Pension Changes Headed To House Floor

February 17, 2016

Less than a week after it was introduced, a bill that could shift more public employees into a 401(k)-style retirement plan is headed to the House floor.

The legislation (HB 7107) was approved Tuesday by the House Appropriations Committee on a 16-9 vote, clearing the way for the full chamber to take up the measure. The initiative has already caused friction with the Senate, which wants a different set of changes to the Florida Retirement System also included in the House proposal.

Under the House bill, employees who don’t choose between the state’s traditional pension plan and a 401(k)-style investment plan would “default” into the investment plan. Currently, workers are automatically placed in the pension plan if they don’t make a selection.

Most of the roughly 1 million working and retired members of the system are in the traditional pension plan.

Supporters of the legislation say it better fits the current workforce, where employees are more likely to change jobs. Rep. Matt Caldwell, the North Fort Myers Republican handling the bill, said younger workers in particular could end up in a plan that doesn’t mesh with their career paths.

“If they don’t make a choice … and they default today into the pension and leave before vesting, they leave with nothing,” Caldwell said.

House Republicans have for years pushed bills aimed at encouraging or even requiring new employees to enter the investment plan, arguing that it’s more stable and more closely resembles the retirement plans in private industry.

But unions, Democrats and some Senate Republicans have fought those efforts, arguing the traditional pension plan is sturdy and offsets the fact that state workers make less money than their private counterparts.

They also note that the vast majority of workers currently pick the pension plan.

“Clearly there is a desire when people make a choice to go into the defined benefit plan,” said Rep. David Richardson, D-Miami Beach. ” … Why would we say that we’re going to change the choice and default people into a plan that only one out of four would choose when they don’t make a choice?”

In an effort to make the House changes more appealing, the bill approved Tuesday includes pension legislation favored by the Senate. It incorporates some provisions dealing with death benefits the Senate is seeking, as well as a fix to unintended consequences of legislation passed several years ago meant to cut down on “double dipping” by members of the retirement system.

The Senate has particularly focused on increasing death benefits for families of first responders killed in the line of duty and making changes for those in the investment plan. The House would make changes to the death benefits for all workers in the investment plan.

Rep. George Moraitis, R-Fort Lauderdale, pointed to the two Senate provisions in explaining why he voted for the bill Tuesday. But he sounded hesitant about the default switch.

“Unless we’re saying we really cannot afford our FRS (Florida Retirement) system going forward, I don’t necessarily see a need to make this change,” he said.

But other Republicans defended the change, and have highlighted the fact that the legislation would extend the amount of time workers have to choose between the two plans before defaulting.

“I think if you give someone eight months to make a decision, that that should be ample time to do all the bit of research that any human might necessarily need to be able to make a decision,” said Rep. Matt Hudson, R-Naples.

Should it pass the House, the odds are still long in the Senate. That chamber voted unanimously last week to approve the death-benefits bill in what the sponsor described as a show of resolve on the issue.

by Brandon Larrabee, The News Service of Florida


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Written by William Reynolds · Filed Under News