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Miami

Cypen & Cypen
SPECIAL SUPPLEMENT

for
MAY 12, 2011

Stephen H. Cypen, Esq., Editor

FLORIDA LEGISLATURE PASSES PUBLIC
PENSION CHANGES

 

CS for CS for SB 1128 deals with public retirement plans in general and firefighter (Chapter 175, Florida Statutes) and police officer (Chapter 185, Florida Statutes) in particular. SB 2100 deals with the Florida Retirement System. When the bills become law, as they most assuredly will, they will be effective July 1, 2011.

          A. CS for CS for SB 1128:

  • Effective July 1, 2011, payments for accrued unused sick or annual leave may not be included when calculating retirement benefits. Up to 300 hours per year in overtime compensation may be included as specified in the plan. This provision is applicable to all public plans.
  • All public plans must include in their actuarial reports and statements of actuarial impact a disclosure of the present value of the plan’s accrued vested, nonvested and total benefits, as adopted by the Financial Accounting Standards Board, used in the Florida Retirement System’s assumed rate of return, in order to promote comparability of actuarial data between local plans. (This provision does not mean that plans must adopt or employ the FRS assumed rate of return for any other purpose.)
  • An actuarial or cash surplus in any system or plan may not be used for any expenses outside the plan. This provision is applicable to all public plans.
  • A local government sponsor of a retirement system or plan may not reduce contributions required to fund normal costs. This provision applies to all public pension plans except to FRS or other state-administered retirement systems or plans. 
  • The Department of Management Services is required to provide a fact sheet for each participating local government defined benefit pension plansummarizing its actuarial status. The fact sheet should provide a summary of the plan’s most current actuarial data, minimum funding requirements as a percentage to pay and a five-year history of funded ratios. The fact sheet must include a brief explanation of each element in order to maximize the transparency of local government plans. The documents shall be posted on the department’s website. Plan sponsors that have websites must provide a link to the department’s website. This provision is applicable to all public pension plans (at least DBs).
  • For the sole purpose of changing municipal representation on a firefighter or police officer board of trustees, a municipality may, by ordinance, change municipal representation on the board of trustees operating a local law plan, only if such change does not reduce membership percentage of firefighters/police officers or membership percentage of municipal representation. 
  • Firefighter/police officer contribution rates may be increased by consent of their collective bargaining representatives or, if none, by majority consent of firefighter/police officer members of the fund, without requiring corresponding greater benefits. 
  • The Department of Management Services shall develop a plan for creating standardized ratings for classifying financial strength of all local government defined benefit pension plans. The department shall submit the plan, plus any related findings and recommendations, to the Governor, Chief Financial Officer, President of the Senate and the Speaker of the House of Representatives by January 1, 2012. The report must also include specific recommendations for legislative action during the 2012 Regular Session of the Legislature.
  • The task force on Public Employee Disability Presumptions is created for purpose of developing findings and issuing recommendations on statutory disability presumptions for firefighters/police officers. The task force shall submit a report, including findings and recommendations, to the Governor, the Chief Financial Officer, the President of the Senate, and the Speaker of the House of Representatives by January 1, 2012. The report must include specific recommendations for legislative action during the 2012 regular session of the legislature.

          The entire 23-page bill can be reviewed at   http://www.flsenate.gov/Session/Bill/2011/1128/BillText/er/HTML

 

          B. SB 2100:

  • Effective July 1, 2011, all Florida Retirement System members are required to make employee contributions of 3% of compensation (“picked-up” by employer). Participants in Deferred Retirement Option Program are not required to make employee contributions. 
  • For employees initially enrolled on or after July 1, 2011, the definition of "average final compensation" means the average of the 8 highest fiscal years of compensation for creditable service prior to retirement, for purposes of calculation of retirement benefits. For employees initially enrolled prior to July 1, 2011, the definition of "average final compensation" continues to be the average of the 5 highest fiscal years of compensation. 
  • For employees initially enrolled in the FRS pension plan on or after July 1, 2011, such members will vest in 100% of employer contributions upon completion of 8 years of creditable service. For existing employees, vesting will remain at 6 years of creditable service.
  • For employees, initially enrolled on or after July 1, 2011, normal retirement age and years of service requirements are as follows:
  •                              (1) Special Risk Class -- increases the age from 55                                       to 60 years of age; and
                                 (2) For all other classes -- Increases the age from                               62 to 65 and increases years of credible service                                        from 30 to 33 years.
  • DROP is maintained, and employees entering DROP on or after July 1, 2011 will earn interest at a reduced accrual rate of 1.3%. For employees currently in DROP or entering before July 1, 2011, the interest rate remains 6.5%. 
  • The cost-of-living adjustment for service earned on or after July 1, 2011 is eliminated. Subject to the availability of funding and the Legislature enacting sufficient employer contributions specifically for the purpose of funding the reinstatement of the COLA, the new COLA formula will expire effective June 30, 2016, and the current 3% cost-of-living adjustment will be reinstated.

          The entire 201-page bill can be reviewed at http://www.flsenate.gov/Session/Bill/2011/2100/BillText/er/HTML.

 

 

 

 

 

Copyright, 1996-2011, all rights reserved.

Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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