Florida Retirement System Reform Proposals: SB 1130 and HB 1405
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SB 1130, FRS Retirement Reform Sen. Jeremy Ring (D-32-Broward) |
HB 1405, FRS Retirement Reform Rep. Ritch Workman (R-30-Melbourne) |
| 1130-1405 Side by Side Comparision Chart | |
On March 10, 2011, the Senate Governmental Oversight and Accountability Committee passed SB 1130, the FRS Retirement Reform bill. The bill had been the subject of several hearings commencing in December 2010.
This bill makes the following changes to the Florida Retirement System (FRS):
1. Requires an employee contribution of up to 2% of pre-tax gross salary to fund retirement benefits, effective July 1,
2011. The maximum employee contribution is 2% for any member of the Regular Class or Special Risk Class and
4% for any member of the Senior Management Service Class or Elected Officers’ Class.
2. Employee contributions are no longer required if the FRS reaches or exceeds 100% of actuarial funding.
3. For fiscal year 2011-2012, the contribution rates for all members are set at:
* 0% for compensation up to $40,000
* No more than 2% for compensation between $40,000 and $75,000
* No more than 4% for gross compensation that is greater than $75,000.
4. Increases the vesting period for members enrolled in the defined benefit plan from 6 to 8 years.
5. Closes the defined benefit plan on or after July 1, 2011 for FRS employees who are members of:
* the Elected Officers Class
* the Senior Management Service Class, or
* any member of any FRS membership class employed in a position for which the starting salary is more than $75,000
FRS employees who are eligible and elect to enroll in an optional retirement program, will be enrolled in the FRS defined contribution plan.
6. Changes vesting for members enrolled in the defined contribution plan on or after July 1, 2011so that vesting will occur in graded increments over a 5-year period.
7. Amends the definitions of “compensation” and “average final compensation.” Accumulated annual leave payments and overtime payments in excess of 300 hours are not included for service earned on or after July 1, 2011.
8. Creates an additional death benefit for members of the defined contribution plan who are killed in the line of duty.
9. Changes the name of the “Public Employee Optional Retirement Program” to the “Florida Retirement System Investment Plan.”
10. Requires each active member of the Senior Management Service Optional Annuity Program, the State University System Optional Retirement Program, and the Community College Optional Retirement Program to contribute the same percentage of gross salary to fund retirement benefits as those contributed by FRS employees, effective July 1, 2011.
Download tinformation on SB 1130
HB 1405, FRS Retirement Reform
Rep. Ritch Workman (R-30-Melbourne)
HB 1405 incorporates the pension reform provisions incorporated in Gov. Rick Scott’s budget proposal for FY 2012. Gov. Scott’s pension reform plan proposes more wide-sweeping changes to the current FRS system than any of the retirement proposals introduced this year. The Senate bill, SB 1130 by Senator Jeremy Ring (D-32-Broward), is a far more moderate proposal (but FEA remains opposed to it because it requires a 2% employee contribution).
The bill makes several changes to the Florida Retirement System (FRS). However, changes impacting benefits do not apply to those who have already retired. Benefits already earned are not impacted by the changes in this bill.
Effective July 1, 2011, the bill:
1. Requires a 5 percent employee contribution for members of all classes of the FRS pension plan (defined benefit plan), and changes the name of the FRS defined benefit program to the Florida Retirement System Pension Plan (the “pension plan”).
2. Requires a 5 percent employee contribution for members of all classes of the FRS investment plan (defined
contribution plan) and changes the name of the defined contribution program from the Public Employee Optional
Retirement Program to the Florida Retirement System Investment Plan (the “investment plan”).
3. Maintains the current service accrual rate for FRS Regular Class participants at 1.6%. Reduces the service accrual
rate for the FRS Elected Officials Class to 1.6% (from 3.33% and 3%). Reduces the service accrual rate for the FRS
Senior Management Service Class from 2% to 1.6 percent. Members of the Special Risk Class will maintain the
current service accrual rate of 3%.
4. Closes DROP (the Deferred Retirement Option Program) to new participants, after July 1, 2011. All FRS participants who are enrolled in DROP by June 30, will continue through DROP as currently established (usually 5 years).
5. Freezes the Health Insurance Subsidy (HIS) at the benefit level accrued by June 30, 2011, so that no additional service credit for HIS can be earned after July 1, 2011. For example, if you have 15 years of service as of July 1, 2011, the maximum HIS benefit you will receive upon retirement is $5 per year for each of your 15 years of service ($75 per
month). (This means that you will not earn, nor receive, the current maximum HIS benefit of $5 month times 30 years
($150 per month).
6. For members of the FRS Regular Class who enroll on or after July 1, 2011, the bill increases the retirement age from age 60 to age 62, and years of service from 30 to 33 years.
7. For members of the FRS Special Risk Class, increases the retirement age from age 55 to age 60, and years of service from 25 to 30 years.
8. The bill, as reported from Committee, does not include Gov. Scott’s proposal to force all new state workers to enroll in 401(k)-style defined contribution pension plans.
Download information for HB 1405
