MOD 660
03-29-2013, 10:32 PM
Legislative Proposals for the Florida Retirement System
As you know by now, the Legislature is proposing reforms to the Florida Retirement System for new employees. Both chambers have released proposals to address changes. The Florida PBA has endorsed the Senate's proposal, because we believe it better protects future employees by allowing them to remain in the pension plan. Below is a major components comparison of the two plans:
House FRS Version:
HB 7011 by Representative Jason Brodeur
This legislation closes the pension to new employees hired on or after January 1, 2014. All new employees become compulsory members of the FRS investment plan.
The proposal allows an employee who becomes disabled to receive the pension plan's disability benefit and it also provides a death benefit to special risk employees, which is equal to 10 times the employee's salary.
The House plan does not lower the employees' contribution from 3 percent.
Senate FRS Version:
SB 1392 by Senator Wilton Simpson
This legislation closes the pension to all new elected officers and senior management employees hired on or after July 1, 2014.
The legislation allows special risk employees who are hired on or after July 1, 2014 to remain in the pension, but they must actively make the choice to remain in the pension plan. The default position for the new employees is the investment plan if no choice is made within the selection period.
The plan also lowers the employees' contribution for investment plan members from 3 percent down to 2 percent. This change is to entice more people to choose the riskier no guarantee of the investment plan option over the pension plan.
The Florida PBA has officially endorsed the SB 1392 for the following reasons:
It does not require future special risk employees to become compulsory members of the investment plan. We believe the pension plan is still a vital benefit for public safety employees and this legislation recognizes the importance of having such a benefit.
We also believe the original reason pension reform was targeted by the public was because of highly paid employees in the senior management and elected officers' ranks. Many of those employees used the system to earn extraordinarily high pension payments in retirement. We do not begrudge them for it and we do not believe they have committed any illegal acts. However, the negative public sentiment stems from media attention many of these high paid employees have drawn to the overall system. The Senate proposal puts an end it and it will get the pension plan out of the headlines.
Finally, we want to see the employees' contribution lowered for all employees regardless of the plan choice. Although the Senate version does not currently incorporate that change to both plans, it does lower the contribution for employees in the investment plan. The rationale for his change is because the investment plan is the more risky option to employees. PBA is still advocating to lower the employees' contribution for both plans.
The House and Senate will begin negotiations on the two plans over the remainder of session. We will keep you informed.
As you know by now, the Legislature is proposing reforms to the Florida Retirement System for new employees. Both chambers have released proposals to address changes. The Florida PBA has endorsed the Senate's proposal, because we believe it better protects future employees by allowing them to remain in the pension plan. Below is a major components comparison of the two plans:
House FRS Version:
HB 7011 by Representative Jason Brodeur
This legislation closes the pension to new employees hired on or after January 1, 2014. All new employees become compulsory members of the FRS investment plan.
The proposal allows an employee who becomes disabled to receive the pension plan's disability benefit and it also provides a death benefit to special risk employees, which is equal to 10 times the employee's salary.
The House plan does not lower the employees' contribution from 3 percent.
Senate FRS Version:
SB 1392 by Senator Wilton Simpson
This legislation closes the pension to all new elected officers and senior management employees hired on or after July 1, 2014.
The legislation allows special risk employees who are hired on or after July 1, 2014 to remain in the pension, but they must actively make the choice to remain in the pension plan. The default position for the new employees is the investment plan if no choice is made within the selection period.
The plan also lowers the employees' contribution for investment plan members from 3 percent down to 2 percent. This change is to entice more people to choose the riskier no guarantee of the investment plan option over the pension plan.
The Florida PBA has officially endorsed the SB 1392 for the following reasons:
It does not require future special risk employees to become compulsory members of the investment plan. We believe the pension plan is still a vital benefit for public safety employees and this legislation recognizes the importance of having such a benefit.
We also believe the original reason pension reform was targeted by the public was because of highly paid employees in the senior management and elected officers' ranks. Many of those employees used the system to earn extraordinarily high pension payments in retirement. We do not begrudge them for it and we do not believe they have committed any illegal acts. However, the negative public sentiment stems from media attention many of these high paid employees have drawn to the overall system. The Senate proposal puts an end it and it will get the pension plan out of the headlines.
Finally, we want to see the employees' contribution lowered for all employees regardless of the plan choice. Although the Senate version does not currently incorporate that change to both plans, it does lower the contribution for employees in the investment plan. The rationale for his change is because the investment plan is the more risky option to employees. PBA is still advocating to lower the employees' contribution for both plans.
The House and Senate will begin negotiations on the two plans over the remainder of session. We will keep you informed.