And they’re off …. HB 525 introduced to cut FRS benefits

And they’re off…

The Florida House of Representatives session does not begin until January, but already Representative Ritch Workman has introduced a bill that will cut benefits to Florida Retirement System members.  While it is too early to give it much attention, it is obviously a harbinger of things to come.  Workman, if you remember introduced a bill last year that was intended to radically cut benefits, has introduced HB 525 months before the session even begins.

Some of the changes include:

The proposal would change the default plan in the Florida Retirement System from the Pension Plan to the Investment Plan.  Currently when a member enrolls in FRS they are automatically in the Pension Plan.  Workman would like to change that to the Investment Plan.  It appears that he would like to limit the ability to enroll in the Pension Plan to the first 12 months of service.  If you don’t (or are unaware of your options) move to the Pension Plan in those first 12 months, you lose your right to ever go into the Pension, and are then limited to participation in the Investment Plan from then on.  We would construe this as an introduction to the elimination of the Pension Plan for new employees in the near future.  (Lines 220 to 243, and 426 to 429).

It would also increase the vesting age to 10 years. (Lines 85-87)

The minimal age for retirement for Special Risk members would be 25 years of service and age 48.  Currently there is no minimum age if you attain 25 years of service.  (Lines 62 – 64)

The other potential change, and we find the language to be confusing, is for those opting to take early retirement.  The penalty appears to be the same (5/12 of a percent for each month, or 5% per year, prior to the normal retirement age, but seems to eliminate the 30 years of service option, and the language may also indicate the payment is the average of the monthly income, and not the typical Average Final Compensation which is the highest 5 year basis.  (Lines 135 to 147)

We would reiterate it is too early to lose sleep over this proposal, but Representative Workman was a sponsor of major FRS reform (2011 HB 1405).  It is not too early to call, write, and email him and your Representatives and Senators and let them know further cuts are unacceptable.  2012 is an election year – use it to your advantage.  Get the word out and DO NOT RE-ELECT those that cut your benefits.

 

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  • Moose

    So am I understanding this correctly…if you were initially enrolled in special risk on or after July 1, 2011 but before July 1, 2012 you have to complete 30 years of service or reach age 60 for normal retirement, but if you are enrolled on or after July 1, 2012 you would only have to complete 25 years of service as long as you reach age 48? 

  • http://www.floridaretirementsystem.info FRS Options

    As we read it, the 25 years of service doesn’t change, but the minimum age to retire would be set at 48.

  • Moose

    According to the way you’re reading it, does this apply to everyone no when they initially enrolled in special risk?

  • http://www.floridaretirementsystem.info FRS Options

    No, only those enrolled (hired) after July 1, 2012.

  • Concerned

    Speial Risk empolyee since 1988. Change or no change ?

  • http://www.floridaretirementsystem.info FRS Options

    Not yet.

  • http://www.floridaretirementsystem.info FRS Options

    It would appear the only question of the lawsuit is the ability for the state to unilaterally impose a 3% contribution, without negotiation. We don’t know that whichever way the ruling goes (be careful letting the comments lead you to believe which way it will go, the judge must decide based on law, not emotion) it would preclude other changes to FRS. There were a multitude of changes made last year, but the only one being tested in the courts is the employee contribution. As we have said in the past. Be careful what you wish for. If the 3% contribution is reversed, don’t think that will mean the legislators will not try to save money by making other changes. We wonder if paying 3% into a solid retirement might not be preferrable to having that retirement greatly reduced? By the way, It could go to the Supreme Court whichever way the judge rules.

  • Biagio

    It’s not only the 3% contribution but the COLA to be contested as well. If the 3% and COLA are reversed the legislators couldn’t make changes again for current employees unless the changes are agreed upon through negotiations by all party’s involved.

    Yes, they would look for savings in other areas or depts and probably threaten layoffs. Also, the counties and cities that are in the FRS used the 3% to balance their budgets or used the money as they saw fit. It didn’t go towards the pension fund. Only the state employees had their 3% go towards the fund. So, in essence the 3% used by county and city agencies was a tax on those employees.

    The problem is, if the 3% is reversed, all those government agencies counting on that money will have big budget problems next cycle. I could see layoffs in the future.

    If it were up to me I’d say keep the 3% (not a big deal in my opinion) but reinstate the COLA, change what you want for new hires and call it a day.

  • http://www.floridaretirementsystem.info FRS Options

    I agree. We have little doubt the system will change dramatically for new hires.

  • gibby

    If they reverse it, Tallahassee will just bombard us with heavier cuts from all angles during the next session. We’ll basically be shooting ourselves in the foot.

