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State Employees Would Be Shifted to 401(k)-Like Plans, Ending Florida Retirement System for Almost All

| February 12, 2014

They're trading on your retirement.(Thetaxhaven)

They’re trading on your retirement.(Thetaxhaven)

A Senate measure dramatically overhauling the pension plans for many future public employees has been introduced, setting off a highly anticipated election-year fight between unions and Republican legislative leaders.

The bill (SPB 7046), which was filed Monday, would close the Florida Retirement System to most new public employees, instead shifting them to either the state’s existing 401(k)-style investment plan or a new “cash balance plan.” Law-enforcement officials and firefighters would still be allowed to join the traditional pension plan.

Exempting those “special risk” employees appears to be an effort to attract support from renegade Senate Republicans who last year killed an effort to move all new employees into the investment plan. Many of those senators had strong ties to the law-enforcement community.

Overhauling the pension plan is one of the elements of a joint agenda that House Speaker Will Weatherford, R-Wesley Chapel, and Senate President Don Gaetz, R-Niceville, introduced to reporters last month.

“The proposed committee bills relating to Florida’s retirement system are a common sense approach to ensure that we are able to fully deliver on the benefits that we’ve promised our hard-working state employees for years to come,” said Senate Community Affairs Chairman Wilton Simpson, R-Trilby, whose committee sponsored the bill and is scheduled to take it up next Tuesday.

Under a “cash balance plan,” employees would have accounts that can be withdrawn when they retire as either a lump sum or an annuity.

Employees hired by the state on or after July 1, 2015, would be automatically enrolled in the cash balance plan to start. However, if employees didn’t tell the state that they wanted to remain in that plan within eight months, they would be transferred to the investment plan. Special-risk employees would be able to elect to join the pension plan, but would also be moved to the investment plan if they didn’t tell the state about their choice of plans.

Speaking before Florida Chamber of Commerce members on Tuesday, Weatherford said changing the pension system would help the state avoid hundreds of millions of dollars in payments a year to the fund and allow that money to flow elsewhere.

“If you look at the states that are raising taxes,” Weatherford said in reference to New York, Illinois and California, “they’re not raising taxes to put more money into education, they’re not raising taxes to pay for health care, they are raising taxes to bail out a broken pension fund.”

Gaetz, speaking before the same group, indicated he believed the new push would be successful.

“I think we’re going to bring this one over the line,” he said.

But allowing special-risk employees to be part of the traditional pension plan opened the bill up to charges from critics that it was unfair.

“If it’s good for one set of employees, it should be good for all sets of employees,” said Florida Education Association Vice President Joanne McCall in a press conference Tuesday morning.

Opponents of the change also point to studies that have consistently shown Florida has one of the best-funded pension plans in the country.

“Our Florida Retirement System is sound,” said Sen. Bill Montford, D-Tallahassee, who is expected to play a key role in the pension debate. ” … My question is, why tinker with a very good system that has worked for years?”

–News Service of Florida

 

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26 Responses for “State Employees Would Be Shifted to 401(k)-Like Plans, Ending Florida Retirement System for Almost All”

  1. Genie says:

    Good article. I have participated in both systems, the first with a cash balance plan in another state and the second with a 401(k). The latter earned me a lot more money.

    If you have the opportunity to switch, I’d choose the 401(k) plan. My program was matched by my employer and earned almost 3 times the amount of the former cash plan from a state retirement fund.

  2. fruitcake says:

    It’s about time….

  3. confidential says:

    There we go the GOP Conservatives dictatorship getting their paws on peoples retirement funds to place them in these fraudulent 401K’s that are gamble by their buddies in Wall Street with hidden and complicated fees and charges that the workers do not even understand. Little by little their induced cancer of privatization for their self serving purposes is forced in all of us. Better get out, register and vote in the midterm 2014 senate and congress elections if we want to preserve our workers jobs, rights and pensions from being destroyed.
    Like in Chattanooga’s Volks Plant where owner and plant workers agree to unionize and those Repugnlicans in the Tennessee majority government threat to legislate against against it. Then they call the Dems communist, what a fraud they are.. http://money.cnn.com/2014/02/12/news/companies/vw-uaw-vote/
    Those workers better remember well and get out an vote in 2014 and 2016.

