§ 135-63.  Benefits on death before retirement.

(a) In-Service Benefit. - If a member dies while in service, then, upon receipt of proof of the death that is satisfactory to the Board of Trustees, a lump sum death benefit shall be paid to the beneficiary or beneficiaries that the member designated by electronic submission in a form approved by the Board of Trustees or by written designation duly acknowledged and filed with the Board of Trustees. If no beneficiaries are designated or living at the time of the member's death, then the death benefit shall be paid to the member's legal representative. The amount of the death benefit payable under this subsection is equal to the sum of (i) the member's accumulated contributions, plus (ii) the member's final compensation, unless a member's surviving spouse is eligible for and elects to receive a survivor's alternate benefit under subsection (a1) of this section.

(a1) Survivor's Alternate Benefit. - The surviving spouse of a member who was age 50 or older with at least five years of membership service at the time of death may elect a survivor's alternate benefit. If the surviving spouse elects a survivor's alternate benefit, then the lump-sum death benefit provided for under subsection (a) of this section shall consist only of a payment equal to the member's final compensation and there shall be paid to the surviving spouse an annual retirement allowance, payable monthly. The monthly payments shall commence on the first day of the calendar month coinciding with or next following the death of the member. All of the following apply to the survivor's alternate benefit:

(1) The survivor's alternate benefit shall continue on the first day of each month thereafter until the remarriage or death of the spouse.

(2) The amount of the survivor's alternate benefit retirement allowance shall be equal to one half of the amount of the retirement allowance to which the member would have been entitled had the member retired under the provisions of G.S. 135-57(a) on the first day of the calendar month coinciding with or next following the member's date of death, reduced by two percent (2%) thereof for each full year, if any, by which the age of the member at his or her date of death exceeds that of the member's spouse.

(3) If the retirement allowance to the spouse terminates on the remarriage or death of the spouse before the total of the retirement allowance payments made equals the amount of the member's accumulated contributions at date of death, then the excess of those accumulated contributions over the total of the retirement allowances paid to the spouse shall be paid in a lump sum to the beneficiary or beneficiaries the member designated by electronic submission in a form approved by the Board of Trustees or by written designation duly acknowledged and filed with the Board of Trustees. If no beneficiary is designated or living at the time the lump sum payment becomes due under this subdivision, then the lump sum payment shall be made to the former member's legal representatives.

(b) Repealed by Session Laws 2025-11, s. 7(c), effective June 13, 2025.

(c) Not in Service Benefit. - Upon receipt of proof, satisfactory to the Board of Trustees, of the death of a member not in service, there shall be paid in a lump sum to the beneficiary that the member designated by electronic submission in a form approved by the Board of Trustees or by written designation duly acknowledged and filed with the Board of Trustees. If no beneficiary is designated or living at the time of the member's death, the lump sum death benefit shall be paid to the member's legal representatives. The lump sum death benefit payable under this subsection is equal to the member's accumulated contributions.

(d) Repealed by Session Laws 2025-11, s. 7(c), effective June 13, 2025.

(e) For purposes of this subsection, a participant whose employment is interrupted by reason of service in the Uniformed Services, as that term is defined in section 4303(16) of the Uniformed Services Employment and Reemployment Rights Act, Public Law 103-353, shall be deemed to be "in service" until the last day of such service in the Uniformed Services. If the participant does not return immediately after that service to employment with a covered employer in this System, then the participant shall be deemed "in service" until the date on which the participant was first eligible to be separated or released from his or her involuntary military service.  (1973, c. 640, s. 1; c. 1385; 1983, c. 761, ss. 231, 234; 2009-66, ss. 6(c), 11(a), (b); 2017-129, s. 3(c); 2025-11, s. 7(c), (d).)