A group of Senators narrowly agreed Tuesday to introduce several bills aiming to reform the Florida Retirement System.
As chair of the Senate Community Affairs Committee, Trilby Republican Senator Wilton Simpson introduced a series of pension reform proposals. The most debated was a proposal seeking to shift recent hires into a 401K-style plan or the new “cash balance” option, thus eliminating the traditional pension plan for new state employees.
Under the cash balance plan—a hybrid of the two existing retirement options, the investment plan and the pension plan—employees are expected to receive a guaranteed minimum 2 percent rate of return with employers bearing the risk.
Several lawmakers on the panel raised concerns, with some calling the proposal risky. Lawmakers are awaiting the results of a study expected to outline the feasibility of Florida enacting such a plan that could take several weeks to a month. Not knowing the results particularly alarmed Clearwater Republican Senator Jack Latvala.
“I’m really taken aback by how you would want us to start voting on a bill—that although you may understand, and you believe in your heart—but we don’t have any numbers or any actuarial study to show us that. So, we’re sort of in-the-blind on this thing,” said Latvala.
Simpson says while he will work to make sure the bill has the necessary information before it goes to the Senate Budget committee, he maintains the measure shouldn’t be slowed down because the state’s retirement system needs a fix.
“So, I would say this is just an introduction bill. It’s a bill we can now gather more information on. We are desperately waiting on that study. There’s not a person in this room, who doesn’t want that study more than I do because that will give us the roadmap to go down,” said Simpson.
Simpson’s proposal also exempts special-risk employees, like police and firefighters, from the change. But he says he’s awaiting the results of the study to see if that’s even possible.
Both the state’s firefighter and police officer unions are also waiting on those results. Meanwhile, Florida Professional Firefighters Association President Jim Tolley says for now, he opposes the bill because not only is there no study, but the bill also doesn’t cover all employees who work for fire departments.
“And, I think the bill includes special-risk to a certain extent, as well as many of our members are not in special-risk. So, I think we’re included and excluded. And, I think we need the study to make a sound decision on how we move forward.”
Still, the committee narrowly agreed, 5-4, to make the proposal a committee bill with Latvala joining Democrats in opposing the bill.
The panel also advanced a bill that creates a trust fund for the new cash balance plan, and another that defaults all employees—current and new—into what’s called a “deferred compensation” program, where employees making less than $60,000 dollars contribute up to 2-percent of their pay on top of their current contribution and the employer matches the 2-percent contribution. Those making more than $60,000 would be limited to $1,200 per year.
That program would be in addition to any retirement option—pension, investment, or cash balance— employees choose. The current lone default is the traditional pension plan, where most state employees are in enrolled.
Stay tuned to Friday's Capital Report for more on this story! CLICK HERE for the story!
For more news updates, follow Sascha Cordner on Twitter: @SaschaCordner.