  • http://pulse.yahoo.com/_EQDAZC6SZ5NUUL62YBA2MMCHO4 n

    I was forced to leave State employment due to child welfare going private back in 2004.  There were not enough State jobs for all of us seeking to stay with the State. I would love to return to work (now totally handicapped due to an accident), and had been looking at returning to State employment if possible.  Now I am almost glad that I went ahead and retired when I did.  My benefit may only be 50% of what it should be, but at least I don’t have to worry about too much of this turmoil except for how it affects my FSR brothers and sisters.

  • Adgirl50

    Here we go again.

  • Pbono9475

    Are you asking a change to what?  in the investment or Pension Plan?

  • http://www.floridaretirementsystem.info FRS Options

    I suspect they are inquiring if the new proposal will make any changes for Special Risk.

  • D28martinguitar

    Having retired at end of ’08, the COLA is important to me because it accurately offsets the annual inrease in health insurance premiums. Is the COLA still under threat?

  • http://www.floridaretirementsystem.info FRS Options

    None of the FRS proposals have been to change benefits for those retired. All of the proposals to change FRS have only been for future benefits of those still working. If you are retired, we would think your benefits are safe.

  • Adgirl50

    Has Judge Fulford made any decision regarding our pensions? I know this was in court late October and was wondering if you heard anything.

  • http://www.floridaretirementsystem.info FRS Options

    We are not aware of any decision, and will keep you posted the moment we hear anything!

  • Biagio

    According to people that know Judge Fulford she makes timely decisions. I believe the trial was on a Wed and many said we should hear something by Fri. Well, we are going on 4 weeks later. How long does it take to make a decision? It’s ridiculous!

  • http://www.floridaretirementsystem.info FRS Options

    As we have said in the past, the wheels of justice spin slowly. Even if she makes a decision soon, it will most likely be appealed, and can languish there even longer!

  • new_hire

    Can someone who left employment in 2001 with 7 years return to the pension plan?

  • http://www.floridaretirementsystem.info FRS Options

    Depending on the timing, you should be vested, which means you have a benefit regardless. If you return to service, it will simply make your benefit larger. If, however, you did not reach vesting requirements, you will be starting over when you are reinstated.

  • new_hire

    Thanks for the reply. Seven years was not vested because at that time it was 10 years. Was told by a friend that I could be fully vested after being back for a year but that was awhile ago. I have been trying to get back to Florida but was just now offered a new job starting in January. The website myfrs.com has info that makes it seem like it was possible but the guys in my interview did not know. No matter I am taking job anyway but will probably have to wait until I officially start to get the official word.

  • http://www.floridaretirementsystem.info FRS Options

    I believe if you opt into the Investment Plan, you can get credit for you previous years of service, and be vested in One year. Depending on how long you anticipate working, it might be worth looking into.

  • Adgirl50

    They are going to take it easy on us for 2012 (it’s an election year)…they start again in 2013. http://www.miamiherald.com/2011/12/05/2533088/fla-gov-goes-slowly-on-more-changes.html

  • Adgirl50

    They are going to take it easy on us for 2012 (it’s an election year)…they start again in 2013. http://www.miamiherald.com/2011/12/05/2533088/fla-gov-goes-slowly-on-more-changes.html

  • http://www.floridaretirementsystem.info FRS Options

    We totally agree. If they take it easy, it is purely out of fear in an election year.

  • http://www.floridaretirementsystem.info FRS Options

    We totally agree. If they take it easy, it is purely out of fear in an election year.

  • Adgirl50

    Someone I spoke with insisted it had nothing to do with the election year.  However, I am concerned about them maybe doing something with DROP in 2013. In early 2013 i go into DROP. I would rather go to the end and have a higher pensions, however, with COLA dropping for each year I work, I would rather do DROP. I was also told (by this same person), that they CANT eliminate DROP for those already in it. Even though it may not be likely, do you know if this can be done? Is this something I have to worry about.

  • http://www.floridaretirementsystem.info FRS Options

    We would not think any politician would admit it was do to being an election year, and we would feel confident that it has EVERYTHING to do with being an election year. There are a lot of people out there who do not think their legislators are doing a good job, and embarking on controversial and polarizing issues in an election year is simply not a good idea.

    The courts have been pretty consistent on only changing benefits that are not yet earned or granted. It would be extremely difficult to take away DROP or Pension benefits from those already collecting. That should probably not be at the top of your worry list.

  • Math4You

    We cannot give them a chance to “take it easy.”  We’ll get hammered in 2013.  When they changed the high-five calculation this year, it made a difference of $500 per month in my pension as they limit the overtime I can claim toward my annual pay.  I crunch numbers for a living and they are definitely out to make changes that will reduce our monthly checks.  You are not safe unless you are already retired or in drop.

