TSERS and Social Security in North Carolina

Does Social Security affect a TSERS pension?

Not directly. Nothing in the TSERS Handbook or state law reduces your benefit because you also get Social Security, and members pay the same 6% of pay whether or not they're covered. The one link is Option 4, a payment option that levels your income around your age-62 Social Security benefit.

That's the whole picture in the sources. They don't say whether your job is covered by Social Security or how a federal benefit is figured; ask the Social Security Administration for that.

How Option 4 works: the handbook's example

John Murphy's maximum allowance is $2,000 a month, and his Social Security estimate at 62 is $1,000.

Rules to know

• The TSERS sources say little about Social Security. Contributions are the same 6% whether or not you're covered by Social Security, and Option 4 uses your estimated age-62 Social Security benefit.G.S. 135-8(b)(1); Handbook: Benefit Payment Options, Option 4
• Option 4 in the handbook's example: John Murphy's maximum allowance is $2,000 a month and his age-62 Social Security estimate is $1,000. Option 4 pays him $2,670 a month until 62 and $1,670 after. All payments stop at his death; nothing goes to a survivor.Handbook: Example of Payment Options
• The drop at 62 is how TSERS recovers the extra paid before 62. The payment changes the month after the month you first become entitled to Social Security age-62 benefits.Handbook: Benefit Payment Options, Option 4
• Raises granted before 62 under Option 4 apply to the larger amount you're paid then, but at 62 the benefit drops to the original post-62 amount plus the percentage (not the dollar) increases granted before 62.Handbook: Benefit Payment Options, Option 4
• Disability retirees can choose any payment option except Option 4.Handbook: Disability Income Plan of North Carolina
• To get an Option 4 estimate, send the Retirement Systems an SSA estimate of your age-62 Social Security benefit, requested from SSA within two years before your effective retirement date.Handbook: Retirement Application Process
• When you or a covered dependent become eligible for Medicare, you must elect both Part A and Part B to keep the same State Health Plan coverage you had before retirement.Handbook: Health Coverage in Retirement
• State law reserves the General Assembly's right to change TSERS to coordinate with changes in the federal Social Security Act made after January 1, 1955.G.S. 135-18.4

What to do

• Within two years before you retire, request an estimate of your age-62 benefit from the Social Security Administration if you want an Option 4 estimate.
• Compare Option 4 with the other options in ORBIT; it pays nothing to a survivor (see survivor benefits).
• Plan for Medicare: to keep the same State Health Plan coverage, you'll need Parts A and B once eligible.

Questions

Related: taxes on your TSERS benefit and retiring early, since Option 4's higher payment runs only until 62.

Estimate your maximum allowance (example filled in) →