Effective July 1, 2025, Session Law 2025-8 (HB 50) amends G.S. 143-166.42, which governs the Law Enforcement Special Separation Allowance (LESSA) for local law enforcement officers. While the core structure of the LESSA remains unchanged, the new law introduces an alternative benefit calculation method that may impact retirement decisions and budget planning for local governments.

Background on the LESSA

The LESSA is a monthly payment provided to eligible law enforcement officers upon their retirement. Law enforcement officers are defined in G.S. 128‑21(11d) or G.S. 143‑166.50(a). As of July 1, 2025, there are two methods to calculate the benefit amount and payment term. There are also slightly different eligibility criteria.

Traditional LESSA Benefit Option

Eligibility criteria for the traditional LESSA benefit require a law enforcement officer to satisfy the following:

• Retire under the Local Governmental Employees’ Retirement System (LGERS);
• At retirement, have at least 30 years of creditable service, or be at least age 55 with at least 5 years of creditable service prior to retirement;
• Have at least 5 years of continuous service as a law enforcement officer immediately preceding retirement;
• Retire prior to reaching age 62;
• Have at least 50% of total creditable service be in a law enforcement officer position.

Creditable service means service for which a credit is allowed under LGERS.

Under this option, law enforcement officers who meet these requirements are entitled to an annual benefit equal to 0.85% of their most recent annual base rate of compensation before retirement, multiplied by the officer’s total years of creditable service. For example, an officer with a final salary of $65,000 and 32 years of creditable service would receive an annual LESSA of 0.0085 × 65,000 × 32 = $17,680 (or approximately $1,473.33 per month).

This amount is paid monthly and ceases when the officer reaches age 62, dies, or becomes reemployed in a position covered by LGERS. (There is an exception to the third trigger—benefits do not cease if the officer is employed by a county board of elections to work during early voting or on election day, as specified in G.S. 143-166.42(c1)(2).)

The New 30-Year Fixed Benefit Option

For law enforcement officers who retire on or after July 1, 2025, S.L. 2025-8 (HB 50) allows for an alternative benefit calculation.

Eligibility criteria for the new 30-year fixed benefit option require a law enforcement officer to satisfy the following:

• Retire under LGERS;
• By age 62, have at least 30 years of creditable service;
• Have at least 5 years continuous services as a law enforcement officer immediately preceding retirement;
• Have at least 50% of total creditable service be in a law enforcement position.

Under the 30-year fixed benefit option, instead of using the officer’s final salary and total years of service, the new formula fixes both variables:

• The benefit is calculated using the officer’s base rate of compensation at the time they reach 30 years of service; and
• The benefit is based on exactly 30 years of service, regardless of how many years the officer ultimately works.

The resulting annual allowance is: 0.85% × annual equivalent of base salary at 30 years × 30. For example, if an officer’s annual equivalent base salary at the 30-year mark of service is $60,000, the annual LESSA under the fixed option would be: 0.0085 × 60,000 × 30 = $15,300 per year (or $1,275 per month).

Officers who select this option will receive this fixed monthly amount upon retirement. Unlike the traditional LESSA, the benefit under the fixed option does not automatically end at age 62. Instead, it continues until the officer has received the allowance for a period equal to the difference between age 62 and the age at which they completed 30 years of creditable service. For example, if an officer reached 30 years at age 52 and retired then, the allowance would be payable for 10 years, with payments ending at age 62. Alternatively, if the officer waited and retired at age 55, they would still receive the benefit for 10 years, with payments ending at age 65.

The benefits cease earlier if the officer dies or becomes reemployed in a position requiring participation in LGERS. (The same exception to the LGERS trigger applies if the officer is employed by a county board of elections to work during early voting or on election day, as specified in G.S. 143-166.42(c1)(2).)

Ambiguity in Defining Years of Service

A drafting inconsistency in the amended G.S. 143-166.42 creates some uncertainty about how to calculate the 30-year fixed benefit option. Every eligibility provision in the statute, including the new option, is based on “years of creditable service.” For example, an officer must “by age 62 have completed at least 30 years of creditable service,” with at least half of that time in a law enforcement position. Creditable service has the same meaning as in LGERS. However, in the sentence that describes how to calculate the benefit under the new fixed option, the wording changes. The statute provides that the allowance equals “0.85 percent of the officer’s base rate of compensation at the time the officer attains 30 years of service, multiplied by 30 years of service.” The absence of the word creditable in that clause raises an interpretation question about whether “years of service” was meant to have a different meaning from “years of creditable service.”

There are two ways this language could be read. One interpretation is that “years of service” was intended to mean something different from “years of creditable service.” Under that view, the calculation could be based on actual years worked, continuous years with the same department, or another measure not tied to the LGERS. The challenge with this interpretation is that “years of service” is not defined anywhere in G.S. 143-166.42 or in related retirement laws. If local governments interpret the phrase differently, it could lead to inconsistent benefit calculations across the state. It could also create practical problems. For example, an officer might reach 30 years of creditable service at age 52, retire that year and qualify to elect the new option, but if the formula instead depends on 30 years of actual employment and the officer has only 29 years, the benefit could not be calculated. This outcome would leave both the officer and the employer uncertain about the proper payment amount. And it would be an odd result to qualify for the fixed benefit option but not actually be able to take advantage of it because there is no number to use in the formula.

The alternative interpretation is that “years of service” is meant to refer to “years of creditable service,” and the omission of the word creditable was unintentional. This reading keeps the eligibility and calculation provisions aligned, maintains consistency with long-standing LGERS practice, and allows local governments to administer the LESSA uniformly. I believe this is the better interpretation based on the structure and purpose of the statute. (And I use this interpretation in calculating the benefit amount in the examples above.) However, because the text is ambiguous, local governments should consult with their attorneys to confirm how to apply the calculation and ensure consistency with their local policies and retirement administration practices.

Election Requirements for Benefit Calculation

If a law enforcement officer meets all eligibility criteria under G.S. 143-166.42, the local government employer must allow the officer to elect which calculation method to use—the traditional LESSA based on final salary and total service, or the new 30-year fixed option based on the salary at 30 years. This election is a one-time, irrevocable choice that must be made before the first LESSA payment is issued. If the officer fails to make an election, the law mandates that the employer use the calculation method under the new 30-year fixed option by default. Note that the new option is only available to eligible law enforcement officers who retire on or after July 1, 2025. A law enforcement officer who retired before that date may not change to the new calculation method.

Implications for Local Governments

Local governments remain responsible for funding LESSA benefits for their eligible retirees on a pay-as-you-go basis. The new fixed option does not alter this obligation or provide any additional funding support. However, it may affect the timing and amount of payments in certain cases. Local government budget and finance staff must be familiar with both LESSA calculation methods and consider how the presence of two different benefit structures might affect projections of retirement-related expenses.