Bill Text: FL S0224 | 2023 | Regular Session | Comm Sub


Bill Title: Special Risk Class Retirement Date

Spectrum: Bipartisan Bill

Status: (Failed) 2023-05-05 - Died in Appropriations [S0224 Detail]

Download: Florida-2023-S0224-Comm_Sub.html
       Florida Senate - 2023                              CS for SB 224
       
       
        
       By the Committee on Governmental Oversight and Accountability;
       and Senators Hooper, Berman, Gruters, Collins, Harrell, Brodeur,
       Boyd, Polsky, Osgood, DiCeglie, Torres, Wright, Rouson,
       Trumbull, Pizzo, Book, Powell, Burgess, and Davis
       
       
       585-02906-23                                           2023224c1
    1                        A bill to be entitled                      
    2         An act relating to Special Risk Class retirement date;
    3         amending s. 121.021, F.S.; revising the definition of
    4         “normal retirement date”; decreasing the age and years
    5         of service needed to reach the normal retirement date
    6         for certain members; amending ss. 121.091 and
    7         121.4501, F.S.; conforming provisions to changes made
    8         by the act; authorizing certain members of the Special
    9         Risk Class to apply to participate in the Deferred
   10         Retirement Option Program within a specified time
   11         period; revising required employer retirement
   12         contribution rates to fund the benefit changes made by
   13         the act; providing a directive to the Division of Law
   14         Revision; providing a declaration of important state
   15         interest; providing an effective date.
   16          
   17  Be It Enacted by the Legislature of the State of Florida:
   18  
   19         Section 1. Paragraph (b) of subsection (29) of section
   20  121.021, Florida Statutes, is amended to read:
   21         121.021 Definitions.—The following words and phrases as
   22  used in this chapter have the respective meanings set forth
   23  unless a different meaning is plainly required by the context:
   24         (29) “Normal retirement date” means the date a member
   25  attains normal retirement age and is vested, which is determined
   26  as follows:
   27         (b) For If a Special Risk Class members member initially
   28  enrolled:
   29         1.Before July 1, 2011:
   30         1.a. The first day of the month the member attains age 55
   31  and completes the years of creditable service in the Special
   32  Risk Class equal to or greater than the years of service
   33  required for vesting;
   34         2.b. The first day of the month following the date the
   35  member completes 25 years of creditable service in the Special
   36  Risk Class, regardless of age; or
   37         3.c. The first day of the month following the date the
   38  member completes 25 years of creditable service and attains age
   39  52, which service may include a maximum of 4 years of military
   40  service credit if such credit is not claimed under any other
   41  system and the remaining years are in the Special Risk Class.
   42         2.On or after July 1, 2011:
   43         a.The first day of the month the member attains age 60 and
   44  completes the years of creditable service in the Special Risk
   45  Class equal to or greater than the years of service required for
   46  vesting;
   47         b.The first day of the month following the date the member
   48  completes 30 years of creditable service in the Special Risk
   49  Class, regardless of age; or
   50         c.The first day of the month following the date the member
   51  completes 30 years of creditable service and attains age 57,
   52  which service may include a maximum of 4 years of military
   53  service credit if such credit is not claimed under any other
   54  system and the remaining years are in the Special Risk Class.
   55  
   56  For pension plan members, normal retirement age is attained on
   57  the normal retirement date. For investment plan members, normal
   58  retirement age is the date a member attains his or her normal
   59  retirement date as provided in this section, or the date a
   60  member is vested under the investment plan as provided in s.
   61  121.4501(6), whichever is later.
   62         Section 2. Subsection (3) and paragraph (a) of subsection
   63  (13) of section 121.091, Florida Statutes, are amended to read:
   64         121.091 Benefits payable under the system.—Benefits may not
   65  be paid under this section unless the member has terminated
   66  employment as provided in s. 121.021(39)(a) or begun
   67  participation in the Deferred Retirement Option Program as
   68  provided in subsection (13), and a proper application has been
   69  filed in the manner prescribed by the department. The department
   70  may cancel an application for retirement benefits when the
   71  member or beneficiary fails to timely provide the information
   72  and documents required by this chapter and the department’s
   73  rules. The department shall adopt rules establishing procedures
   74  for application for retirement benefits and for the cancellation
   75  of such application when the required information or documents
   76  are not received.
   77         (3) EARLY RETIREMENT BENEFIT.—Upon retirement on his or her
   78  early retirement date, the member shall receive an immediate
   79  monthly benefit that shall begin to accrue on the first day of
   80  the month of the retirement date and be payable on the last day
   81  of that month and each month thereafter during his or her
   82  lifetime. Such benefit shall be calculated as follows:
   83         (a)1. For all Special Risk Class members or a member of the
   84  Regular Class, Senior Management Service Class, or the Elected
   85  Officers’ Class initially enrolled:
   86         1. before July 1, 2011, the amount of each monthly payment
   87  shall be computed in the same manner as for a normal retirement
   88  benefit, in accordance with subsection (1), but shall be based
   89  on the member’s average monthly compensation and creditable
   90  service as of the member’s early retirement date. The benefit so
   91  computed shall be reduced by five-twelfths of 1 percent for each
   92  complete month by which the early retirement date precedes the
   93  normal retirement date of age 62 for a member of the Regular
   94  Class, Senior Management Service Class, or the Elected Officers’
   95  Class, and age 55 for a member of the Special Risk Class, or age
   96  52 if a Special Risk member has completed 25 years of creditable
   97  service in accordance with s. 121.021(29)(b)3. s.
   98  121.021(29)(b)1.c.
   99         2. For a member of the Regular Class, Senior Management
