MOD 660
04-12-2013, 06:52 PM
What a week.
Before I even get into all the changes to the municipal pension legislation, I thank all those who were in Tallahassee this week for their help. It was a true team effort. Not only our team, but the PBA and the Florida Professional Firefighters join together to get the job done on a critical amendment. It is nice when allies work together, I wish other so-called allies could get with the program (I digress). I appreciate everyone's "CAN DO" spirit.
Okay, so what was accomplished.
Last week, PBA and the FPF were opposed to both SB 458 and HB 1399. We had a couple of major concerns with the Legislation. The biggest concern was changing language in SB 458 that would have essentially allowed cities to bargain benefits down to the minimums, which are really low. Our argument was to create the March 12, 1999 level of benefits as the floor for minimum benefits. Under our proposal, if a city and the employees bargain to reduce benefits then the levels cannot dip below the 1999 base levels. If the reductions go below those levels, the premium tax monies will be suspended.
We were successful. The Senate adopted our Amendment by Senator Miguel Diaz de la Portilla. This amendment establishes March 12, 1999 is the minimum "required benefits" for a pension plan in existence prior to March 12, 1999. That's the overwhelming majority of plans. We also owe great appreciation to Senator Jack Latvala, Senator Jeremy Ring, and Senator Rob Bradley for assisting us in our negotiations with this amendment.
There were other changes to the legislation. Another one of our concerns was allowing plans that already have supplemental accounts to continue to receive the scheduled funding for those accounts. Senators Ring and Bradley were very gracious to this proposal and amended the bill to include this provision.
Many of the other changes are technical, but the continued threat of the so-called "Naples Letter" for those of you who are familiar with it has been removed from the legislation, too.
All in all, it was a solid week for us.
Below is a listing of the basics contained in the legislation:
Definitions
The bill defines several new terms. The most relevant terms are "base benefits", "required benefits" and "special benefits".
"Base benefits"are those retirement benefits in effect on March 12, 1999.
"Required benefits" are the base benefits which are the benefits in effect on March 12, 1999.
"Special benefits" are those retirement benefits offered through a defined contribution plan. This plan will be in addition to the defined benefit plan currently in used for all of the municipal plans. The plans are also commonly referred to as share accounts or supplemental plans.
Use of Insurance Premium Tax Revenues (175/185 monies)
The bill amends parallel provisions in Ch. 175 and 185, F.S., and specifies that in order to receive insurance premium tax revenues, those revenues must be used as follows:
- The amount of premium tax revenues received in 1997 must be used to fund the benefits in existence on March 12, 1999.
- Premium tax revenues in excess of the amount received in 2012, and any accumulations of additional premium tax revenues that have not been applied to fund extra benefits must be used as follows:
If the plan has a preexisting supplemental plan as of September 30, 2012 than all scheduled dollars will continue to fund the supplemental plan if the long-term funded ratio is above 70%
If the long-term funded ratio is below 70% then a 50% of the new premium tax monies will be used to fund the actuarial deficiency until it goes above 70%.
If the plan has a long-term funded ratio of less than 80 percent (meaning your plan is below 80% funded):
50 percent of the revenues must be used to pay actuarial deficiencies (Unfunded Actuarial Liability); 25 percent of the revenues must be used to fund base benefits; and the remainder must be placed in the additional defined contribution plan to fund special benefits.
If the plan has a long-term funded ratio of 80 percent or greater (meaning your plan is above 80% funded):
50 percent of the revenues must be used to fund base benefits; and the remainder must be placed in the additional defined contribution plan to fund special benefits.
The bill requires plan sponsors to create the additional defined contribution plan components if the plan is currently without one within their plans by October 1, 2013, or upon the creation date of a new participating plan. Plans created by special act of the Legislature have until July 1, 2014, to create a defined contribution component.
The bill explicitly allows plans to use the insurance premium tax revenues and offer benefits base (March 12, 1999) levels in certain instances. Benefit reductions are still subject to collective bargaining.
The plan must have relied upon the interpretation of the statute by the DMS to reduce the level of benefits or use the premium tax revenues, and such reliance must be evidenced by certain documentation. The plan may continue to offer these reduced benefits and/or use the premium tax revenues in this manner until the earlier of October 1, 2016, or another collective bargaining agreement is negotiated addressing the benefits or use of revenues.
