The “New” FRS DROP

there is no magic to DROP, the bulk of the DROP benefit is simply your own pension being returned to you after the 5 years.

For those of you that were interested in entering the DROP, you might not want to give up so quickly because of the decrease in interest rates.  The rate reduction from 6.5% to 1.3% initiated by the Florida Legislature as of July 1 does not necessarily make the Deferred Retirement Option Program obsolete.  Certainly, it lowers the earnings, but, the biggest part of the DROP sum is not interest, but simply your pension payments accruing each month in the DROP account.  There seems to be some misunderstanding about these numbers.  It appears that those of you choosing to enter the DROP on or after July 1 will earn the lower 1.3% interest rate on your pension payments.  If you are already in the DROP, and once you begin the DROP, you will NOT have to make the 3% employee contributions!

Your DROP amount will not decrease by 70%, only the interest earned will.  As we discussed on our web page FRSOptions.info , there is no magic to DROP, the bulk of the DROP benefit is simply your own pension being returned to you after the 5 years.

When you enter the DROP, you technically retire and begin to receive your pension.  Since you are going to continue to work, instead of the pension checks coming to you each month, those checks are deposited in your “DROP account”, and interest is then added to it.  The monthly amount going into your DROP is determined by the same calculation as your pension, which is:  Years of service, multiplied by service credit (3% for special risk, or 1.6% for regular members.  The result is then multiplied by your Average Final Compensation, which is the 5 years of your highest earnings.  For example, you have worked 30 years, and average of your highest five years of compensation (your AFC) is $50,000.   Your calculation is 30 times 1.6%, times $50,000, or a pension of 48% of $50,000, or $24,000 per year – so you would receive $2,000 per month into your DROP account.  Each year, on July 1, you will receive an annual increase by whatever your Cost of Living Adjustment (COLA) is.

Continue reading “The “New” FRS DROP”

SB 2100 passes 2nd reading with amendments!

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!”

Thoughts from a non FRS member!

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!”

Amendments to SB 1130 FRS Reform

The biggest change as we see it would indicate the amended version will allow for up to 500 hours of overtime to be used in the computation of the Average Final Compensation

Today the Florida Senate returned a “Strike-All” Amendment to Senate Bill 1130 which is meant to reform the Florida Retirement System.  The purpose of the “Strike-All” was to amend the language and stipulations of the original bill, filed by Senator Jeremy Ring.  There were also 5 additional amendments proposed changing other aspects of the proposal.

  • The biggest change, as we read it, would indicate the amended version will allow for up to 500 hours of accumulated leave payments to be used in the computation of the Average Final Compensation.  (lines 208-248, and 274-308).  And further appears that for service prior to July 1, 2011 overtime is included.

This seems to be a significant compromise to the original proposal, but excludes overtime after July 1.  It does not mitigate the fact that overtime is time worked for compensation earned, and therefore, as compensation, should be used for the AFC calculation. Continue reading “Amendments to SB 1130 FRS Reform”

A letter to FRS members from one of you!

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!”

Scott’s Proposals for FRS

It might be be premature to make any decisions until the details are known.

As you are no doubt aware, Governor Scott is slipping tidbits about his plan for FRS into the news.  Unfortunately, those tidbits are sparse in detail and his full plan is not scheduled to be released until February 7, so it is very difficult to get a grasp of how they will ultimately affect Florida Retirement System workers and retirees.  It is obvious the changes, IF ENACTED, will be significant.  It might be be premature to make any decisions until the details are known.  In the meantime, 1,000,000 strong FRS participants and retirees should be contacting their legislators and directing those representatives as to how they want to be represented in Tallahassee.

Fact? or fiction.

Misleading headlines are becoming more fantastic with each day we edge closer to the November elections. Candidates, their parties, and the press are in a race to see who can be as creative with the truth as possible, in hopes of swaying momentum in their favor.

Misleading headlines are becoming more fantastic with each day we edge closer to the November elections.  Candidates, their parties, and the press are in a race to see who can be as creative with the truth as possible, in hopes of swaying momentum in their favor.

We have commented on many articles fabricating the truth about the Florida Retirement System most recently the article quoting Senator Mike Bennett as saying it is “out of control”.  We know the facts tell a different story.  FRS is one of the strongest, best managed, and most well funded pension plans in the country.

Fact? or fiction.

Continue reading “Fact? or fiction.”

Is Florida Paying Former Employees Too Much?

Bennett has announced that he will be introducing a bill this fall that will cut and eliminate benefits to FRS members.

In a recent new article titled “Is Florida Paying Former Employees Too Much”, Senator Mike Bennett was quoted as saying the current Florida Retirement System Pension System is “out of control”.  Bennett has announced that he will be introducing a bill this fall that will cut and eliminate benefits to FRS members.  We decided to check into the data he used to support his opinion and we could not find credible data to support his conclusion.

The article statesthe state paid out $5.6 billion to retired workers; that’s almost 10 percent of the state budget”.  According to the Annual Report (page 53) The Florida Retirement System Trust paid out $4.8 billion in total pension benefits (we could not validate the $5.5 billion number from the annual report).  The article stipulates this is almost 10% of the state’s total annual budget.  Again the math is fuzzy; as the budget was closer to $66 billion, of which 5.5 is only 8.3%, but I guess rounding up makes the story more sensational.

Page 19 of the Annual Report, reflects $4.8 billion payout to retirees (who worked hard for the benefits the state promised them), employer contributions accounted for $3.73 billion, and of that only $679 million are labeled state contributions.  The real number – only 1% of the real dollars came from the State budget.

Continue reading “Is Florida Paying Former Employees Too Much?”

Be Prepared !

… it would be implausible to believe significant changes aren’t in store for FRS people and their benefits in the 2011 session.

The Florida Senate “Interim Work Plan 2011 Session” has been published on the Florida Senate Website, and there doesn’t seem to be any entry or schedule for the “Summer Study” that was promised (please see FRSOptions post “All FRS Legislation put on hold”).  During the 2010 Legislative Session, Senator Mike Bennett announced that all changes to FRS would be put on hold pending a summer study on how the legislators should best proceed in making potential changes.  The pending study provided a respite for Florida Retirement System participants, as none of the thirty-plus bills that had been introduced in the 2010 session came to fruition.

In the absence of the study it is unclear what course the legislators will take.  Hopefully it will not be a repeat of the maelstrom of bills introduce this past session.  It appears the press has been enlisted to a large degree, as there is seldom a day goes by that an article doesn’t appear condemning the Florida state pension plan and the Deferred Retirement Option Plan (DROP) as being overly generous, and an unfair liability to the taxpayers of the state of Florida.  (We attempt to post a sampling on a regular basis on our sister site on Facebook.com/FRSOptions).

In light of the previously proposed bills, the vetoed changes, and the changes suggested by the “Florida Tax Watch”, which is a lobbying group that boasts of several prominent Legislators including the following:

Continue reading “Be Prepared !”

Crist Vetoes cut in DROP interest?

Governor Crist exercised his line item veto power to veto HB 5607 which would have cut the interest rate paid on DROP form 6.5% t0 3%

We have just heard that Governor Crist exercised his line item veto power to veto HB 5607 which would have cut the interest rate paid on DROP from 6.5% t0 3% for those entering the DROP after July 1 of this year.  According to our sources, Crist vetoed the cut because he didn’t like the way it was rushed into the legislation at the end of the term, without going through the normal process!  We will keep you informed.