Retirement; Judges; Post-retirement Increases

Subject:

Retirement; Judges; Post-retirement Increases.

Requested by:

E. T. Barnes, Director Retirement Systems Division Department of State Treasurer

Questions:

(1)

Is a retired Superior or Appellate Court judge, who was serving prior to January 1, 1974, and who retired effective August 1, 1982 with a benefit based on the provisions of Chapter 7A, entitled to an adjustment of his retirement allowance under either the provisions of Chapter 7A or the provisions of § 221 of Chapter 761 of the 1983 Session Laws?

(2)

Is a retired Superior or Appellate Court judge who was in service prior to January 1, 1974, but who retired after that date, entitled to an increase in his retirement allowance based on the provisions of Chapter 7A if, because of longevity payments, he is not currently receiving as much as two thirds of the salary of the occupant of the office from which he retired?

(3)

Is a retired Superior Court judge, who was a judge prior to January 1, 1974, but who retired after that date with benefits computed under the provisions of G.S. § 7A-51, entitled to an increased retirement benefit if he is not currently receiving two-thirds of the salary of the occupant of the office from which he retired because his successor is now receiving additional payment for services as the Senior Resident Superior Court judge of that district?

Conclusions:

(1)

No.

(2)

No.

(3)

No.

The Uniform Judicial Retirement System, Article 4 of Chapter 135 of the North Carolina General Statutes, governs retirement for all judges and justices who were judges and justices on January 1, 1974, or who have become judges or justices since that date. G.S. § 1135-51(a). In order that those judges and justices who were already in office did not lose benefits under the new system, the statute provides that judges or justices serving immediately prior to January 1, 1974, should under no circumstances receive a retirement allowance "initially payable upon the retirement of" that member less than he or she would have been entitled to under the terms of the previous system. G.S. § 135-58(c). That section refers to the "allowance initially payable" and does not refer to post- retirement increases. (Emphasis added). Nor is there any similar section relating to post-retirement increases for those judges or justices who retired on or after January 1, 1974. (Different language applies to those judges and justices already retired on the effective date of the new provisions.)

The question has been raised whether a judge who retired on August 1, 1982, is entitled to an increase in his allowance under either the provisions of Chapter 7A or the provisions of § 221 of Chapter 761 of the 1983 Session Laws if that judge’s benefit was initially calculated under the provisions of Chapter 7A. Similarly, the question has been asked whether a judge who retired after January 1, 1974, but who received an initial benefit based on Chapter 7A, is now entitled to post-retirement increases to reach two thirds of the salary paid his successor, when his successor has received increases because of longevity or status as Senior Resident Superior Court Judge. In other words, when the judge first retired, he would have received a higher benefit under the old system than under the new system. Therefore, he received that higher benefit as specifically provided.

Under the old judicial retirement provisions, as set out in G.S. § 7A-51, a Superior Court judge who qualified for retirement was entitled to receive "two thirds of the annual salary from time to time received by the occupant of the office from which he retired." Thus, a retired Superior Court judge’s benefit would rise after retirement as the salary of active judges rose so that the retired judge would always receive two thirds of the salary of the judge occupying the office from which he retired. Similarly, a judge or justice of the appellate division would be entitled after retirement to receive two thirds of the annual salary of the office from which he retired. G.S. § 7A-39.2. On the other hand, District Court judges were members of the Teachers’ and State Employees’ Retirement System prior to the establishment of the Uniform Judicial Retirement System. Since the formula for calculation of benefits under the Uniform Judicial Retirement System is significantly higher than that for calculation of benefits under the Teachers’ and State Employees’ Retirement System, District Court judges would not be entitled to any higher amount under the old system than under the Uniform Judicial Retirement System.

If a Superior Court judge was serving prior to January 1, 1974, and has retired since that date, it is necessary to calculate his initial benefit both under the provisions of the Uniform Judicial Retirement System and under G.S. 7A-51. At the date of his retirement, he is entitled to the higher benefits. However, there is no provision in the Uniform Judicial Retirement System which requires his post-retirement increases to maintain the level of benefits which he might receive under G.S. § 7A-51. As emphasized above, the language of G.S. § 135-58(c) applied only to the initial allowance, not to the allowance that he may receive at a later date. Therefore, should a judge retire and have his benefit calculated under G.S. § 7A-51, he is nevertheless not entitled to later increases based on the two thirds provision of G.S. § 7A-51 and such additional payments received by his successor as salary increases, longevity or allowances for services as a Senior Resident Judge. Similarly, an Appellate Court judge retiring after January 1, 1974, would not be entitled to post-retirement increases based on G.S. § 7A-39.2.

Nothing in the North Carolina Constitution requires that retired judges continue to receive, at all times, two thirds of the salary currently received by the occupant of the office from which he retired. Section 21, Article IV of the Constitution of North Carolina does specify that "the salaries of Judges shall not be diminished during their continuance in office." As long as a judge or justice was in office and the relevant provisions of Chapter 7A were in effect, a judge or justice was entitled to two thirds of the then-current salary for his office upon retirement. This assumes, as suggested by the North Carolina Supreme Court, that retirement allowances are deferred payments of salary. See Harrill v. Retirement System, 271 N.C. 357, 156 S.E.2d 702 (1967); Bridges v. City of Charlotte, 221 N.C. 472, 20 S.E.2d 825 (1942). Even if the General Assembly could not reduce the amount of retirement benefit to which a judge is entitled under existing provisions of law, he or she is not necessarily entitled to the same formula for computing retirement benefits. The constitutional provision against diminishment of a judge’s salary while in office contemplates an amount of money payable to him, not a method of calculating that amount of money. Since any judge who was in service prior to January 1, 1974, has received the higher of the two benefits, either under Chapter 7A or under Article IV of Chapter 135, he or she has received the full amount of the salary provided to him by law or while in office. Failure to provide post-retirement increases as active judges receive salaries does not constitute a diminishment of salary during the term of office even though the formula for determining the post-retirement amount has been changed. Consequently, a judge or justice serving prior to January 1, 1974, who retired after that date with at least two thirds of the salary he was receiving when he left office is not entitled to any post-retirement increases not specifically provided for by statute or by appropriation of the General Assembly.

An additional question was whether a judge who retired on August 1, 1982, was entitled to an adjustment of his retirement allowance under the provisions of § 221 of Chapter 761 of the 1983 Session Laws. That legislation is the Appropriations Act for the new biennium. The specific section referred to provides for post-retirement increases, effective July 1, 1983, to those beneficiaries on the retirement rolls as of July 1, 1982. Clearly, a judge who retired on August 1, 1982 does not meet the requirement for receiving this increment.

In conclusion, whether a judge was in service before or after January 1, 1974, once he has retired, any post-retirement increases must be based upon the provisions of Article IV of Chapter 135 of the North Carolina General Statutes, the Uniform Judicial Retirement System, or upon any other action by the General Assembly such as an increment provided for by appropriation. A judge or justice who does not meet the requirements of an appropriation provision or of any increase granted by the Uniform Judicial Retirement System pursuant to statutory authority is not entitled to have his retirement allowance increased or adjusted.

RUFUS L. EDMISTEN Attorney General

Norma S. Harrell Assistant Attorney General