it applies for governmental plans.
1. Section 415, including the defined benefit dollar limitation under section 415(b)(1)(A) of
the Internal Revenue Code.
a. The defined benefit dollar limitation under section 415(b)(1)(A) of the Internal
Revenue Code, as approved by the legislative assembly, must be adjusted under
section 415(d) of the Internal Revenue Code, effective January first of each year
following a regular legislative session. The adjustment of the defined benefit
dollar limitation under section 415(d) applies to participating members who have
had a separation from employment, but that member's benefit payments may not
reflect the adjusted limit prior to January first of the calendar year in which the
adjustment applies.
b. If a participating member's benefit is increased by plan amendment after the
commencement of benefit payments, the member's annual benefit may not
exceed the defined benefit dollar limitation under section 415(b)(1)(A) of the
Internal Revenue Code, as adjusted under section 415(d) for the calendar year in
which the increased benefit is payable.
c. If a participating member is, or ever has been, a participant in another defined
benefit plan maintained by the employer, the sum of the participant's annual
benefits from all the plans may not exceed the defined benefit dollar limitation
under section 415(b)(1)(A) of the Internal Revenue Code. If the participating
member's employer-provided benefits under all such defined benefit plans would
exceed the defined benefit dollar limitation, the benefit must be reduced to
comply with section 415 of the Internal Revenue Code. The reduction must be
made pro rata between the plans, in proportion to the participating member's
service in each plan.
2. The minimum distribution rules under section 401(a)(9) of the Internal Revenue Code,
including the incidental death benefit requirements under section 401(a)(9)(G), and the
regulations issued under that provision to the extent applicable to governmental plans.
Accordingly, benefits must be distributed or begin to be distributed no later than a
member's required beginning date, and the required minimum distribution rules
override any inconsistent provision of this chapter. A member's required beginning date
is April first of the calendar year following the later of the calendar year in which the
member attains age seventy and one-half or terminates employment.
3. The annual compensation limitation under section 401(a)(17) of the Internal Revenue
Code, as adjusted for cost-of-living increases under section 401(a)(17)(B).
4. The rollover rules under section 401(a)(31) of the Internal Revenue Code. Accordingly,
a distributee may elect to have an eligible rollover distribution, as defined in
section 402(c)(4) of the Internal Revenue Code, paid in a direct rollover to an eligible
retirement plan, as defined in section 402(c)(8)(B) of the Internal Revenue Code,
specified by the distributee.
5. If the plan of retirement benefits set forth in this chapter is terminated or discontinued,
the rights of all affected participating members to accrued retirement benefits under
this chapter as of the date of termination or discontinuance is nonforfeitable, to the
extent then funded.
54-52-29. Employer service purchases.
A participating employer may purchase additional service credit on behalf of a member
under the following conditions:
1. The member may not be given the option to choose between an employer service
purchase and an equivalent amount paid in cash.
2. The member must meet one of the following conditions at the time the purchase is
made:
a. The member's age plus service credit must be equal to or greater than
seventy-five; or
Page No. 24
b.
3.
4.
5.
6.
The member's age must be at least fifty-five and the member must have at least
three years of service credit.
The board must determine the purchase price on an actuarially equivalent basis,
taking into account the contributions necessary for both the retirement program and
the retiree health benefits fund.
The purchase must be completed before the member's retirement.
The employer may purchase a maximum of five years of service credit on behalf of the
member.
The employer must pay the purchase price for the service credit purchased under this
section in a lump sum.
Page No. 25
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