The 2013 session of the Florida Legislature has ended with no changes to the Florida Retirement System
The 2013 session of the Florida Legislature has ended with no changes to the Florida Retirement System. The proposals were all allowed to die without support. At least for this year, the pension is intact, and there will be no changes to benefits for members. Great News for all!
We would ask if the Task Force really studied the issue or just had a little guidance from the Governor as to what “efficiencies” they should look for?
Just how efficient is the Governor’s “Efficiency Task Force” on FRS?
It is no secret Florida Governor Rick Scott is putting FRS benefits back in his sights for the 2013 legislature. Every day the papers and internet post more stories about FRS being scarily underfunded and the taxpayers are being unfairly burdened by “overly generous” pensions to public workers. We can only guess that, this being an election year, the legislators made an effort to appease FRS members (and their votes) with few and minor changes in the 2011 legislative session. It does not appear that will be the case next year. Scott recently went on the record saying that pension plan reform is one of his key financial challenges for the state.
The Governor’s “Government Efficiency Task Force” stacked with his supportive favorites, Senate President Haridopolis and House Speaker Cannon brought back recommendations that coincide with the Governor’s mandates for “pension reform”. No surprise there! We can’t help but wonder if the Task Force really studied the issue or just had a little guidance from the Governor as to what “efficiencies” they should look for? They identified the FRS Pension Plan as one of their key areas for legislative change. Again, there is no surprise to those who have been watching how politics really work. The task force commentary creates more questions for us than it answers.
“Scott has identified funding for the pension plan as one of the two key financial challenges facing the state”.
Continue reading “Just how efficient is the Governor’s “Efficiency Task Force” on FRS?”
The FRS Investment Plan, as a Defined Contribution Plan, will see 30% less money going into their retirement plans as a result of the lowered contribution requirements.
There appears to be considerable interest in the recent decrease in contributions (MyFRS.com Contribution Changes) to the Florida Retirement System by HB 5005, and most notably the effect of that decrease to the members of the Investment Plan. We have been repeatedly asked to help educate our readers on the process, and to that effect, we have attempted to shed some light on the recent changes. Hopefully this will dispel rumor and false belief, and provide a background and some insight for members to understand what is happening, and what their FRS Options may be. Because the Pension Plan is a Defined Benefit Plan, the reduced contributions will have no effect on Pension Plan members. There were no changes to the Pension Plan benefits this year. On the other hand, the Investment Plan, as a Defined Contribution Plan, will see 30% less money going into their retirement plans as a result of the lowered contribution requirements. While Florida law may necessitate the changes, it seems counter-intuitive to see the Investment Plan members get punished, as the desired goal of the legislators is to have members move to the Investment Plan.
According to Florida Law, Statute 1121.71, Contributions to the Florida Retirement System are determined on an annual basis by a study of the FRS plan by the designated actuary. You may follow this link to the actual statute (Florida Statutes regarding annual retirement contributions). We have quoted the pertinent paragraph here:
1121.71 Uniform rates; process; calculations; levy.—(1) In conducting the system actuarial study required under s. 121.031, the actuary shall follow all requirements specified to determine, by Florida Retirement System employee membership class, the dollar contribution amounts necessary for the next fiscal year for the pension plan. In addition, the actuary shall determine, by Florida Retirement System membership class, based on an estimate for the next fiscal year of the gross compensation of employees participating in the investment plan, the dollar contribution amounts necessary to make the allocations required under ss. 121.72 and 121.73. For each employee membership class and subclass, the actuarial study must establish a uniform rate necessary to fund the benefit obligations under both Florida Retirement System retirement plans by dividing the sum of total dollars required by the estimated gross compensation of members in both plans.
Continue reading “FRS Contribution Changes …”
Judge Jackie L. Fulford handed down a ruling today that would reverse the actions of the 2011 Legislature in assessing a mandatory 3% contribution from members of the Florida Retirement System.
Circuit Court Judge Jackie L. Fulford handed down a ruling today that would reverse the actions of the 2011 Legislature in assessing a mandatory 3% contribution from members of the Florida Retirement System. You may read the Official Ruling Here.
The following is an excerpt from the ruling, which is the gist of Judge Fulford’s ruling”
Continue reading “Judge Hands Down Ruling, but “It ain’t over … until it is over!””
Finally, the 2nd Choice Calculator is back on the MyFRS website for Florida Retirement System members
Finally, the 2nd Choice Calculator is back on the MyFRS website for Florida Retirement System members. It has incorporated the legislative changes mandated last session, and once again members can calculate their lump sum amounts.
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).
Continue reading “And they’re off …. HB 525 introduced to cut FRS benefits”
The legislature may reduce future benefits to lessen plan liabilities, or may raise employee contributions to increase funding.
2012 is a major election year. Due to the 2010 Census results, Florida will undergo redistricting for legislative purposes. As a result, ALL Representatives and Senators will be up for re-election next year. The legislature is already in preliminary committee meetings, and the regular session will begin in January. It will be a big year, and we would highly urge all FRS members to anticipate another session of potential cuts to their benefits. The writing is on the wall, and in very large letters.
You only need to look at the MyFRS.com homepage where you will find a special notice box with the headline “Volatile Financial Markets”, there is a second headline – “Funding of the FRS Pension Plan” under which you will see the following;
“BE FOREWARNED: The FRS Pension Plan is less than 100 percent funded. The legislature may reduce future benefits to lessen plan liabilities, or may raise employee contributions to increase funding. The legislature may make changes to FRS at any time”.
Continue reading “Be Forewarned!”
The official Conference Committee Agreement has been posted on the Senate Web site.
The changes are substantial, but not nearly as dire as Governor Scott wanted. Employees to contribute 3%, DROP stays at 1.3%
It appears we have a Final Agreement between the House and Senate on changes to the Florida Retirement System. The changes are substantial, but not nearly as dire as Governor Scott wanted. There will be NO changes for those already retired, or those already in the DROP, your benefits remain the same. Many of the more radical changes only affect those hired after July 1, 2011. Changes for new hires only are:
For members after July 1, AFC become the highest 8 fiscal years.
Increases retirement age for all new hires after July 1:
Continue reading “Florida House and Senate Agree on FRS Reform!”
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!”