A few words about SB 5005

The actuaries want to lower the contributions into the Florida Retirement System

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FRS Options has received many requests in regard to the posting on the MyFRS.com site concerning SB 5005. We hope this will help. SB 5005 was simply a proposal by the legislature to match the contributions into the Florida Retirement System to the amounts required by the actuaries.  SB 5005 was not passed, and was sent to the Conference Committee for final resolution.  The results of the committee are not yet known to us.

We have provided a copy of the Legal Analysis done by the Senate.  It contains some interesting language, which we have highlighted below.

Section 121.031, F.S., requires that an actuarial study of the FRS be provided by the administrator of the system (the Department of Management Services) and for the results to be reported to the Legislature by December 31 of each year. Thereafter, the Legislature uses this report in establishing uniform contribution rates in law during the next legislative session.

revises s. 121.71 F.S. to adjust the employer contribution rates for the FRS based on the 2011 Actuarial Valuation as adjusted by the changes to the Investment Plan allocations.

As is evidenced by the analysis, the basis of SB 5005 is simply to lower the contributions into the Florida Retirement System Pension Plan or the Investment Plan for members, as is recommended by the actuaries empowered by Florida statute, to insure the well-being of FRS.  In order to lower contribution rates, the actuaries must be able to demonstrate that the plan is funded sufficiently to allow lower contributions.  We find it ironic that the actuaries are recommending a lower contribution, which means less money is required to keep the plan well-funded, at the same time Governor Scott is on record as saying that FRS is not well funded.

It would seem the Governor is willing to make any statements necessary to further his personal agenda,  unfortunately, the media doesn’t seem willing to tie the hypocrisy of his statements with the facts.

We will keep you posted as to any outcomes affecting FRS in the Conference Committee.

  • Adgirl50

    Scott said our pension is NOT FUNDED….thank you for including my politifact link.

  • Straightalker

    “We find it ironic
    that the actuaries are recommending a lower contribution, which means
    less money is required to keep the plan well-funded, at the same time
    Governor Scott is on record as saying that FRS is not well funded.”My thoughts exactly…

  • Gary

    Are you going to update this story? The bill passed and those in the pension fund will see a 6% decrease!

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

    We have addressed it on the FRSOptions/Facebook page. Technically, the bill did not pass, it was put to the conference committee. The outcome is nearly the same. The language is still confusing, so we are trying to get the details before we update.

  • Henry

    I’m a little confused, does this mean I will be getting less money into my account to invest.  Of so I should be given a 3rd option to get out!

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

    If signed into law by the Governor, it means the contributions will be reduced. The contributions are determined by the actuaries as to what contributions are necessary to keep the plan in sound financial decision. The fact that the contributions are to be reduced, is a direct contribution to the Governor’s constantly saying it is unfunded.

  • Henry

    I want a Third Option to get out of the Investment Plan.  It’s just not worth it now when compared to our pension plan.

  • Manny Otero

    The way I read it it’s the investment plan that the contributions will be reduced by 30% not the pension plan. The pension plan is based on the highest 5 years  salary multiplied by 1.6% for every year of service for regular service. Not what is deposited in the pension account.

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

    We believe you will find the contributions for the Pension Plan and the Investment Plan to be the same. Since the MyFRS is primarily for the Investment Plan, it appears they were specific to the Investment Plan. We are disseminating the legislation and will report our findings.

  • Adgirl50

    Since this is going to the Supreme court, did you know what date they will rule on this?

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

    Not a clue :(

  • Manny031

    What I meant correct me if I’m wrong is the 1.6% multiplier x years of service x AFC = yearly pension that has not changed or will not change even if they deposit 30% less in my pension account

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

    That would be correct. The contribution makes no difference on the Pension Plan.

  • Randy

    I still have my 2nd choice. However, it would cost too much to get back into the pension fund. When initially choosing between investment program and pension, the paying to go back to the pension program was never mentioned.  It was made out to be that you could just switch back (1 time) if you liked.

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

    The buy-back is in the information you should have recieved, as is the “one time option” information. The buy back is determined actuarially, and could be cheaper with good investment returns. The option is not designed to go back and forth from one to the other as things change, but a simple alternative depending on your long term wishes.

  • Cathy

    How is this legal to reduce the employer contributions to only those in the investment plan?  When I made my second choice decision, it was based on 9% of my salary being invested.  Now, I’m paying 3%, the bill reduces the employer contribution to 3%, so I have in effect, lost 70% of employer contributions in one year!  Yet, those in the pension plan are unaffected??

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

    We believe you will find the employer contributions to be the same for the Pension and the Investment Plan. Since the MyFRS is primarily and investment plan site, it did not report the Pension Contributions. From what we can tell in the legislative posting, they are the same.

  • Adgirl50

    Someone told me that DROP is going away as of July 2012. I have not heard this. I was planning on going into DROP in January 2013. Could you comment?

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

    Find another source for your information, we believe that “Someone” is wrong. There are no changes to DROP.