  4. confidential says:

    My child and daughter in law lost over 60% of their forced 401K plan in 2008…to never recover it! Plus all the brokers fees and charges that they have no control over and never understood…all with false promises a la Wall Street bankers.
    I never put a penny on any 401K and saved plenty enough for a secured full retirement today at 70! I contributed to SS and Medicare the best government plan existing and I collect my fair share now part of my eggs nest. To the contrary my children will have for retirement what my trust will give them when I will die not to long from now at 70. Why is that…? because in 2008 they lost being middle aged, most of their 401K invested as usual by the GOP Wall Street boys and their full time jobs that just recently regained.
    If you let the GOP’s wishes, workers in America are bound to become slaves allover again…

  5. Anonymous says:

    excellent idea…this should apply to teachers too

  6. rhweir says:

    The state here does not pay most employees enough to warrant an actual pension plan. This appears to be a shift to the investment plan that FRS already has as an option. I worked for the state here for 5 years after I retired from a well paying state job “up north”. I was in the investment plan here and took my money out when I left. It worked out fine. I saw what 30 year lifers here expected to get from the traditional FRS retirement plan. We’re talking $1000 range. It was a paltry sum to be sure. Most of them end up getting as much or more in SSRE and they also get, yes, Food Stamps to supplement. Heck, most of the employees I worked with who had kids were already of Food Stamps. So, putting everyone in the investment plan makes sense.

  7. Bob Z. says:

    Fine, just increase their salaries to those of their counterparts in the private sector.

  8. Geezer says:

    Florida is not a good state in which to be an employee, except for the healthcare fields.
    (depending on whom you ask)

    It’s great for business owners and well-heeled retirees.
    Workers here are largely disposable and with few, if any rights.
    There’s always a poor bastard worse off than you, waiting to take your shitty job.
    You have no leverage, even at Walmart….

    Florida prefers that you earn your pension elsewhere then spend it here when you retire.

  9. jim says:

    Geezer…..u, my man …hit the nail SQUARE on the head!!! this states HATES its employees!!! but LOVES other states pension money!

  10. Brian says:

    Well the true way to fix that would be fore politicians to stop robbing the retirement funds like they have the social security funds , keep your filthy greedy paws to yourself

  11. Concerned says:

    A single person can’t live on a 30 year Florida retirement income. They get around $1,000 per month and their health insurance costs approx $500 per month and keeps going up.

    • rhweir says:

      Oh so true! $1000 and then they mess with them on health insurance. And they all talk about retiring when they hit 30 and then, they stay until they’re at least 65 . The public employees here are not treated well. Not treated well at all. It’s a shame, no it’s a crime and it’s not fair to the citizens either. You get what you pay for.

  12. Catfish says:

    Geezer hit the nail on the head. I’ve lived & worked in the state of FL my whole life… then only people that make out like bandits are the ones who move here from up north with their nice fat wallets. My employer doesn’t even match our 401k, so I stopped it & now handling my own retirement account. Why should I give them my hard earned $ to play with?

  13. Watchout says:

    Careful what you ask for people. You just might get it !
    First the NUDGE…Then the Push….Then the SHOVE……

  14. Brian says:

    Another thing this state refuses to do is give people their disability retirement, I got hurt bad on two jobs and one kid hit me head on on Belle Terre herniating 4 disks , reinjuring my neck I hurt at Sea Ray when a QC dropped a huge window we were putting in a rack,and another person pulling a insurance scam ran me into a tree on US1 at 65 MPH because I refused to run into her van when she slammed on the breaks by pax trax for no reason at all , SS disability acknowledges all my injuries , acknowledges I can never do any of the jobs Ive done my whole life ,Acknowledge they owe me 1130 a month for working my whole life , just Fla judges refuse to give me my money ,would rather I live on 189 bucks in food stamps a month , its my money, I paid in my whole life and not one of my injuries were my fault , this state sucks but I`m stuck here now.

