Calling the current pension system “old and archaic,” incoming House Speaker Will Weatherford said Tuesday he wants to revamp the state retirement program for new employees and make it more like the private sector.
Weatherford, a Wesley Chapel Republican, said new state employees should be required to enroll in 401(k)-type plans instead of counting on regular pension payments from the state. Most large corporations have moved to such plans, which help them control retirement costs while also placing more responsibility on workers to make investment decisions.
“It (pension costs) is a ticking time bomb in every state and in every city across the country, and it’s time for us to get real and do what the private sector has done,” Weatherford told reporters, as he prepares to formally begin presiding over the House next week.
But trying to change the pension system likely would be controversial. The Republican-controlled Legislature in 2011 approved a plan to require workers to contribute 3 percent of their salaries to the retirement system — a move that has touched off a legal battle now at the Florida Supreme Court.
Rep. Dwayne Taylor, a Daytona Beach Democrat who has served as a trustee on his city’s fire and police pension board, said requiring new employees to enroll in 401(k)-type plans would jeopardize the actuarial soundness of the pension system. That is because fewer people would be paying into the system, while it would still owe benefits to retirees and workers who would be entitled to the more-traditional pensions.
“There’s a domino effect when you start tinkering with the system,” Taylor said.
The Florida Retirement System includes state employees and many local-government workers, such as teachers. Weatherford said he would have to look at whether his proposal would also apply to local governments.
People in the retirement system currently can choose whether to enroll in pension plans or 401(k)-type plans, though most have chosen pensions. As of Aug. 31, 540,352 active employees were in the pension plan, while 107,040 were in a 401(k)-type plan.
Under Weatherford’s proposal, already-hired workers would continue to be able to choose a pension of a 401(k)-type plan, which might help avert legal problems. The key question in the court battle about the 2011 law is whether the state can force already-employed workers to contribute 3 percent of their salaries to the retirement system. Opponents have not legally fought the requirement for new employees.
The financial health of public pension plans has been a major issue in numerous states. Florida’s pension plan has an estimated balance of $125.1 billion, though, on an actuarial basis, it is not fully funded. An October report from state economists said it was funded at 86.9 percent.
Any changes to the retirement system are closely watched by groups such as public unions, and Weatherford’s idea could touch off a political fight. The unions and their legislative backers argue, in part, that pensions and other benefits are a way to make up for lower salaries that workers earn working for the government instead of in the private sector.
But Weatherford said pension costs are a “real problem for the state long term.”
“I think when it comes to pensions, this is not anything radical,” Weatherford said. “Ninety percent of the private sector has a 401(k)-based plan.”
–Jim Saunders, News Service of Florida
Samuel Smith says
Oh hell no.
Popo3984 says
Well it’s not the private sector vote all republicans out they are what are damaging this country anti union why should I risk my life for scum like him
Henry says
Kudos to Weatherford, about time a legislator is man enough to take the correct action. Please do pursue revamping the State pension system and make the state workers really earn their pensions. Next, reduce all those benefits they shouldn’t have!!! Keep up the great initiative Will!!!
bq says
Well, here we go again! What is with Republicans, can they be this clueless?
Riley says
@ Henry. You must be self taught. Did you attend the public school system? Teachers EARN their pay and pensions.
Thank a teacher!
Riley says
I think we should look at the pension of the House Speaker and adjust his accordingly, to comply with corporate america.
Thinkforyourself says
@henry – do tell what benefits are you referring to? The School districts health care costs are astronomical. Please do tell what wonderful benefits do they have???
Eyes Wide Open says
You have got to be kidding. Let’s take away all of our remaining benefits. The less than $38k I make why should I continue to risk my neck for you? Or better yet, how about I apply for State benefits which my family and I qualify for. Law enforcement on state welfare nice. Oh its great to be a public servant, the career I chose because I actually care about people which is more than many who are ungrateful. I have an idea how about the state legislators give up their salary and benefits for the greater good. ,
tampabucsfan says
Hello Henry,
What is good for the goose is good for the gander. You need to look at this report from earlier this year.
http://www.insurancejournal.com/news/southeast/2012/03/01/237661.htm
The people getting the best fringe benefits are the ones who can afford it the most. My wife and I both work for the school system and pay $640 a month for health coverage for our family. Don’t you find this a little unjust?
Diego Miller says
Many top University studies have shown that 401K Plans, which were instituted by Big Insurance Companies don’t work. Most people aren’t good money managers and also Pension Plans are able to invest from a large pool as opposed to one’s individual input.
Tallahassee is following a well orchestrated plan by the Koch brothers. Large funding into Governers races like Florida and Wisconsin, deunionize and privatize all public sector jobs, eliminate Social Security and Medicare.
Isn’t it ironic that the states that get the most Federal welfare are the red states. The states that want to keep wages and benefits to stoneage standards. We are strongly lacking a good labor movement in this country. It’s about government and unions that work together through apprentiship programs and high skills that lead to good paying jobs, with health care and Pensions.
Firefighter says
I started as a Firefighter paying into the State retirement System at age 20. When I became a Firefighter it wasn’t because I was planning on be wealthy. I was doing what I dreamed and I was planning on providing a secure imcome with benifts that would take care of me for life. The Florida State Retirement is among the most solvent in the nation. It needs no medaling from republican law makers in the state legislature. Leave it alone..
Retired State Worker says
I would like to make a few corrections on the above article, the Florida Retirement System assets this fiscal year 126.078 billion not 125.1. It is 87.5% funded not 86.9%. Their payments are 6,685 billion.
They need to leave it alone it is doing fine thank you, and has been for quite a while.
2008-09 Assets 118.765, liabilities 134.204, payments 5,670
2009-10 Assets 120.93 liabilities 137.635 payments 6,089
2010-11 Assets 126.078 liabilities 144.122 payments 6,685
This information was taken from the Florida Retirement System newsletter .
rickg says
More like the private sector…. you mean where CEO’s like Rick Scott gets caught skimming millions from Medicare but still gets a huge parachute just to leave the company…. Yeah that should work..