Florida Pension Redo: Rank and File Would Contribute 2%, Management and Elected 4%
FlaglerLive | February 25, 2011
Rank and file government workers, police, firefighters and other emergency responders would be required to contribute 2 percent toward their pensions under a Senate proposal aired Thursday.
Focusing on the Senate’s pension reform plan (SB 1130), the chamber’s Governmental Oversight and Accountability Committee took nearly two hours of public testimony as it discussed amendments that will be considered when the committee meets again after the legislative session begins next month. Lawmakers are looking to have government workers contribute to their pensions – which they currently don’t do – in part because they say it’s fair, and in part because they say the current system is too expensive to sustain over the long haul.
Sen. Jack Latvala, R-St. Petersburg, introduced a series of amendments that would blunt the impact of an earlier proposed plan, which would have had workers put in 5 percent of their paychecks. Latvala on Thursday proposed a 2 percent maximum contribution for rank and file employees covered by the Florida Retirement System, which now has more than 650,000 state, county, school district and local employees.
“I feel strongly that there are many people who work for government for the pension they are going to get,” Latvala said. “It’s important to keep that path open for them.”
Unlike rank and file workers, senior managers and elected officials would have to contribute 4 percent of their salaries toward their pensions under amendments Latvala distributed Thursday and will likely formally introduce at the committee’s next hearing.
Other proposed amendments would allow new employees first hired at salaries of $75,000 or below to choose a traditional pension plan that guarantees retirement benefits or opt for a 401 (k) plan similar to those increasingly offered by private businesses. Senior managers and employees hired at more than $75,000 would be required to go into a 401 (k).
Gov. Rick Scott has proposed doing away with the traditional retirement plan in favor of a having employees contribute 5 percent to what amounts to an individual retirement account. Scott wants all new hires to be placed in the 401 (k)-style plans.
While he would prefer no employee buy-in, Latvala said the writing is on the wall and the Senate needs to offer a plan that is less expensive for employees, many of whom have not seen raises in the past several years.
“What we’re trying to do is craft something meaningful out of this committee that may have a little longer shelf life,” he said.
Committee members heard from a procession of union representatives, teachers, firefighters, and university officials echoing the sentiment that public employees in their respective fields trade higher salaries in the private sector for the retirement benefits available from the state.
They also argued that Florida’s system has operated in a surplus for much of the past 15 years. Like most investments, the fund took a hit in the most recent recession but is climbing its way back toward fully funded status.
Andrew McMullian, former director of the state’s retirement system, said lawmakers must tread lightly and not scrap something that has become the envy of others.
“You cannot improve on the system, but you can destroy the system,” McMullian said. “…You are putting employees at risk with the ebb and flow of the stock market.”
–Michael Peltier, News Service Florida