North Carolina § 128-31 - Exemptions from execution; employing unit to offset amount owed by member or beneficiary.

§ 128-31. Exemptions from execution; employing unit to offset amount owed by member or beneficiary.

Except for the applications of the provisions of G.S. 110-136, and G.S. 110-136.3 et seq., and in connection with a court-ordered equitable distribution under G.S. 50-20, the right of a person to a pension, an annuity, or a retirement allowance, to the return of contributions, the pension, annuity or retirement allowance itself, any optional benefit or any other right accrued or accruing to any person under the provisions of this Article, and the moneys in the various funds created by this Article, are exempt from levy and sale, garnishment, attachment, or any other process whatsoever, and shall be unassignable except as in this Article specifically otherwise provided. Notwithstanding any provisions to the contrary, application for System approval of a domestic relations order dividing a person's interest under the Retirement System shall be accompanied by an order consistent with the system-designed template order provided on the System's Web site. Notwithstanding any provisions to the contrary, the Retirement System shall only make payment of a share of the member's retirement benefits to the member's former spouse based upon a domestic relations order, and the former spouse shall not be permitted to receive a share of the member's retirement benefits until the member begins to receive the benefits, consistent with the system-designed template order. Notwithstanding any provisions to the contrary, the former spouse shall not be entitled to any type or form of benefit or any option not otherwise available to the member. Notwithstanding any provisions to the contrary, for orders entered on or after January 1, 2015, payment to a member's former spouse pursuant to any such domestic relations order shall be limited to the lifetime of that former spouse and, upon the death of that former spouse, the former spouse's share shall revert to the member. Notwithstanding any provisions to the contrary, any overpayment of benefits or erroneous payments to a member in a State-administered retirement system, the Disability Salary Continuation Plan, or the Disability Income Plan of North Carolina, including any benefits paid to, or State Health Plan premiums or claims paid on behalf of, any member who is later determined to have been ineligible for those benefits or unentitled to those amounts, may be offset against any retirement allowance, return of contributions or any other right accruing under this Chapter to the same person, the person's estate, or designated beneficiary. Notwithstanding any provisions to the contrary, if the member or beneficiary is an employee of an employing unit of the State or any political subdivision of the State, then any overpayment of benefits or erroneous payments to, or on behalf of, the member or beneficiary shall be offset against the net wages of the employee. If a member or beneficiary owes an amount to the Retirement System, has been notified of this amount in writing, and has not entered into a payment plan acceptable to the Retirement System, then the Retirement System shall notify the member or beneficiary's employer of the amount owed. Upon receipt of this notice from the Retirement System, the employer shall offset the amount owed against not less than ten percent (10%) of the net wages of the member or beneficiary until the Retirement System notifies the employer that the amount owed has been paid in full. The Retirement System's notice shall be prima facie evidence that the amount owed is valid and, notwithstanding any other provision of law to the contrary, the employer has no obligation to verify the amount owed. The employer shall provide no more than 30 days' but not less than 14 days' written notice to the member or beneficiary prior to beginning the offset. The employer shall remit all amounts offset under this subsection to the Retirement System in intervals corresponding with its regular pay periods. If an employer fails to adhere to the provisions of this section, then the Retirement System shall, after notice to the employer of its failure to cooperate, be entitled to seek recovery of any amounts due directly from the employer. Nothing in this section shall be construed to limit the Retirement System's ability to pursue alternative judicial remedies against a member or a beneficiary, including the pursuit of a judgment and lien against real property. History (1939, c. 390, s. 11; 1985, c. 402; c. 649, s. 5; 1989, c. 665, s. 3; c. 792, s. 2.4; 2005-91, s. 11; 2013-405, s. 4(b); 2014-112, s. 5(b); 2017-135, s. 9(b); 2018-52, s. 2(c); 2019-172, s. 1.2.) Editor's Note. - Session Laws 2018-52, s. 2(d), made subsections (c) and (d) of this section, as added by Session Laws 2018-52, s. 2(c), effective June 25, 2018, and applicable to all amounts owed by a member or beneficiary to the applicable retirement system for which notice is sent on and after that date, regardless of the date the overpayment of benefits or the erroneous payment was made. Session Laws 2018-52 provides in its preamble: "Whereas, the employee benefit programs operated by the Department of State Treasurer are an intergenerational partnership between public employees and taxpayers of the State, it is incumbent upon the administrators of those programs to provide for Financial Accountability, Integrity, and Recovery of assets (FAIRness); and "Whereas, taxpayers should expect FAIRness in these employee benefit programs, and the Department of State Treasurer should be provided all tools necessary to promote that goal; and "Whereas, public employees who are participants in these employee benefit programs by virtue of deductions from compensation should also expect FAIRness as a baseline in the operation of these programs; and "Whereas, future generations of North Carolinians benefit from fiscally responsible management provided by FAIRness of these employee benefit programs by the current generation; Now, therefore," Session Laws 2018-52, s. 1, provides: "This act shall be known and cited as the 'Financial Accountability, Integrity, and Recovery Act of 2018'." Session Laws 2019-172, s. 13 made the amendments to subsection (a) of this section by Session Laws 2019-172, s. 1.2, effective October 1, 2019, and applicable to distributions on or after that date. Effect of Amendments. - Session Laws 2005-91, s. 11, effective July 1, 2005, substituted "retirement system, the Disability Salary Continuation Plan, or the Disability Income Plan of North Carolina may" for "retirement system or Disability Salary Continuation Plan may" near the middle of the last sentence. Session Laws 2013-405, s. 4(b), effective September 1, 2013, added the second sentence. Session Laws 2014-112, s. 5(b), effective October 1, 2014, inserted the third sentence and inserted "including any benefits paid to, or State Health Plan premiums paid on behalf of, any member who is later determined to have been ineligible for those benefits" in the last sentence. Session Laws 2017-135, s. 9(b), effective July 20, 2017, in the last sentence, inserted "or erroneous payments," inserted "or claims," inserted "or unentitled to those amounts," and made a stylistic change. Session Laws 2018-52, s. 2(c), added "employing unit to offset amount owed by member or beneficiary" to the section heading; designated the existing text as subsections (a) and (b); and added subsections (c) and (d). For effective date and applicability, see editor's note. Session Laws 2019-172, s. 1.2, in subsection (a), inserted "Notwithstanding any provisions to the contrary" in the second and fifth sentences and added the third and fourth sentences. For effective date and applicability, see editor's note. Legal Periodicals. - For article analyzing North Carolina's exemptions law, see 18 Wake Forest L. Rev. 1025 (1982).