We would ask if the Task Force really studied the issue or just had a little guidance from the Governor as to what “efficiencies” they should look for?
Just how efficient is the Governor’s “Efficiency Task Force” on FRS?
It is no secret Florida Governor Rick Scott is putting FRS benefits back in his sights for the 2013 legislature. Every day the papers and internet post more stories about FRS being scarily underfunded and the taxpayers are being unfairly burdened by “overly generous” pensions to public workers. We can only guess that, this being an election year, the legislators made an effort to appease FRS members (and their votes) with few and minor changes in the 2011 legislative session. It does not appear that will be the case next year. Scott recently went on the record saying that pension plan reform is one of his key financial challenges for the state.
The Governor’s “Government Efficiency Task Force” stacked with his supportive favorites, Senate President Haridopolis and House Speaker Cannon brought back recommendations that coincide with the Governor’s mandates for “pension reform”. No surprise there! We can’t help but wonder if the Task Force really studied the issue or just had a little guidance from the Governor as to what “efficiencies” they should look for? They identified the FRS Pension Plan as one of their key areas for legislative change. Again, there is no surprise to those who have been watching how politics really work. The task force commentary creates more questions for us than it answers.
“Scott has identified funding for the pension plan as one of the two key financial challenges facing the state”.
Continue reading “Just how efficient is the Governor’s “Efficiency Task Force” on FRS?”
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 …”
The legislature may reduce future benefits to lessen plan liabilities, or may raise employee contributions to increase funding.
2012 is a major election year. Due to the 2010 Census results, Florida will undergo redistricting for legislative purposes. As a result, ALL Representatives and Senators will be up for re-election next year. The legislature is already in preliminary committee meetings, and the regular session will begin in January. It will be a big year, and we would highly urge all FRS members to anticipate another session of potential cuts to their benefits. The writing is on the wall, and in very large letters.
You only need to look at the MyFRS.com homepage where you will find a special notice box with the headline “Volatile Financial Markets”, there is a second headline – “Funding of the FRS Pension Plan” under which you will see the following;
“BE FOREWARNED: The FRS Pension Plan is less than 100 percent funded. The legislature may reduce future benefits to lessen plan liabilities, or may raise employee contributions to increase funding. The legislature may make changes to FRS at any time”.
Continue reading “Be Forewarned!”
SB 2100 has passed its 2nd reading and is heading to the third and final reading.
As best as we can decipher the myriad amendments, amendments to the amendments, and replacements to the amendments, SB 2100 has passed its 2nd reading and is heading to the third and final reading. The changes would seem to indicate the following:
- Employee contributions would be a graduated scale; 2% on the first $25,000, 4% for compensation between $25,000 and $50,000, and 6% for compensation over %50,000.
- AFC will include up to 300 hours of overtime, and 500 hours of accumulated leave time.
- The DROP will continue through July 1, 2016. No new enrollees after that date.
- The interest rate for DROP members entering after July 1, 2011 will be reduced to 2%, it will stay at 6.5% for those enrolling before July 1.
- Vesting for the Pension goes to 10 years for those hired after July 1. Only those hired in Special Risk may participate in the Pension Plan after July, all other new hires must participate in the Investment Plan.
- Special Risk members retain the normal retirement date of age 55 or 25 years of service.
- Accrual rates remain the same.
Continue reading “SB 2100 passes 2nd reading with amendments!”
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!”
NEVER come across as negative, conflict oriented, or otherwise play into the hands of the politicians, who want pictures of workers with pitchforks massing as the gates.
We received this letter from the following individual, and felt it was such a well rounded and wonderful perspective, that with the author’s permission, we have copied it verbatim. I urge you ALL to read it, absorb it, and take action accordingly! Thank you Paul!
Subject: Concern over Legislative Season
By way of introduction, I am a retired Martin County deputy. Politically I am libertarian…
As I read the various posts on Facebook and elsewhere by public sector employees, I am struck with a fear that the attitude being conveyed by far too many public employees is playing directly into the aims of the political structure and their media supporters. The actions in Wisconsin are especially troubling. The political power structure wants to be able to paint the public employees as merely union followers using a pink brush, recognizing that the American voter, suffering under the current economic situation, can be easily led to consider public employees as the problem.
Continue reading “A letter to FRS members from one of you!”
Democratic Senator Jeremy Ring has finally introduced Senate Bill 1130 (SB 1128 for local governments) for the reform of the Florida Retirement. As we expected, contrary to statements made by Senator Ring prior to the Governors Proposal, this is a watered down proposal in comparison, but still makes substantial changes.
- The proposal eliminates the Pension Plan for all employees hired after July 1, 2011 (lines 727-731) and mandates participation in the FRS Investment Plan for those employees.