  • http://www.floridaretirementsystem.info FRS Options

    Are you sure they changed the high-five calculation this year?

  • Adgirl50

    As I said…2012. We cannot predict for 2013 and I will be retired early 2013 at 8 am in the morning…but who’s counting.

  • Adgirl50

    I wasnt aware that the “high 5” was changed. I dont believe it was. Do you have any information on this?

  • http://www.floridaretirementsystem.info FRS Options

    I believe the other reader spoke in error. To the best of our knowledge the high 5 has NOT BEEN CHANGED!

  • Moose

    Does anyone see any significant differences between HB 525 and SB 1280 which was filed on Dec. 14th?

  • http://www.floridaretirementsystem.info FRS Options

    It appears to be the Senate Version of the same bill. Both would make the Investment Plan the default, and after a period of time you would lose the ability to go into the Pension Plan, and have penalties for early retirement. The fact that the House and Senate have submitted very similar bills prior to the session opening, may not bode well for the members this session. It is pretty obvious the legislators are going to go for cuts again.

  • Biagio

    The “high 5” was changed last year for “New Hires” to the ‘High 8″ years. Only for new hires. Those already in the system before July 1 of last year still have the high 5.

  • http://www.floridaretirementsystem.info FRS Options

    That is correct. New hires go to 8 years for AFC. We were taking the position for those already members.

  • Disgruntled FRS Member

    Myfrs.com still hasn’t posted the 2nd choice calculator! I’ve been calling them and FRS monthly looking for an update on this, but they’re still dragging. FRS claims to have given the formulas to Ernst & Young a couple of months ago, yet they still have not updated the website with them.

    I’ve filed a written request to FRS asking for the formula used to calculate my 2nd choice benefits. I’ve asked for both versions: the one used before 6/11 and the one they’re using post 6/11. This is the only way I can tell exactly how bad I’m getting screwed by SB2100. I have yet to hear back from them.

    Isn’t this their fiduciary responsibility to supply us with the actual formulas that are used?

  • http://www.floridaretirementsystem.info FRS Options

    We have no idea why the 2nd choice calculator is not back on line, but can only guess it is political, in that the legislators don’t want members to see the impact of last year’s cut to COLA, etc. As to any fiduciary responsibility to supply the actual formula, to the best of our knowledge, the actual formula was never posted, nor publicized. The formula is done by actuaries, so we can’t really say.

  • Disgruntled FRS Member

    I did receive an extremely vague response from FRS stating that my Opening Account Balance (OAB) is calculated by two computations. One being my annual pension plan benefit, and the other being a ‘PV factor’. They refrained from supplying me the formula for the PV factor.

    I have now submitted another request asking for the complete eaw formula for calculating the PV including the life expectancy and discount rates they’re using to calculate my second choice option. I’ll continue to ask them for this until they either give it to me, or they reply in writing that they will not provide this formula to me.

    I’m not sure what my next step will be if I get a written letter of denial from FRS, but I certainly will be taking additional steps if this turns out to be their response.

  • http://www.floridaretirementsystem.info FRS Options

    I am guessing the actual Present Value computer program is a bit intensive to put in writing. The critical issues are the discount rate (currently really low), the assumption for inflation, and the mortality tables. Inflation should be the COLA rate, and the mortality tables are probably the IRS tables. It is not likely they are cheating on the calculations, as that would take a conspiracy of significant magnitude. It is more likely they simply don’t want members to see the impact of the changes on the PV.

  • http://www.floridaretirementsystem.info FRS Options

    That would be speculation, which would probably get me in trouble. I would guess we won’t have to worry, as we don’t see either bill as political posturing. I

  • Mike

    It is my understanding that you do not lose your service credit that you earned prior, even if you weren’t vested when you terminated employment.  If you come back to an FRS employer, the service credit you earned prior (even if you were not vested at the time of termination) is added to the new service credit that you will earn in the new position.

  • http://www.floridaretirementsystem.info FRS Options

    Correct. If you leave service and return, and do not take a distribution of your pension, your service credit should be re-activated, and future credit added to it.

  • Rdy2DROP

    Guess what? It’s baaaaaack (2nd choice calculator).

  • http://www.floridaretirementsystem.info FRS Options

    And it only took 7 or 8 months!

  • Stressed

    I have made life decisions based on this retirement plan.  This proposal would be taking away my livlihood!  If one is vested, the promises should stay the same (i.e. 30 yr. option, highest 5 years compensation).  I am so close to my retirement date, and the legislators keep trying to take away my benefit.  I can barely make it on my income, so the retirement benefit isn’t much either.

  • http://www.floridaretirementsystem.info FRS Options

    It doesn’t appear that 525 changes anything for those already enrolled in FRS, the changes are for New Hires.