Legislation Proposed to Close Pension Plan

Closes the Pension Pan to those hired after January 1, 2014.

Share

According to the Calendar for the Florida House of Representatives, the Government Operations subcommittee is scheduled to have a Workshop on Thursday morning, January 24, to discuss potential changes to chapter 121 of the Florida Statutes, which is the statute pertaining to the Florida Retirement System. 

The agenda includes potential legislation to close the Pension Plan, and force all new employees into the Investment Plan.  While this is not a surprise, it comes prior to the official start of the legislative session .  You can read the meeting synopsis at  this link: Retirement Changes Agenda, as well as the proposed legislation.

We expect further changes to the Florida Retirement System to be offered up for discussion and action by the legislature.  We will try and keep you up to date with the proposals.

  • nana3956

    Why don’t those jerks leave hard working people alone – remember – we all pay taxes too making us taxpayers………………….. Where does this put the people that are retired via FRS pension?

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

    None of the changes in effect or proposed will change the benefits for those already retired.

  • amyandy

    Can you explain what the “percentage of gross compensation” is in the draft legislation on page 51 and what it means if the percentages are stricken?

  • myfairsharepaid

    Here we go I GOT MINE attitude. See how fast your check drops when on ones paying into the system.
     

  • nana3956

    But if no one can go into the defined pension; how does that affect the $$ for the retirees currently retired; we’re still guaranteed our pension.

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

    We believe, since the Pension Plan is a defined benefit plan, and the new plan would be a defined contribution plan, the employer would no longer make contributions to the defunct plan on behalf of employees who are not in the Pension Plan,

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

    It will not have any impact. The pension is funded for those in the plan, and is a direct responsibility of the state to maintain it. Unless the state is on the verge of bankruptcy, there is not reason to believe the plan will not be funded appropriately, and the state is far from in financial straits.

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

    We would suggest that all Pension Plan members will continue to pay into the plan, and only the new members will not.

  • http://profile.yahoo.com/7WDRYLHHAYM4DZM5DN76MG26PE Tom

    I’m taking this to mean that the legislator’s pensions are unaffected in this scheme?

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

    The legislator’s belong to FRS, and any changes to FRS affect them the same as you. They have the same vesting, contribution levels, and rules as you do.

  • Jonathan Kozla

    after a while it will not be funded anymore and those collecting will no longer collect

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

    That isn’t likely. The Pension Plan will continue to be funded, both by the employer and the employees who are in the plan. If no new members go into the Pension Plan, then no new members will be withdrawing from the plan, and it is very well funded now.

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

    At the risk of being redundent, all current Pension workers will continue to pay into the system, and no new hires would be withdrawing from the system if the plan were to be approved. Why does everyone seem to think there would be no further contributions to the pension?

  • myfairsharepaid

    How can we believe the checks and 3 % cola will continue when we also believed our pension would not change. I have already started my list of who not to vote for.

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

    We were unaware of any changes made to the Pension plan. The COLA has changed, and the contributions levels have changed, but the Pension benefit is still the same percentage of your high five it has been. Other than that, we must all keep up with what is going on, and make our decisions according to our own interpretation and beliefs.

  • Greenly721

    If all new hires are moved to the investment plan. How long can the fund have the ability to meet it’s obligations..is this a valid concern? Talking about the long run 10-20 years down the road. 

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

    Maybe, but we wouldn’t think so. While the new hires would not fund the plan, they also would not draw from the plan, in the meantime, all current members and employers would continue to fund it. Since the plan is currently well funded, it would not seem to be a problem.

  • http://profile.yahoo.com/PFPW7ZMET5KHYZJVBZP76CMWD4 Really

     Is it safe to say that once you are collecting your pension, that there are only two legislative options that could affect it? One, the annual COLA could be changed or eliminated. Two, the health subsidy could be changed or eliminated. I guess there is a third that if the State declares bankruptcy, then the pension itself could be eliminated but that’s not likely to ever happen.

