Pension Reform Fight Resumes For 2014 Legislative Session
A fight over the future of Florida’s state pension program is back -- and groups are already lining up to fight some proposed changes.
Trilby Republican Senator Wilton Simpson’s bill would steer state workers hired after July of 2015 into so-called cash-benefit plans.
According to the U.S. Department of Labor, "benefits that are received are defined in terms of an account balance. For example, assume that a participant has an account balance of $100,000 when he or she reaches age 65. If the participant decides to retire at that time, he or she would have the right to an annuity based on that account balance. Such an annuity might be approximately $8500 per year for life. In many cash balance plans, however, the participant could instead choose (with consent from his or her spouse) to take a lump sum benefit equal to the $100,000 account balance".
The main difference between a traditional plan and the cash-balance system is that a pension is guaranteed for life based off of an employees earnings at the time of retirement; the cash-balance system bases those payments off of how much money is in the employees' account at the time of their retirement.
Police and firefighters could still participate in the traditional pension plan. The state’s largest teachers union, the Florida Education Association, says exempting some groups but not others is unfair—they argue the changes could put the retirement benefits of current state employees in jeopardy.
“If it’s good for one set of employees it should be good for all employees. And I hate to say that 70 percent in the retirement system are female, so I’m kind of concerned that we’re carving out police and firefighters. Is there a gender-equity gap there?” Said FEA Vice President Joanne McCall.
She believes plans to carve out special groups are unfair to everyone else who participates in the Florida Retirement System. Last year's pension reform bill died amid opposition from police and firefighter unions-- which were not exempt under the former proposal.
House Speaker Will Weatherford and Senate President Don Gaetz are promising the exemption for police and firefighters, as well as current employees and retirees. But groups opposed to the plan fear that steering new employees away from the pension will destabilize it financially--affecting those already in the system.
Senate President Don Gaetz says he’d vote against any proposal that could affect current state employee benefits.
“I think on our watch we have an obligation to look at options, but there is no option that Speaker Weatherford is considering...that would affect the pension benefits of anyone in the system now. And if there were, I doubt it would see the light of day on the Senate floor.”
A 2012 survey from Bloomberg News rates Florida’s state employee pension system as one of the best-funded in the country. But despite its high marks, Florida lawmakers note they have to put half-a-billion dollars into the system each year. They say the changes are a preemptive fix to a system they believe is outdated.