Lifted by gains in the stock market, the Florida Retirement System pension plan gained $19 billion in the fiscal year that ended on June 30. The 22 percent gain is the biggest in 25 years, reports the State Board of Administration, and larger than the 14 percent gain from last year. The total value of the pension plan has soared to $128.4 billion.
The state pension plan performed better than its benchmark, a goal of 21.7 percent, and better than many of its peers that have also reported returns for the fiscal year.
Ash Williams, the executive director and chief investment officer for the State Board of Administration, said “by staying the course and being able to use strong partnerships to take advantage of market opportunities” the pension plan was able to rebound by $54 billion from a recent low of $83.3 billion just 27 months later.
But even with promising returns, thousands of employees are fleeing the traditional pension plan to the state’s 401(k)-style investment plan, which reported an 18.1 percent return and has 136,500 participants.
No doubt sparked, at least in part, by the uncertainty surrounding long-term employment in state government, 8,300 public employees made the switch this year, which is double the number of employees that made the same switch last year.
Nearly 25 percent of new hires chose the 401 (k)-style investment plan, a slight increase from recent years.
The Florida Retirement System pension plan serves nearly 1 million people, making it one of the largest public pension plans in the nation. Participants are drawn from state government and local governments.
Though not all public pension plans have released their returns for the fiscal year, the ones that have show that FRS performed better, according to an SBA spokesman. Only CalSTRS, the public pension plan for California teachers, performed better with a 23.1 percent return.
Florida’s retirement system has drawn scrutiny lately from Gov. Rick Scott, who questioned whether the pension plan was sound and called for reforms that included requiring a 5 percent contribution by employees.
The Legislature instead required a 3 percent contribution from all public employees, which kicked in this month. The 3 percent contribution equates to a 3 percent pay cut, with no equivalent gain at retirement in additional retirement compensation. A lawsuit filed by the Florida Education Association and other union groups is challenging the new requirement.
Doug Martin, a spokesman for the Florida chapter of the American Federation of State, County and Municipal Employees, called the 3 percent contributions “harsh medicine,” but said it could have been worse.
“Thank goodness the Legislature didn’t shut it down,” Martin said. “It really is one of the shining stars of state government.”
Still, Scott’s concerns about the state pension plan have apparently not been entirely eased.
As recently as July 1, the St. Petersburg Times reported that Scott warned in an email to state employees that across the nation, pension systems are “unsustainable” and would require major tax hikes to stay solvent.
“The pension reform we accomplished this year prevents tax hikes, and also protects the retirement of government workers,” Scott wrote in the email.
–Lilly Rockwell, News Service of Florida
MO MONEY says
Rick Scott looks at the FRS and begins to salivate thinking how can he get his hands on that money.
ol'sarge says
Again, and again, and again..who voted for this clown???
Outsider says
Well, now that you are a fan of investing in the stock market, can I have my social security contributions go into an investment account instead?
Thinkforyourself says
I just don’t get it. The FRS is one of the healthiest in the nation. It will only become unsustainable because they are reverting to what was policy in the early 70’s. This is what many were saying early on in the discussion this legislative session. The longevity of those in the FRS is on average 5 years. Once you allow people to make those contributions (3%) – they take the money with them when they leave. Prior to the change in recent law, they lost that money and it stayed in the system. If anything we should learn from history, instead of giving into a political sound bit.
John Boy says
The Fraudster won’t be happy until he has raided the FSRS Trust Fund, if there is any money antplace, this crook will surely try to get it for himself and his Facist Buddies. When will someone introduce a bill to change our Constitution that will allow us to Recall this Low Life Criminal.
rickg says
Again a Republican Governor scandalizes a very good pension plan and people continue to vote R. WTF
Frank Ellis says
How does making employees pay 3% of their wages into the pension fund and freeing up the 3% for tax breaks for Rick Scott’s Country Club buddies make the pension fund more solvent? If it was going to collapse as Rick Scott claimed, putting the exact same amount of money into the fund will not keep it from collapsing? If he was being honest in his claim, the state would continue to put in the same amount and have the employees ADD 3% in addition to the state amount. That isn’t what he did. He took the 3% and redistributed it in the form of corporate tax breaks. His actions do not match his rhetoric.
KFinn says
Using round numbers i am contributing to a fund at 10 percent and I raise the case that the 10 percent wont be enough to reach my objective and I cant afford more than 10 percent so I ask my employees to contribute 5 percent so the fund can reach the objective which would equal 15 percent going into fund. Good math.
Same scenario I am contributing 10 percent and I cant afford more than 10 percent so I ask my employees to contribute 5 percent to reach our goal , the employees give 5 percent and than I only add 5 percent to equal the 10 percent . Bad Math . With the FRS employees paying 3 percent the state reduced there amount , Under that plan what was fixed other than the State saving Money not the FRS getting healthy. The FRS is one of the healthiest pensions in the country. It was all a Rick Scott shell game .
palmcoaster says
When are we going to demand from our Florida elected ones to vote to place the recall provision in our constitution? So we can recall the crook? Rep. Rick Kriseman: http://ballotpedia.org/wiki/index.php/State_Rep._Kriseman_introduces_bill_to_allow_recall_in_Florida