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

    We think it is safe to say (relatively speaking) that if you are retired and collecting your pension, the COLA will not change, unless the state was on the verge of bankruptcy, which it is not! The HIS is not a FRS benefit, so we would suggest it could be up for change, but probably for those not retired.

  • downwithrickscott

    Where is the money going that we are ‘contributing’ to the retirement funds?
    Is it going into the system or are we plugging the holes in the state budget?
    I have yet to see this part of the issue addressed by those who are in the position to know..governor, legislature, etc.

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

    Any contributions, whether employer, employee, or state, goes directly to the Florida Retirement System, and does NOT go to the State Budget. What does go to the budgets, of not only the state, but the local governments, is the 3% the employer no longer has to contribute to FRS. That savings derived from the employee contribution allows those municipalities to plug potential holes in their budgets. All retirement contributions, by law, go to retirement plans.

  • downwithrickscott

    Thank you. That is what I thought, but with what goes on in Tallahasee these days, you can’t trust anyone.

  • motero62

    What do you think the chances are for the legislature to eliminate the health insurance subsidy for retired persons already receiving it. I ask because I am about to retire ,or enter into the DROP, this July 1, but if they were to get rid of the HIS, then that would influence my decision. I would probably have to work some years more.  

     

  • 1abcde

     Here’s the problem that many are ignorant to especially the public. Gov Scott went around the state trying to gain support to cut pension benefits.  Scott would give speeches saying how the pension was a “ticking time bomb” and something needed to be done to “sustain” and “shore up” the pension so it would be there for retirees.

    For the sake of brevity I won’t go into every detail about what Scott said but most everyone involved knew he wanted to dramatically change the pension with at the very least a contribution by employees. Much of his rhetoric was exaggerated or untrue about the pension.

    So what does Scott do? He reduces the state and county’s contribution by 3%. So, if they were paying 15% into the pension for employees now the state or county was only responsible for 12%. This saved the government millions as the 3% now went towards balancing the budget.

    The 3% employee contribution took the place of the 3% the state and county were no longer obligated for. It was a shell game! There were no additional funds added to the pension to “sustain” or “shore” it up! That was a farce and outright lie. The 3% employee contribution just took the place of the 3% the state no longer contributed! So, basically it was a tax to balance the budget!

    So much for the pension being a “ticking time bomb”!!!!

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

    The HIS is not an FRS benefit, so we really don’t know. At this point there has been nothing on the table to eliminate it, but who knows.

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

    Yep, we have been saying that for 2 years!

  • nana3956

    Thank you FRS Options!  Apparently, people must think the change is cutting off the bloodflow to the current employees and retirees. 

  • nana3956

    Thank you.

  • http://pulse.yahoo.com/_MB7OOFHMBT4OP2P5FKZXV5JFIU can

    Is it worth staying any longer in the system or just I just pack up and go?

    If I leave tomorrow, i would start with a hefty sum based on years of service  and my average 5 year salary will net me $40,000 a year. If I roll over all the funds to the investment plan I am close to $600,000. I am thinking the way the world is going, nothing is actually safe, including my pension.TWO QUESTIONS:1-Can they take the investment/pension money away if I give my intent to retire?2-Which plan is actually best for me, seeing that I usually am conservative and a planner?

    Suggestions are welcome but wont hold you to them.
    thank you

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

    Money transferred into the Investment Plan is YOUR money, despite the fact that you can’t access it until you terminate employment. It can not be taken away from you. A benefit from the Pension Plan is also something you are vested in, but the state still owns it, and it is subject ot changes (as we have seen). The likelihood that actual pension plan would be take away, we believe, is only under criminal circumstances. We would guess a bit more conversation would have to take place to determine which is best for your, but the Investment Plan offers a lot of benefits, not the least of which the money is yours and goes to you or your beneficiary if something should happen to you,

  • http://pulse.yahoo.com/_MB7OOFHMBT4OP2P5FKZXV5JFIU can

    Thank you so very much for your reply. I will take this under advisement.

  • candyhatcher

    Just like the Legislators, screw the working class to fund their own retirements. What happens when you can’t  squeeze anymore blood out of the turnip??? Tell me how many of the current Legislators are willing to cut themselves off of this golden parachute for them while the average worker gets $23000 annually? 

