FRS Conference Committee Named

The Conference Committee members are in line to decide the fate of Pension Reform for the Florida Retirement System

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It appears the Conference Committee members are in line to decide the fate of Pension Reform for the Florida Retirement System.  As discussed previously, since the House and Senate could not agree on the proposals put forth, the House and Senate have appointed conferees to determine what course the legislature will take as to the reduction or elimination of your retirement benefits.  It can be presumed that whatever agreement the Committee comes up with, will be presented to the Governor for his signature.

In the Senate, Senate President Mike Haridopolos named J.D. Alexander, R-Lake Wales, as the chairman of the Senate Conference with Joe Negron, R-Palm City, as vice-chairman. At large conferees will be republicans Andy Gardiner of Orlando (Majority Leader), Don Gaetz of Destin and John Thrasher of Jacksonville.  Democratics named arer Nan Rich of Sunrise and Gary Siplin, D-Orlando.

In the House of Representatives, Speaker Dean Cannon tapped Representative Denise Grimsley as the House Leader of the conferees. Representing the house as republicans will be GOP Leader Carlos Lopez-Cantera of Miami, Gary Aubuchon of Cape Coral, Dorothy Hukill of Port Orange, Paige Kreegel of Punta Gorda, Speaker Pro Tempore John Legg of Port Richey, Seth McKeel of Lakeland, William Proctor of St. Augustine, Rob Schenck of Spring Hill,  William Snyder of Stuart and Incoming House Speaker Will Weatherford of Wesley Chapel. On the Democratic side will be Democratic Leader Ron Saunders of Key West, Chuck Chestnut of Gainesville, Darryl Rouson of St. Petersburg and Franklin Sands of Weston.

We find it interesting that Senator Jeremy Ring, whom introduced Senate Bill 1130 is not a member of the committee, and we can only surmise that he and Senator Alexander are on the same page as to the direction the Committee should take.

The Committee is scheduled to begin negotiations tomorrow, so it is absolutely essential that all FRS members contact the Committee members and make their feelings known.  We have demonstrated that you are being heard, and must continue to be heard!

 

  • Pepper

    Thank you for the quick reply. I will be 55 at my 30 years. I forgot to ask you how to figure COLA? I found your site to be the best information available during this time of angst for all of us!

  • near30

    How can they compleat budget negotiations prior to finnishing work on the pension? Don’t they need to, I thought they needed this information to see what the “savings” would be? Is it possible they will end the session with this unresolved?

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

    COLA is simply a 3% increase in your pension that is applied each July 1.

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

    I believe they have come up with a budget amount, and the current negotiations are to try and bring spending in line with the agreed budget. It’s probably possible, but not likely that they won’t come to some agreement.

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

    It is common knowledge that FRS is financially sound, but our beloved Governor still believes it is unsustainable as is. We can say with a fairly high level of confidence, his proposed changes are not necessary.

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

    I would think it would be to your benefit to postpone DROP to age 57, if the DROP is extended. It will still be a viable plan for you, as the decrease in interest (if it is reduced to 2%) will reduce your overall benefit by only about 10%. If your original Drop Value was going to be in the area of $200,000, it will probably be reduced to about $180,000. We realize it is a considerable amount of money, but so is the remaining benefit. If you can wait until you are 57 to DROP, it will add not only to your pension, but also will help make up the difference in DROP by adding 2 more years of service credit (which is another 3.2%). That extra credit could potentially up your pension by about $125 per month, and increase your DROP amount by close to $20,000. If they extend DROP until 2016, it would be good for your to wait until age 57 to DROP!

  • Anonymous

    Thanks for the quick response… I thought it might be advantageous to wait if things turn out this way. My district has been bringing people back – Admins after 5 years and teachers after 5 +3 years for years, but word is they are going to stop the practice. Heck, our Superintendent is a prime example of this practice. He maxed out everything and is still getting a $225K package.

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

    I would not count on being brought back after DROP. I suspect that is the next thing to be dis-allowed.

  • mpd

    I feel your pain – my 62nd birthday IS July 1st and I only have 25.5 years so can’t retire or enter DROP before July 1st…such bad luck!

  • Urbina3333

    if they extend the drop at 2016 , that means 2016 will be the last year that you can star drop

  • roberto

    I have 27 years this year as regular class in the pension plan ,will be smart to change to the investment a this time or stay in pension. if they extended the drop to 2016 i still will be a candidate i’m very confused please advise me how much will be my drop amountor my investemnt if i change

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

    I have a feeling you will be fine. It would seem DROP will be extended until July 1, 2016 – though that is not confirmed or final yet.

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

    That would seem to be the case. No new enrollments into DROP after July 1, 2016.

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

    Without details it is a tough call. I do think it would be beneficial to stay for your 30 years before moving to the Investment Plan, as the last 5 bring the highest gains in the Lump Sum value. I can’t tell you how much DROP would change without knowing the details for your AFC and such.

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

    Wow, there a quite a few things to address here.

    First-of-all, we believe you will find the state has NO ability to “raid” FRS for the general budget. Any and all contributions to FRS stay in FRS, by statute, and probably by constitution. FRS will only pay money out in the form of benefits to members.

    If you are a regular member, your employer is now contributing 9% of your income to FRS for your pension. If you are required to pay 3% employee contribution, then the total remains 9%, 6% from your employer and 3% from you.

    We’re a little confused on teh “state fRS gets 4% and you get 4%” figures, but I will tell you that you will most likely get a monster return on your investment. Let’s assume you started at $12k per year 30 years ago, and you are now up to $50 or 55k per year. Your average income over those 30 years is somewhere around $30k per year. That means your employer has funded your pension with total contributions in the area of $81,000 ($30k times 30 yrs. times 9%). If your AFC is close to the $50k, you are entitled to .48% of $50k, or $24,000 per year, plus 3% COLA per year for every year you collect. Let’s them assume your retire at 62, and live to be 82. That means you will collect somewhere close to $700,000 in retirement. That, my friend, is quite a return on your investment!

