As of July 1, 2011 there will be some changes made…you will receive no further credit for COLA for the five years after July 1, 2011.
As you are aware, one of the better benefits within the Florida Retirement System has been the automatic 3% Cost of Living Adjustment that FRS adds to your Pension checks each year. Over the course of a 24 year retirement, the COLA would almost double your annual pension, which would hopefully allow your standard of living to keep up with rising prices and inflation.
COLA is a simple process. Each year, beginning on July 1, your pension check is increased by 3% more than what it had been for the previous 12 months. That 3% compounds each year, meaning next year’s 3% pension increase will be added to last year’s pension increase, which was added to last year’s pension hike, and so on. To illustrate, let’s assume you Pension check is $2500 at retirement. Next year, it will be $2500, plus 3% ($75), so your pension check will be $2,575. Year three FRS will add 3% to the Second year amount which is $82.50, so the third year checks will be $2,657.50, and so forth. If you retire at 62, by the time you reach age 85 your monthly pension check will be almost $4,900!
As of July 1, 2011 there will be some changes made.
Continue reading “The “New” FRS COLA”
there is no magic to DROP, the bulk of the DROP benefit is simply your own pension being returned to you after the 5 years.
For those of you that were interested in entering the DROP, you might not want to give up so quickly because of the decrease in interest rates. The rate reduction from 6.5% to 1.3% initiated by the Florida Legislature as of July 1 does not necessarily make the Deferred Retirement Option Program obsolete. Certainly, it lowers the earnings, but, the biggest part of the DROP sum is not interest, but simply your pension payments accruing each month in the DROP account. There seems to be some misunderstanding about these numbers. It appears that those of you choosing to enter the DROP on or after July 1 will earn the lower 1.3% interest rate on your pension payments. If you are already in the DROP, and once you begin the DROP, you will NOT have to make the 3% employee contributions!
Your DROP amount will not decrease by 70%, only the interest earned will. As we discussed on our web page FRSOptions.info , there is no magic to DROP, the bulk of the DROP benefit is simply your own pension being returned to you after the 5 years.
When you enter the DROP, you technically retire and begin to receive your pension. Since you are going to continue to work, instead of the pension checks coming to you each month, those checks are deposited in your “DROP account”, and interest is then added to it. The monthly amount going into your DROP is determined by the same calculation as your pension, which is: Years of service, multiplied by service credit (3% for special risk, or 1.6% for regular members. The result is then multiplied by your Average Final Compensation, which is the 5 years of your highest earnings. For example, you have worked 30 years, and average of your highest five years of compensation (your AFC) is $50,000. Your calculation is 30 times 1.6%, times $50,000, or a pension of 48% of $50,000, or $24,000 per year – so you would receive $2,000 per month into your DROP account. Each year, on July 1, you will receive an annual increase by whatever your Cost of Living Adjustment (COLA) is.
Continue reading “The “New” FRS DROP”
The changes are substantial, but not nearly as dire as Governor Scott wanted. Employees to contribute 3%, DROP stays at 1.3%
It appears we have a Final Agreement between the House and Senate on changes to the Florida Retirement System. The changes are substantial, but not nearly as dire as Governor Scott wanted. There will be NO changes for those already retired, or those already in the DROP, your benefits remain the same. Many of the more radical changes only affect those hired after July 1, 2011. Changes for new hires only are:
For members after July 1, AFC become the highest 8 fiscal years.
Increases retirement age for all new hires after July 1:
Continue reading “Florida House and Senate Agree on FRS Reform!”
Representative John Tobia (Republican from Melbourne) offered five new amendments to House Bill 1405. The amendments would bring HB 1405 in line with Governor Scott’s recommendations
Representative John Tobia (Republican from Melbourne) offered five new amendments to House Bill 1405. The amendments would bring HB 1405 in line with Governor Scott’s recommendations. As we read and interpret the changes, they include:
- · Reduces the service credit for future years of service in the Special Risk, Elected Officers, and Judges from 3% to 2%. Amendment 460885
- · Eliminate the Cost of Living Adjustment for Pensions and the DROP after July. Amendment 279579
- · Eliminate overtime in the calculation of the Average Final Compensation. Amendment 696491
- · Raises the Employee contribution up to 5% across the board (it had been reduced to 3% in committee). Amendment 328909
- · Reiterates the closing of the Pension Plan after July 1, and mandates all new members to the Investment Plan. Amendment 251959
Continue reading “Rep. Tobia offers severe amendments to HB 1405!”
The Senate Budget Committee introduced a new Committee Bill today, SPB 7094. The bill reworks many of the terms of SB 1130 to the detriment of current members.
The Senate Budget Committee introduced a new Committee Bill today, SPB 7094. The bill reworks many of the terms of Senator Ring’s SB 1130 to the detriment of current members, and brings the Senate version much closer to the House version. The committee is headed by Republican Senator J.D. Alexander. As we read the new proposal, which is to be heard by the Committee on Wednesday, it proposes to:
· Does away with the DROP program after July 1, of 2011. It appears to read that you must enter the DROP prior to that date in order to be eligible. (lines 1857 through 1862)
· The Investment Plan will be mandatory for ALL new hires after July 1, 2011, and will not be eligible for a Pension. (lines 888 through 896
Continue reading “Senate backtracks, new bill proposed!”
