FRS proposals to Florida legislature are here
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Originally Posted by Again
The rumors about gutting Florida's pension system are true. At this juncture, these are just proposals or recommendations to the legislature. Here are some interesting points from the PDF file:
- Eliminate FRS Pension Plan and Switch to 401k: Florida’s defined contribution plan (401k) is an option for state and local government employees in the FRS and removes the state’s obligation from paying retirement benefits. Switching all FRS members to a defined contribution plan (401k) and eliminating the defined benefit plan (pension) would save the state funds as contributions would no longer be determined by the necessary amount needed to cover future pension payments. Most private companies only offer defined contribution retirement options (401k). Two states, Nebraska and West Virginia, completely abandoned their defined contribution plans (pensions).
Defined Benefit = Pension PLan
Defined Contribution = 401K Plan
. [/*:m:4niwhe7l] - Require FRS Employee Contributions of 5%: Modifying the FRS pension fund to require newly hired employees to contribute to their DB (pension) or DC (401k) plans would dramatically reduce government contribution requirements. Most other state-sponsored defined benefit programs require an employee match, with the average amount being 5% of the employee’s average salary. The legislature should require that all active FRS members contribute at least of half of their employers current contributions to their respective retirement plans.
. [/*:m:4niwhe7l] - Change High 5 Years to Total Years of Service: The average final compensation AFC (average of highest 5 years) is current used to determine the final benefit, including overtime and up to 500 hours of accrued annual leave. Removing all non-base salary earnings from the final benefit calculation could result in cost-savings. Increasing the number of years used in calculating the AFC or using the lifetime average salary in calculating the final benefits is an additional measure that can save taxpayer dollars. Most private pensions use lifetime average salaries when calculating payable pension benefits.
. [/*:m:4niwhe7l] - Lower High Risk from 3% to 2%: “Regular” class members have accrual rates of 1.6%, judges get 3.33%, other elected officials get 3.00% and “Special Risk” class members get 3.00%. A cost-savings recommendation proposes a consolidation of employees into two categories: 1.6% and 2.00%. Employees who are members of the regular, elected and senior management classes would get 1.6% (Category I) and special risk would get 2.00%. This recommendation would return to the employee class structure that was present during the formation of the FRS.
. [/*:m:4niwhe7l] - Increase Retirement Age by 3 Years: Regular, Senior Management and Elected Officers can retire at the age of 62 or with 30 years of service. The state could increase the normal retirement age from 62 to 65 and increase the minimum years for retiring from 30 to 33 years. Special Risk can retire at the age of 55 or with 25 years of service. The state could increase the retirement age from 55 to 58 and increase the years of service for retirement from 25 to 28 years. Recommendation: The legislature should increase the retirement age (and required years of service) by three years for all employee classes in the FRS.
. [/*:m:4niwhe7l] - Eliminate Health Subsidy: Eliminate Health Insurance Subsidy for FRS members.
. [/*:m:4niwhe7l] - Eliminate Drop: Reform or eliminate DROP and reduce rate from 6.5% to 3.0%. Require Governor’s approval to rehire individuals who have completed DROP.
. [/*:m:4niwhe7l] - Limit Special Risk to LEO, CO & Fire: Limit Special Risk class membership to law enforcement, firefighters, and corrections. Eliminate the others e.g. crime lab technicians, etc. [/*:m:4niwhe7l]
Here are the companies that are sponsoring these proposals to change or eliminate your defined benefit pension plan:
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The Work of the Government Cost Savings Task Force for FY2011-12 has been made possible through the generous philanthropic support of the following sponsors:
State Farm Companies and State Farm Companies
AT&T
Capital Health Plans
Communications International, Inc.
David A. Smith
Dominic & Debbie Calabro
Marble Medical
Nextera
The Pew Charitable Trust
Publix Super Markets Charities
Verizon Foundation