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

    The legislators are members of FRS also, any cuts impact them in the same manner. They also pay the 3% employee contribution.

  • DY

    I left the FRS after 14 yrs in 2011.  I wonder how this will affect my payments when I eventually retire down the road. 

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

    It should have no affect. Vested benefits should be unchanged.

  • rickscottsucks

    The state of Kentucky did a review of pension vs. 401k type retirement systems in 2008 and found that the 401k plan actually costs the state more than a traditional pension. 
    Article link: http://www.ktrs.ky.gov/05_publications/Bang%20for%20the%20Buck%20Fact%20Sheet5-2010.pdf How can one state prove that it costs more to have a 401k or hybrid plan and yet our fabulous politicians move to end the pension system based on their “theory” that the pension system is a drain on taxpayers.

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

    It isn’t comparing apples with apples. The Kentucky study was based on both plans providing the SAME benefit, which is not what they are doing in Florida. For the same benefit, there is no question a Pension is more efficient, as remaining funds at a member’s death go back to the state, and not to the member’s estate as they would in the 401k type plan. It is not valid to compare them for benefit, as one is a defined BENEFIT, and the other is a defined COMTRIBUTION. The 401k will most certainly be less expensive to the state, and the benefit will most certainly be less to the participant.

  • jonmh11

    I was enrolled in FRS in June 2008. Therefore, I will not have my 6 yrs in & be VESTED in the pension plan until June 2014. Will this affect me or does this bill only affect new hires January 2014 or after?

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

    As proposed, it would affect new hires only.

  • FloridaCopper

     The idea of the federal government seizing retirement accounts, 401K’s and defereed compensation plans seems to surface every couple of years.  I know there’s been resent talks about this idea, back in early December 2012.  It’s my understanding this would need to be approved by congress, the president and the supreme court.  With the current administration in the white house, this idea seems to be a liitle more threatening, due to the fact obama believes executive orders can bypass all of the normal channels.  Is there need for concern, could obama seize Florida Retirement System funds to help off set America’s 17 trillion dollar debt. 

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

    We are not aware of any precedent that would allow for the seizure of a pension plan by the Federal Government, or the State Government for that matter. And they would have absolutely no ability to seize 401k’s or IRA, as those belong to the participant individually. It is not something we would spend much time worrying or even thinking about. The country isn’t in such a condition that it is even concievable.

  • Carol711

    I have a question about reemployment following retirement from FRS.  If we return to work after the required 12 months, we are not eligible for investment or pension plan (this is fair).  Do they still collect the 3% contribution?  Just curious, not complaining. 

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

    As we understand it, the employer makes contribution for all employees, eligible or not. Since the employee is entitled to retain their contributions, if you are required to contribute, you should get a benefit. The question is, if you want to return to work, why are you retiring?

  • Carol711

    I retired  because I was massively overworked and needed a break.   I had left the classroom to go into administration, but miss being a classroom teacher.  (It was not a good fit for me in administration).     Even though I have 30 years in, I  am really to young to retire for good, and would like to return to the classroom next year. 

    Lucky for me there is a shortage of math and science teachers, and the HR office thinks it will not be a problem for me to find a job.    This will be 12 months from when I left the system in August of 2012.  

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

    A good response! We believe the language is in terms of ALL employees contribute, not just those eligible for a benefit. We wish you well with the job.

  • Kyle Scully

    Based on all new hires going into the investment plan what do you think this will do to investment contributions going forward?  Since the investment plan contributions (currently 14%)  are based on the pension plan contributions  do you think it will be more expensive to fund, thus increasing investment contributions? 

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

    We would have thought the intention of the switch would be to save money, thus lowering the contributions, but from the actuarial study, that may not be the case. The legislature has an obligation to keep the pension plan well funded, so we will have to wait and see if the move goes through. It makes absolutely no sense to close the pension plan if the contributions can’t be lowered.

  • KB

    No….the employees in DROP do not contribute.