The FRS Investment Plan, as a Defined Contribution Plan, will see 30% less money going into their retirement plans as a result of the lowered contribution requirements.
There appears to be considerable interest in the recent decrease in contributions (MyFRS.com Contribution Changes) to the Florida Retirement System by HB 5005, and most notably the effect of that decrease to the members of the Investment Plan. We have been repeatedly asked to help educate our readers on the process, and to that effect, we have attempted to shed some light on the recent changes. Hopefully this will dispel rumor and false belief, and provide a background and some insight for members to understand what is happening, and what their FRS Options may be. Because the Pension Plan is a Defined Benefit Plan, the reduced contributions will have no effect on Pension Plan members. There were no changes to the Pension Plan benefits this year. On the other hand, the Investment Plan, as a Defined Contribution Plan, will see 30% less money going into their retirement plans as a result of the lowered contribution requirements. While Florida law may necessitate the changes, it seems counter-intuitive to see the Investment Plan members get punished, as the desired goal of the legislators is to have members move to the Investment Plan.
According to Florida Law, Statute 1121.71, Contributions to the Florida Retirement System are determined on an annual basis by a study of the FRS plan by the designated actuary. You may follow this link to the actual statute (Florida Statutes regarding annual retirement contributions). We have quoted the pertinent paragraph here:
1121.71 Uniform rates; process; calculations; levy.—(1) In conducting the system actuarial study required under s. 121.031, the actuary shall follow all requirements specified to determine, by Florida Retirement System employee membership class, the dollar contribution amounts necessary for the next fiscal year for the pension plan. In addition, the actuary shall determine, by Florida Retirement System membership class, based on an estimate for the next fiscal year of the gross compensation of employees participating in the investment plan, the dollar contribution amounts necessary to make the allocations required under ss. 121.72 and 121.73. For each employee membership class and subclass, the actuarial study must establish a uniform rate necessary to fund the benefit obligations under both Florida Retirement System retirement plans by dividing the sum of total dollars required by the estimated gross compensation of members in both plans.
Continue reading “FRS Contribution Changes …”
Finally, the 2nd Choice Calculator is back on the MyFRS website for Florida Retirement System members
Finally, the 2nd Choice Calculator is back on the MyFRS website for Florida Retirement System members. It has incorporated the legislative changes mandated last session, and once again members can calculate their lump sum amounts.
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”
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!”
Since both Houses (the Senate and House of Representatives) sent each other their differing versions of pension reform, and refused to accept either, it will now go to a Conference Committee.
Things will start to get crazy now. The Senate has passed SB 2100, which is their version of pension reform. The House, however, presented HB 1405, with language that does not coincide with SB 2100. In order to become law, the same bill must pass both houses in identical language – which they have not. Since both Houses (the Senate and House of Representatives) sent each other their differing versions of pension reform, and refused to accept either, it appears the matter will now go to a Conference Committee, probably next week.
This is a quote from the Senate Website in regard to the Conference Committee: “For a bill to become an act it must be passed by both houses in precisely the same words and figures. The second house frequently amends and returns the bill to the house of origin. In the case of bills with substantial differences, the shortcut of a conference committee likely will be taken almost immediately.” The Conference Committee is really just a horse trading forum; where members from both houses participate in a negotiation process. According to the Senate site “Conference committees are intended to reconcile differences. This suggests a give-and-take process because if a majority of the conferees from either house refuses to budge, the conference would be stalemated and the bill could fail. However, this rarely happens”.
Ultimately, a group of legislators go into a room, and come out with an agreement. The process could be either good or bad, as the group doesn’t have to conform to the original bills, and can come up with their own version. The Speaker of the House, Dean Cannon, and President of the Senate, Mike Haradopolos, have indicated they think they will be ready to go to Conference next week.
Continue reading “Pension Reform Stalemate goes to Conference!”
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 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”