  15. Observer says:

    Stop screwing around with our future

  16. DJSII says:

    The Federal Government went to a 401k-like system back in 1984 to get out of the very costly retirement system that had been in place for generations.

    The new retirement package had three parts. (1) They received a small sum of money each month based on their length of service and salary. (2) After 1984, Govt. employees were also required to pay into SS and are eligible to receive benefits once they meet the same requirements as everyone else. (3) The 401k or Thrift Savings Plan (TSP) is the most significant part of a Federal employees retirement with the Government matching up to 5% of the employees contribution. Of course, as with any 401k investment, you have a chance of losing money as well as gaining it.

    Having worked under this system since 1984, I believe that it was a step in the right direction. Did I make money in the TSP?—>yes. Did I lose money in the TSP?—>yes. But, mostly I made money.

    I had a lot of fear when first entering into this type of system but it proved to be very beneficial in the end.

  17. Firefighter says:

    You can be a member of FRS and work for a city or service district seperate from the state. Why does this matter? Because the majority of the millions the state GOP claim the FRS costs the state tax payers yearly is actually the normal payemnts its required to make for each of its employees to be apart of the FRS. They make it sound as if the have to shore it up or it will fail. The state’s FRS is proven to be one of the most sound programs in the country.

    This pension is what was promised to me when I decided to become a Firefighter. Friends of mine chose other careers making more money than me. Alot more. Money wasn’t and never has been a motivator for me.

    Now that conservatives in the private sector have lost money in their 401K’s and IRA’s the war cry is to slash the penifits of public servants attacking the middle class that played it smart and earned a modest living in exchange for security..

    Remember who they are hurting. The ones who respond to your home, or neighbors home when someone is sick or injuried. Or if you’re involoved in an accident, or your house cathes fire. The ones who educate our children. Or the ones who fix our roads and bridges that are driven on everyday..

  18. confidential says:

    Firefighter you are so right!
    They get plenty revenue from our payroll, SS, Medicare, unemployment insurance contributions and sales and income tax but they waste it benefitting their elites and policing the world and getting their hands in that giant cookie jar all the time and then what I despise is that cut our services that we pay up front to receive for our taxes and the first thing they do is firing our service employees and/or cut their pensions and other benefits. These conservatives fire our government workers and then do not want to extend the unemployment insurance, that they paid up front during their life of labor. Even worst cut the food stamps needed by the millions of unemployed, to not fault of their own.
    The level of ignorance is so high that they keep pushing that destructive agenda that keeps us in the dumpsters by cutting the budget were hurts the worst our pathetic economy and is by cutting our service employees jobs! Idiots, good way to doom the tax revenue and the consumer power that drives sales.
    Conservatives also do not want to end these wars that we can’t afford. Always looking for another trouble hot spot in the world and get us embroiled again

    • Genie says:

      @ confidential: You are right, except that both the Republicans and Democrats are doing it. Very hard to tell the difference anymore.

      You are wrong about the wars. Congress doesn’t start them, President’s do. This one promised to end what Bush started. Not seeing that.

      Time to stop sending billions in foreign aid and help our people here.

  19. Out of Curiosity says:

    Nice divide and conquer tactic of separating law enforcement and firefighters from the rest of the state employees.

  20. Bill says:

    The state retirement fund is weel stocked with cash. its one of the few that is. i work for county government im in the 401k plan and am happy with it. As i am somwhat older i knew I would not be working for it long Thought just a few years but as the economy still sucks i may stay till 65 now. One reason I went with the 401k plan is that in that you own the $$$ in the penson plan type you do not when you die it goes with ya nothing is left for your loved ones.

  21. rickg says:

    The Rs would just love to get your retirement money and SS money into the hands of Wall St Bankers etc… You get screwed and the Bankers get rich… I had a 401k and it barely made money. Most of the cash came from my contributions.. On the other hand SS money has been consistent and at least a compliment of what one would need in retirement.

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