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Trouble Looms For State Pension Proposal
February 19, 2014
Hopes seemed to evaporate Tuesday that exempting law-enforcement officials and emergency personnel would make changes to the state retirement system an easier sell this year, as a key senator signaled he had deep reservations about the measure.
The Senate Community Affairs Committee voted to introduce the bill (SPB 7046) by a 5-4 margin after Sen. Jack Latvala, R-Clearwater, joined the panel’s three Democrats in voting against the measure. Latvala was one of a handful of renegade GOP senators who sank a more-sweeping pension overhaul last year.
“I’ve got more convincing to do,” said Senate Community Affairs Chairman Wilton Simpson, R-Trilby, who sponsored the bill.
This year’s Senate proposal would close the Florida Retirement System’s traditional pension plan to new employees after July 1, 2015, though those employees already in the system would remain. New hires would be required to choose between a 401(k)-style investment plan and a “cash balance” plan, which in some ways acts like a 401(k) but guarantees a minimum benefit.
Employees would have de facto accounts set up and would be guaranteed a return of at least 2 percent a year on the money in their accounts. If the plan’s investments made more than 2 percent, then three-quarters of the extra money would go to employees.
Law enforcement officers and emergency personnel who qualify for the “special risk” category could still sign up for the traditional pension plan, a concession that appeared to be aimed at winning over at least some of last year’s critics. But Latvala said that some law enforcement employees wouldn’t qualify, and he questioned carving out certain groups.
He also criticized the decision to move forward with the bill before an accounting study on the effect of the changes was complete.
“I really am taken aback by how you would want us to start voting on a bill where — although you may understand, and you may believe in your heart, and I know you believe in your heart that this is the right thing for our future — when we don’t have any numbers, any actuarial study to show us that,” Latvala said.
Simpson said he could not guarantee that the study would be available in time for every committee that considers the measure, but suggested it would be available at least once.
“What I will say is that it would not be appropriate for the Appropriations Committee to hear this bill before we have that study back,” Simpson said.
Supporters say an overhaul is necessary to help preserve the pension plan without bankrupting the state. Lawmakers already set aside $500 million a year to try to cover costs of the “unfunded actuarial liability” in the plan. If the plan were to fail, Simpson said, retirees who rely on the fund could be wiped out.
“I would just say that anyone that’s opposed to these current shifts (is) jeopardizing everyone in this pension plan’s livelihood,” he said.
House leaders still have not spelled out their plan for revamping the retirement plan, long a top priority of Speaker Will Weatherford, R-Wesley Chapel. The House is considering either a cash balance system or a proposal that would divide an employee’s retirement between the traditional pension plan and the investment plan.
“There’s a glaring problem with $500 million a year that we’re putting towards the pension fund as opposed to education,” Weatherford said Tuesday. “It’s too soon to say what exactly what it’s going to look like.”
by Brandon Larrabee, The News Service of Florida
Comments
4 Responses to “Trouble Looms For State Pension Proposal”
when I retired in 2007 the Florida was 103% funded.It was and still the best retirement system in the country.Ln fact it was the only one that was more than 80% funged.What has happened since then.All this is is a political move and will destroy the Florida retirement system.Politicians cant stand for the working class to have a good system they have got to change it to where the poor working class does not have a good system.
“If the plan’s investments made more than 2 percent, then three-quarters of the extra money would go to employees.”
So, one is punished by using good investment sense? Give me the money up-front and stay out of my business.
The Florida State Retirement System (FRS) is probably the most stable pension plan in America, there is absolutely no reason, fiscal or otherwise to make contractual changes. This is purely political posturing for no purpose beyond punishing state employees for accepting a job with Florida state, which should be a model employer.
The workers should get the same retirement package as the politicians. You can bet that will NEVER happen!