As state lawmakers debate extending a mechanism that allows highly-paid employees to retire with their full pensions, the UNC system has scheduled two meetings to inform employees about the issue.
The first meeting is 2 to 4 p.m. Wednesday at the UNC General Administration offices in Chapel Hill; the second is 9 to 11 a.m. Sept. 14 at UNC Health Care’s Old Clinic Auditorium in Chapel Hill. A letter sent last week to university employees eligible to retire in the state’s pension system said the UNC system planned to broadcast the meetings over the Internet and record them for later viewing.
The letter speaks to an issue that emerged within the past few years when the State Treasurer’s Department realized that the pay of some state and local employees had surpassed a federal limit on pensions.
These are mostly highly paid employees such as college athletic officials, university medical professors, and top researchers and administrators. Municipal leaders such as county managers and school superintendents also have hit the cap.
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Congress provided a way to avoid the problem by letting pension systems set up a special retirement fund that would pay the amount above what the law allowed. In 2013, state lawmakers set up such a fund, but it was only temporary, for those who retired by the end of last year.
UNC officials want the special fund, known as a qualified excess benefit arrangement, or QEBA, continued. The state Senate inserted an extension of the fund to Aug. 1 in its state budget proposal, but the budget has yet to be passed.
The UNC system’s Board of Governors also voted to create a special fund for employees, but that fund hasn’t been set up. The letter to university employees speaks only to the need for state lawmakers to pass an extension.
“The University and the UNC Board of Governors have been actively working with members of the General Assembly to restore the QEBA provision retroactively to December 31, 2014, but unfortunately, these efforts have not yet been successful,” wrote UNC system President Tom Ross.
State Sen. Tom Apodaca, a Hendersonville Republican, had put the sunset in the 2013 law because he wanted state and local agencies to create other mechanisms to cover the pensions for highly paid retirees without putting the cost on the whole system. The special retirement fund is paid for by taking one hundredth of 1 percent of the contributions all employees make to the system. The fund spent $480,000 in 2014 on 17 retirees.
UNC officials have estimated roughly 200 employees could be affected as they retire over the next several years. They have paid into the retirement system what they were required to under state law to receive their pensions, officials have said.