March 26, 2010
Florida
House
Bill 1319 Will Dramatically Change the
Florida
Retirement System if Passed
There is a
bill moving through committees in
Florida's
State House in
Tallahassee
that will significantly change the Florida
Retirement System if passed.
According to
Florida
House of Representative’s
summary on myfloridahouse.gov, here
are several highlights of HB 1319/SB 1902:
·
Retirement compensation will be computed based on the average salary over ALL
years of service. The
average of the “highest five years” rule will be
repealed. There is no grandfather clause, so this will apply
to existing employees participating in the FRS system who continue to
work after July 1, 2010.
·
All new hires as of July 1, 2011, and all with DROP
participation dates beginning on or after July 1, 2011, would pay a 1 percent
contribution of gross income into the FRS system.
·
Reduction
in annual multiplier from 1.6 percent to 1.44 percent for regular class;
reduced from 2 percent to 1.8 percent for senior management class; and
reduced from 3 percent to 2.7 percent for special risk class (cops,
firefighters, etc). There is no grandfather clause, so this would apply going forward
to existing employees participating in the FRS system who continue to work in
qualified positions beyond the effective dates.
·
Normal
retirement service years and DROP ages increased to 33 years/age 65
(currently: 30 years/age 62), and by +3 years for all special risk
categories. There is no grandfather
clause, so this will apply to existing employees participating in the
FRS system who continue to work in qualified positions beyond the effective
dates. This would not impact those who enter DROP before the July 1, 2010,
effective date.
·
Average full compensation would no longer include
accumulated annual leave paid out of the end. Accumulated sick leave paid out
at the end will also not be counted towards calculating FRS compensation
benefits.
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·
Maximum benefit reduced to 80 percent of average final
compensation. Existing 90 percent cap would remain for FRS participating
employees who vested (at least 6 years of qualified FRS service) before July
1, 2010.
Also pending is HB 1543 (Rep Zapata). The
highlights include:
·
Cut the maximum benefit to 70 percent of average final
compensation.
·
Entirely eliminates the elected official, senior management,
and special risk administrative support classes for FRS benefits. All in
these categories would all remain in FRS, but would be transferred to the
“regular class” category.
·
Eliminates the Senior Management Service Optional
Annuity Program.
·
Retains the “highest five” rule and
existing retirement ages/service years.
·
Makes significant changes in law to municipal pension
plans for firefighters and police officers.
If passed, these bills will have a dramatic impact on
Florida
’s Retirement System. It is important that your clients are aware
of these proposed bills in this 2010 session. The result of these bills may
even place a greater emphasis on saving in a 403(b) or 457 plan.
For more information, please
contact LSW’s 403(b) Team at
877-449-5791.
The Trusted Leader in the 403(b) Market!
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