    You will do yourself no good thinking this is a “make out without losing anything” proposition. You are going to lose something. The state and counties can not save money at the budget level without taking something away.

    As to the reporting, FRS and the SBA report the true numbers, and it is very apparent FRS is financially strong and viable pension. Unfortunately, our Governor is beating the rhetoric drum that it is unsustainable, and the public (though the info is there, the media is remiss to publish it) seems to find it believeable.

    All of that said, it would seem DROP will be around until 2016, your COLA will at least be good for the years of service you have in, and most of the other changes will only affect new hires. It make not be the best of situations, but as we have seen, it could also be a lot worse!

  • MCooper

    You seem to think DROP will be extended to 2016. I have seen reports that indicate that the contribution will be 3 %. I haven’t found any reports, this week, describing what the Budget Conference Committee has decided to do with DROP. Have you heard anything specific about DROP yet? I’m watching the news closely as my DROP date is (or would have been) July 1, 2011.

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

    Only rumors that it would be extended to 2016.

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

    AFC is Average Final Compensation. Currently it is the highest five years of your income that is used to determine your pension at retirement.

  • SAG1725

    As far as COLA is concerned, if a person has 30 or 31 years in the pension plan would it make any difference if they went in DROP before or after 7/1/2011 should the COLA percent change?

  • near30

    I do not know how reliable this source is, but it appears that they are settling for not too awful changes, including leaving drop open to new employees (with the lower interest)

    http://www.postonpolitics.com/2011/04/big-changes-planned-for-pensions-not-so-big-after-all/

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

    You may only go into DROP as of your effective date, which is the date you achieve 30 years of service, or age 62, whichever comes first. If you achieve 30 years prior to age 57, you may defer enrollment until age 57. You have 1 year to enroll, but that is retroactive to the effective date, so if you enroll 6 months after, you lose 6 months of DROP time. If you don’t enroll within that 12 month window of age 62 or 30 years of service, you give up your right to go into DROP. Therefore, you need to see when your effective date is, and that will make the decision as to when to enroll for you.

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

    It appears they are leaving DROP open, but doing away with COLA credit, reducing interest on DROP money to 1.3%, and a 3% contribution across the board. Also raising retirement age. If I am close to retirement age, that is a victory, but if I am 5 years out, it is pretty bad. You lose DROP and COLA going forward, and you have to pay 3%. Could be worse.

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

    Still meeting, but some more rumors. The latest is DROP stays, COLA quits on 7/1, 3% contribution, increased retirement ages.

  • near30

    Ok, I need some help here. I will have 30 years in on July 2012. a) Is my AFC going to be based on 8 years instead of 5? 2) I average about 72,000 a year, am I better of spending 5 years in drop, of just staying with the pension for an additional 5 years. (I will be 59 when I hit my 30 years in).

  • thrifty60

    I have been in DROP for two years. My employer pays $500 bi-weekly to FRS. The rate is much higher than before I entered DROP.

  • 123taz

    I thought I read where there would be a COLA credit for years already earned in the FRS but some of your recent post seemed to say its ending on 7-1-11? Did I mis-read?

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

    It looks like your AFC will be 5 years, the 8 year is for those hired after July1. Whether to go into the DROP would require a lot of input as to what you are looking for in retirement, your beneficiaries, and other information particular to your situation.

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

    Should be the same 9% (regular) or 22% (special risk) of your income, regardless of DROP status.

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

    Both, the proposals were for current employees to get credit for years of service prior to July, and no credit for time after July 1, which translates to there would be no additional COLA after July 1.

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

    DROP is probably still worth it for regular members, probably not for special risk. For regular risk with 30 years of service and an AFC of $50,000, the DROP amount will go from about $150,000 down to about $132,000. It is a decrease, but still a nice chuck of change. For special risk at 25 years and $50k AFC, it goes from around $235k to $205k. The additional 3% credit per year would probably work out better mathematically if you simply stay in the Pension, and then go to the Investment Plan. Those 5 years are worth almost a 20% increase in Pension, and a commensurate increase in the lump sum.

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

    Correct, and the elimination is not official yet either.

  • SAG1725

    My question was more about COLA then DROP. So if a person were to retire or go into DROP, how would that effect the COLA if they went in 6/2011 vs 7/2011.

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

    If you are eligible for DROP as of June, you would not want to wait until July. It isn’t final yet, but appears there will be no COLA paid from July 1, 2011 until July 1, 2016. Therefore, we believe to get COLA you need to be in the DROP program before July 1. Keep in mind it all goes from that effective date, so even if you enroll in June, but your effective date isn’t until July, you would not qualify. Your effective date must be prior to the July 1 date.

  • Rickward470

    Do you know if the final bill presented to the Gov will be under HB 1405 or SB 2100?

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

    I don’t think it will be under either, but am not sure. I suspect it will be its own bill.

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

    Apparently not. Participation is mandatory. Keep in mind that the employer is adding at least 2x what you are, so you would be forgoing a 200% guaranteed return on your contribution, and probably 15 times at retirement. It would seem to us, that by opting out, you would significantly destroy your retirement, for a little sacrifice now. If you opted out of the pension, and gave up all that retirement income, how could you possibly retire. We are firm believers everyone should have an adequate retirement, even if it requires a sacrifice today.

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

    We are generally not comfortable with discussing personal or individual circumstances in a public forum for privacy sake. You may email us on the “contact us” page, and we will arrange for a conversation.