In recent weeks, the pension issue has been a topic of hot controversy, and there are two competing proposals. The House plan that ends the traditional state pension plan has pitted unions and Democrats against Republicans. Meanwhile, a Senate proposal slated for a floor vote soon could later lead to a showdown between Republicans of both chambers in the Florida Legislature.
Within Florida’s Retirement System, employees essentially have two retirement options: the state’s defined benefit plan and the defined contribution plan.
The House version of the pension bill essentially eliminates the state’s defined benefit plan, or what’s called the pension plan, for new employees hired after January 1st, 2014. It would then automatically put the new hires into the 401 K style plan, also known as the investment plan.
Florida House Speaker Will Weatherford has made this one of his top priorities this session.
Weatherford, who’s not been shy on his stance on the issue, says he believes taxpayers will be on the hook for 500 million dollars over the next 28 years if this bill doesn’t become law.
Weatherford says he likes his chamber’s plan, but there can be a compromise with the Senate’s plan.
“They’re different approaches. I wouldn’t say it’s a bad bill. It’s got a lot of great components to it. Compared to the status quo, it’s a good bill, but we think ours is better. We think ours addresses the problem long term, but we certainly want to show deference to the Senate. We’re willing to talk with them. I’m sure there’ll be some negotiations that will ensue," said Weatherford.
While there are differences between the House and Senate plan, their goal appears the same: to make the investment plan the more attractive plan.
Unlike the House, the Senate proposal leaves the traditional pension plan open to new hires. But, under the Senate plan, it would change the current default retirement option from the state pension plan to the investment plan.
It also changes the vesting periods for both plans. For the pension plan, it would be from 6 years to 8 years. But, for those in the investment plan, it would remain one year.
The contributions toward retirement also would differ in both plans. Today, employees in both the pension and investment plans pay three-percent of their salary toward retirement. But, only those in the investment plan would have their percentage lowered to two-percent.
Senate Republicans, like Jack Latvala of Melbourne, urged the Senate bill’s sponsor Wilton Simpson of Trilby to hang tough during talks with the House.
“I’m going to support this bill, but you know how adamant I am against the real broad brush approach the House wants to take to FRS [Florida Retirement System. It’s wrong, it’s ill-conceived…I can think of a whole lot of words that I’d like to put on it. So, I want you to be strong. If we give you this vehicle, please hang in there on behalf of our vehicle,” said Simpson.
To which Simpson replied,” it would be a cold day in hell” before he’d change his position on the bill.
Meanwhile, Senate President Don Gaetz weighed in on issue, saying it could be an uphill battle:
“I think that Senator Simpson has offered what could be compromise. And, I don’t think the story has been entirely written about that yet. I think there’s still more opportunities to work together between the Speaker’s priorities and Senator Simpson’s bill. Yeah, I think it’s possible we could wind up with no bill. But, I think it’s more likely we end up with something that achieves the Speaker’s goals and I share those goals, but that the same time, earns enough votes to pass the Senate,” said Gaetz.
And, while the House and Senate wrangle back and forth on a pension proposal—should they come to a decision, the fate of the plan would be left in the Governor’s hands. So, which proposal does Governor Rick Scott like better?
“First off, my understanding of what the House and Senate is doing is that they’re not making any changes to the existing pension plan, and it’s very important to me because I want to make sure that if you work for the state or you’re part of the pension plan, you know you’re going to get paid,” said Scott in an exclusive interview.
As for the unions….
Some call it a "solution in search of a problem."
Others, like the Florida Education Association, call Simpson’s Senate plan the “lesser of the two evils.”
But, Gary Rainey, the President of Florida Professional Firefighters, who also agrees, says there’s another option available besides the House and Senate plans.
“It’s dead on arrival in the Senate. I think the Speaker knows that as well. They’ll try and negotiate something in conference, but they’re not in a very good negotiating mood on the other side. So, if something gets done, it’ll be something similar to what Simpson’s bill does. The best choice for us would be the third choice, the status quo, that they don’t come to an agreement and everything stays the same. And, the pension plan will keep doing as it’s done for the last 43 years, paying benefits, getting a great rate of return, and doing what it’s supposed to do,” said Rainey.
The House proposal recently passed out of the Florida House 74-42 along party lines and is now in the Senate’s hands. Meanwhile, the Senate’s plan is headed to the Floor, after it passed its last committee stop Thursday.
For more news updates, follow Sascha Cordner on twitter @SaschaCordner.