Before I even get into all the changes to the municipal pension legislation, I thank all those who were in Tallahassee this week for their help. It was a true team effort. Not only our team, but the PBA and the Florida Professional Firefighters join together to get the job done on a critical amendment. It is nice when allies work together, I wish other so-called allies could get with the program (I digress). I appreciate everyone's "CAN DO" spirit.
Okay, so what was accomplished.
Last week, PBA and the FPF were opposed to both SB 458 and HB 1399. We had a couple of major concerns with the Legislation. The biggest concern was changing language in SB 458 that would have essentially allowed cities to bargain benefits down to the minimums, which are really low. Our argument was to create the March 12, 1999 level of benefits as the floor for minimum benefits. Under our proposal, if a city and the employees bargain to reduce benefits then the levels cannot dip below the 1999 base levels. If the reductions go below those levels, the premium tax monies will be suspended.
We were successful. The Senate adopted our Amendment by Senator Miguel Diaz de la Portilla. This amendment establishes March 12, 1999 is the minimum "required benefits" for a pension plan in existence prior to March 12, 1999. That's the overwhelming majority of plans. We also owe great appreciation to Senator Jack Latvala, Senator Jeremy Ring, and Senator Rob Bradley for assisting us in our negotiations with this amendment.
There were other changes to the legislation. Another one of our concerns was allowing plans that already have supplemental accounts to continue to receive the scheduled funding for those accounts. Senators Ring and Bradley were very gracious to this proposal and amended the bill to include this provision.
Many of the other changes are technical, but the continued threat of the so-called "Naples Letter" for those of you who are familiar with it has been removed from the legislation, too.
All in all, it was a solid week for us.
Below is a listing of the basics contained in the legislation:
Definitions
The bill defines several new terms. The most relevant terms are "base benefits", "required benefits" and "special benefits".
"Base benefits"are those retirement benefits in effect on March 12, 1999.
"Required benefits" are the base benefits which are the benefits in effect on March 12, 1999.
"Special benefits" are those retirement benefits offered through a defined contribution plan. This plan will be in addition to the defined benefit plan currently in used for all of the municipal plans. The plans are also commonly referred to as share accounts or supplemental plans.
Use of Insurance Premium Tax Revenues (175/185 monies)
The bill amends parallel provisions in Ch. 175 and 185, F.S., and specifies that in order to receive insurance premium tax revenues, those revenues must be used as follows:
- The amount of premium tax revenues received in 1997 must be used to fund the benefits in existence on March 12, 1999.
- Premium tax revenues in excess of the amount received in 2012, and any accumulations of additional premium tax revenues that have not been applied to fund extra benefits must be used as follows:
If the plan has a preexisting supplemental plan as of September 30, 2012 than all scheduled dollars will continue to fund the supplemental plan if the long-term funded ratio is above 70%
If the long-term funded ratio is below 70% then a 50% of the new premium tax monies will be used to fund the actuarial deficiency until it goes above 70%.
If the plan has a long-term funded ratio of less than 80 percent (meaning your plan is below 80% funded):
50 percent of the revenues must be used to pay actuarial deficiencies (Unfunded Actuarial Liability); 25 percent of the revenues must be used to fund base benefits; and the remainder must be placed in the additional defined contribution plan to fund special benefits.
If the plan has a long-term funded ratio of 80 percent or greater (meaning your plan is above 80% funded):
50 percent of the revenues must be used to fund base benefits; and the remainder must be placed in the additional defined contribution plan to fund special benefits.
The bill requires plan sponsors to create the additional defined contribution plan components if the plan is currently without one within their plans by October 1, 2013, or upon the creation date of a new participating plan. Plans created by special act of the Legislature have until July 1, 2014, to create a defined contribution component.
The bill explicitly allows plans to use the insurance premium tax revenues and offer benefits base (March 12, 1999) levels in certain instances. Benefit reductions are still subject to collective bargaining.
The plan must have relied upon the interpretation of the statute by the DMS to reduce the level of benefits or use the premium tax revenues, and such reliance must be evidenced by certain documentation. The plan may continue to offer these reduced benefits and/or use the premium tax revenues in this manner until the earlier of October 1, 2016, or another collective bargaining agreement is negotiated addressing the benefits or use of revenues.