The Senate Committee on Government Oversight and Accountability approved a version of Senator Ring’s proposed Senate Bill 1130 today by a vote of 12 to 1.
The Senate Committee on Government Oversight and Accountability approved a version of Senator Ring’s proposed Senate Bill 1130 today by a vote of 12 to 1. This was done on the heels of House Bill 1405 filed by Representative Workman from Brevard. We are not experts on the legislative process, but believe the bill will now go to the Budget Committee for their approval.
As we read the final version of SB 1130, and the myriad amendments we have pieced together we believe it proposes the following important aspects :
- The proposal eliminates the Pension Plan for all employees hired after July 1, 2011 that make more than $75,000 per year and mandates participation in the FRS Investment Plan for those employees. A last minute amendment has preserved the Pension Plan for those making less than $75,000, UNLESS you are in the Elected Officers Class, the Senior Management Class. Member those classes are required to participate in the Investment Plan is mandatory regardless of Income.
- A notable change is the proposal now allows 300 hours of overtime and up to 500 hours of accrued leave time in the computation of Average Final Compensation for service before July 1, 2011. It does away with all accumulated annual leave pay for service after that date.
- Employees will make contributions into their FRS Investment Plan. The contribution schedule is 0% on the first $40,000 of compensation, 2% on compensation from $40,000 to $75,000, and 4% on compensation over $75,000. They amended the original version to contain language that seems to limit the employee contribution to no more that 2% of total compensation for regular and special risk members, and a maximum of 4% of total compensation for those in the Elected Official and Senior Management Groups.
- There is also some new language amended to read that NO employee contributions would be required for years in which the plan is 100% funded. That amendment would raise more questions to us than it answers, but let’s hope it is as simple as it sounds.
- The vesting schedule for employee contributions is immediate, and for employer contributions vesting is on a graduated scale as follows:
Continue reading “Committee Approves SB 1130, Rep files HB 1405.”
Scapegoating public employees seems to be more of an assault on working people and the middle-class,
The following is a letter we received from a Tax-paying Florida Citizen, who is not associated with the Florida Retirement System. We found it to be refreshing, and wanted to share it with our readers. Thank you for your perspectives Mr. Cassidy!
To FRS Options,
I am not in the FRS. I am also not related to anyone in it. I am really just a concerned Florida taxpayer, who does not believe that scapegoating public employees is fair or right. I do not believe that one small group of people should be punished, and essentially “taxed,” just because they chose a job or a career in public service.
Continue reading “Thoughts from a non FRS member!”
The biggest change as we see it would indicate the amended version will allow for up to 500 hours of overtime to be used in the computation of the Average Final Compensation
Today the Florida Senate returned a “Strike-All” Amendment to Senate Bill 1130 which is meant to reform the Florida Retirement System. The purpose of the “Strike-All” was to amend the language and stipulations of the original bill, filed by Senator Jeremy Ring. There were also 5 additional amendments proposed changing other aspects of the proposal.
- The biggest change, as we read it, would indicate the amended version will allow for up to 500 hours of accumulated leave payments to be used in the computation of the Average Final Compensation. (lines 208-248, and 274-308). And further appears that for service prior to July 1, 2011 overtime is included.
This seems to be a significant compromise to the original proposal, but excludes overtime after July 1. It does not mitigate the fact that overtime is time worked for compensation earned, and therefore, as compensation, should be used for the AFC calculation. Continue reading “Amendments to SB 1130 FRS Reform”
Florida state legislators are members of the Florida Retirement System, just like every other State, County, or FRS member.
There have been a considerable number of posts and comments over the last several weeks about the benefits of our legislators, most of which are not true. Florida Legislators DO NOT GET 100% of their pay for life after one year of service, or any number of years less than 33 1/3, for that matter. Florida state legislators are members of the Florida Retirement System – just like every other State, County, or FRS member. As such, they are members of the Elected Officers Class and entitled to the following benefits:
- They have the same vesting schedule (6 years).
- The same formula for determining their benefits. To be eligible to get a benefit, a Senator or Representative must achieve age 62, or have 30 years of service.
- Legislators get 3% service credit for each year of service.
- They get the same health benefits as all other state employees.
You might be surprised to learn that both jobs, Senator and Representative, are considered part time jobs, and Legislator pay is in the area of $30,000 per year, plus $133 per day for expenses and travel to Tallahassee, for every day the session in is in session (up to 60 days = $7,980).
Continue reading “Florida Legislators Benefits”
Rick Scott has released his proposal for reform of the Florida Retirement System. As expected, the changes are far reaching and dramatic.
Newly elected Governor Rick Scott has released his proposal for reform of the Florida Retirement System. As expected, the changes are far reaching and dramatic. The Governor’s Bill on Pension Reform (beginning of page 610) proposal is 213 pages long, so we have attempted to hit the highlights, as the details will unfold ad infinitum over the next several weeks.
“Floridians shouldn’t have to send more of their MONEY to Tallahassee to pay for non-essential government programs or solely fund the retirement programs of government employees.”
This quote from Governor Governor Scott’s speech today in Eustis seems to sum his position on the Florida Retirement System up neatly, by lumping you in with “non-essential government programs”. Along with cutting your benefits, and taxing you to pay for future benefits, Governor Scott kicked off his self-proclaimed “job’s budget” by eliminating almost 9000 jobs in the state!
Continue reading “The Governor’s Proposal for FRS Reform.”