- The other most notable change is the proposal does away with the use of any and all overtime pay, unused leave or “any other form of compensation beyond the base hourly or annual salary” (lines 386-393).
- Employees will make contributions into their FRS Investment Plan (Lines 3975-3986). The amounts have not been determined, but our grapevine sources indicate that some legislators are looking for contributions in the range of 2 to 3% of member’s gross compensation instead of Scott’s suggested 5%. We suspect details of this will be forthcoming.
- The vesting schedule for employee contributions is immediate, and for employer contributions vesting are on a graduated scale as follows (lines 2565-2574):
Less than 3 complete years of service …………0%
Continue reading “Senator Ring proposes to eliminate the Pension!”
Seems like wherever we turn, we are at risk of losing our hard earned savings. Interestingly, it is just that volatility that makes them attractive. We have all heard the adage, no pain no gain.
We have spent a great deal of time lately dwelling on potential changes in Florida Retirement System benefits. Since the legislative session is over until next winter, we can breathe easy at least until then. In the meantime, the news is full of dire financial news and predictions. We are in year three of a terrible recession, and the devastating crash in real estate prices has set us all back a few years. So what is a person to do to try and protect their nest egg?
In order to discuss how to protect one’s nest egg, we should probably start with trying to figure out what risk is, and how do we deal with it. For this discussion, let’s define risk as the possibility of losing money! Does that sound fair? The legislature has added risk to our pensions by threatening us with the loss of benefits we thought were secure. The real estate market has become risky as the value of our homes has declined, and the stock market goes up and down on a regular basis. Seems like wherever we turn, we are at risk of losing our hard earned savings. Interestingly, it is just that volatility that makes them attractive. We have all heard the adage, no pain no gain. Without risk, there can really be no reward!
Over the last twenty five years, I have witnessed some seemingly cataclysmic events – all having dire consequences on savings and investments. Remember the stock market crash of 1987? That was probably my first real taste of risk. I was old enough to have some assets and investments and remember being horrified that they were losing money so quickly. When something like that happens, it is easy to err on the side of fear, and sell into the panic. The fight or flight mechanism kicks in and since we don’t really understand what is going on, we run! Unfortunately, as often as it happens – we know it will be a mistake. The average investor buys when they should be selling, and sells when they should be buying. After several hundred years of experience, we know that time will cure most of the markets ills. The crash of 1987 was regained in a mere two years. The fall after 9-11 took less than six months. Even the devastation after the fall of Lehman Brothers in September of 2008 triggered the worst financial panic in our history was regained in about 18 months. The Florida Retirement System Pension plan has rebounded to $118 billion from a low of $83 billion (Current FRS Plan Balance). Had you sold into the panic, those losses become real, with no real way of regaining your losses. On the contrary, had you maintained your holdings in a well diversified portfolio, you would have been made whole in relatively short order!
Continue reading “Your Nest Egg in Volatile times”
this plan is being endorsed by the legislature, and by publicizing it around the state, it becomes propaganda to endorse the bills to cut your benefits. I also thought it was interesting that some of our elected officials were on the task force.
Yesterday there was an interesting “letter to the editor” in the “Sarasota Herald Tribune”, called “State Budget Sense”. The letter was submitted by the CEO of a Tallahassee organization called Florida Tax Watch, and lists “87 ideas worth $3.25 billion” to reduce spending. I’m not really sure who the group is, nor their function, but on their website states that they are “supported by voluntary, tax-deductible memberships and grants” and that “policy makers and government employees have implemented three-fourths of Florida TaxWatch′s cost-saving recommendations, saving the taxpayers of Florida more than $6.2 billion”. It sounds like a lobbyist group, which would answer the question of, why would the CEO of a Tallahassee Group, write a letter to the Sarasota Herald Tribune? I was intrigued enough to go to the site, and look at the 125 page report. Among their suggestions, which have pretty much ALL appeared in recent legislative proposals: Employee contributions to the plan of 5% (SB2022 is starting the process at a lower number to get in the door), Reduce the Credit for Special Risk from 3% to 2%, and for Senior Management from 2% to 1.6% (Think HB 1319 and 1543), Re-evaluate and reduce the who is considered Special Risk, Up the vesting schedule from six years to ten years and last-but-not-least, adjust the 3% COLA increases to the actual Consumer Price Index with a maximum of 3%. Obviously this plan is being endorsed by the legislature, and by publicizing it around the state, it becomes propaganda to endorse the bills to cut your benefits. I also thought it was interesting that some of our elected officials were on the task force. They are as follows:
Senator JD Alexander, Chairman of the Senate Policy and Steering Committee on Ways and Means and Designee of the Senate President to the committee.
Bill McCollum, Attorney General for the State of Florida.
Continue reading “It ain't over, A further call to action for FRS benefits!”