With the Florida House passing pension reform last week and the Senate vote coming up soon, the debate over state employee’s retirement plans isn’t quite finished, but one group said if it’s not broke, don’t fix it.
Retirement: the finish line of 40 years of hard work for the State of Florida, day in day out. Maybe you want to spend your golden years playing golf, or sit back and watch the grandkids play in the pool, or relax on the beach watching the sun set.
More than 650,000 workers are part of the Florida Retirement System. But the current system may soon see some changes. Last week the House passed measures reducing the number of state retirement plans from two to one, doing away with the pension system, and automatically enrolling all new hires, as of January 2014, into the 401-k style investment plan. But the Florida Retirement Security Coalition said why fix what isn’t broken. Dr. Steven Herzenberger, with the Keystone Research Center, said closing the pension system will cost Florida’s taxpayers and is unnecessary.
“Florida has one of the most well-funded pension systems in the nation, and is one of only 11 states to achieve a solid performer rating from the Pew Center on the States,” Herzenberger said.
Dr. Herzenberger said the House plan, lowers returns on investments, raises taxpayer cost, and hasn’t worked in other states that closed their pension plans. “Its three strikes and you’re out,” Dr. Herzenberger said.
Sarabeth Snuggs served 9 years as the Director of the Florida Division of Retirement, until she retired in December of 2012. Snuggs said there is no pressing reason for the changes to the current retirement packages.
“Forcing all employees into a defined contribution plan, as the House plan does, is a misguided solution in search of a nonexistent problem,” Snuggs said.
Supporters of the reform say if the private sector has 401-k’s, shouldn’t the public sector follow? Alan Stonecipher, with the Florida Retirement Security Coalition, said some people just don’t want to take the chance.
“Basically proponents of moving to the 401k style just don’t want the state to be on the hook for any pension payments even though it’s pretty much self-sustaining,” Stonecipher said.
According to him the pension option is one of the tradeoffs for a big paycheck for coming to work for the state. Stonecipher said the decrease in value of private sector 401k’s during the recession of 2008, might happen again to the state’s proposed investment system.
“You might run out of money and you’d be at the mercy of public services like food stamps and Medicaid, and that’s not the risk that we ought to be passing on to people like teachers and firefighters and police officers,” said Stonecipher.
The House voted last Friday, down party lines, to pass the pension reforms, 74 Republicans to 42 Democrats. The Senate version of the bill will go to its final committee stop this week.