  100  Service Class, or the Elected Officers’ Class initially enrolled
  101  on or after July 1, 2011, the amount of each monthly payment
  102  shall be computed in the same manner as for a normal retirement
  103  benefit, in accordance with subsection (1), but shall be based
  104  on the member’s average monthly compensation and creditable
  105  service as of the member’s early retirement date. The benefit so
  106  computed shall be reduced by five-twelfths of 1 percent for each
  107  complete month by which the early retirement date precedes the
  108  normal retirement date of age 65 for a member of the Regular
  109  Class, Senior Management Service Class, or the Elected Officers’
  110  Class, and age 60 for a member of the Special Risk Class, or age
  111  57 if a special risk member has completed 30 years of creditable
  112  service in accordance with s. 121.021(29)(b)2.c.
  113         (b) If the employment of a member is terminated by reason
  114  of death within 10 years before normal retirement as described
  115  in s. 121.021(29)(a)1.b. or s. 121.021(29)(a)2.b., the monthly
  116  benefit payable to the member’s beneficiary shall be calculated
  117  in accordance with subsection (1), but must be based on average
  118  monthly compensation and creditable service as of the date of
  119  death. The benefit so computed shall be reduced by five-twelfths
  120  of 1 percent for each complete month by which death precedes the
  121  normal retirement date specified above or the date on which the
  122  member would have attained the normal retirement date had he or
  123  she survived and continued his or her employment, whichever
  124  provides a higher benefit.
  125         (13) DEFERRED RETIREMENT OPTION PROGRAM.—In general, and
  126  subject to this section, the Deferred Retirement Option Program,
  127  hereinafter referred to as DROP, is a program under which an
  128  eligible member of the Florida Retirement System may elect to
  129  participate, deferring receipt of retirement benefits while
  130  continuing employment with his or her Florida Retirement System
  131  employer. The deferred monthly benefits shall accrue in the
  132  Florida Retirement System on behalf of the member, plus interest
  133  compounded monthly, for the specified period of the DROP
  134  participation, as provided in paragraph (c). Upon termination of
  135  employment, the member shall receive the total DROP benefits and
  136  begin to receive the previously determined normal retirement
  137  benefits. Participation in the DROP does not guarantee
  138  employment for the specified period of DROP. Participation in
  139  DROP by an eligible member beyond the initial 60-month period as
  140  authorized in this subsection shall be on an annual contractual
  141  basis for all participants.
  142         (a) Eligibility of member to participate in DROP.—All
  143  active Florida Retirement System members in a regularly
  144  established position, and all active members of the Teachers’
  145  Retirement System established in chapter 238 or the State and
  146  County Officers’ and Employees’ Retirement System established in
  147  chapter 122, which are consolidated within the Florida
  148  Retirement System under s. 121.011, are eligible to elect
  149  participation in DROP if:
  150         1. The member is not a renewed member under s. 121.122 or a
  151  member of the State Community College System Optional Retirement
  152  Program under s. 121.051, the Senior Management Service Optional
  153  Annuity Program under s. 121.055, or the optional retirement
  154  program for the State University System under s. 121.35.
  155         2. Except as provided in subparagraph 6., for all Special
  156  Risk Class members and Regular Class, Senior Management Service
  157  Class, or Elected Officers’ Class members initially enrolled
  158  before July 1, 2011, election to participate is made within 12
  159  months immediately following the date on which the member first
  160  reaches normal retirement date, or, for a member who reaches
  161  normal retirement date based on service before he or she reaches
  162  age 62, or age 55 for Special Risk Class members, election to
  163  participate may be deferred to the 12 months immediately
  164  following the date the member attains age 57, or age 52 for
  165  Special Risk Class members. Except as provided in subparagraph
  166  6., for Regular Class, Senior Management Service Class, or
  167  Elected Officers’ Class members initially enrolled on or after
  168  July 1, 2011, election to participate is made within 12 months
  169  immediately following the date on which the member first reaches
  170  normal retirement date, or, for a member who reaches normal
  171  retirement date based on service before he or she reaches age
  172  65, or age 60 for Special Risk Class members, election to
  173  participate may be deferred to the 12 months immediately
  174  following the date the member attains age 60, or age 55 for
  175  Special Risk Class members. A member who delays DROP
  176  participation during the 12-month period immediately following
  177  his or her maximum DROP deferral date, except as provided in
  178  subparagraph 6., loses a month of DROP participation for each
  179  month delayed. A member who fails to make an election within the
  180  12-month limitation period forfeits all rights to participate in
  181  DROP. The member shall advise his or her employer and the
  182  division in writing of the date DROP begins. The beginning date
  183  may be subsequent to the 12-month election period but must be
  184  within the original 60-month participation period provided in
  185  subparagraph (b)1. When establishing eligibility to participate
  186  in DROP, the member may elect to include or exclude any optional
  187  service credit purchased by the member from the total service
  188  used to establish the normal retirement date. A member who has
  189  dual normal retirement dates is eligible to elect to participate
  190  in DROP after attaining normal retirement date in either class.
  191         3. The employer of a member electing to participate in
  192  DROP, or employers if dually employed, shall acknowledge in
  193  writing to the division the date the member’s participation in
  194  DROP begins and the date the member’s employment and DROP
  195  participation terminates.
  196         4. Simultaneous employment of a member by additional
  197  Florida Retirement System employers subsequent to the
  198  commencement of a member’s participation in DROP is permissible
  199  if such employers acknowledge in writing a DROP termination date
  200  no later than the member’s existing termination date or the
  201  maximum participation period provided in subparagraph (b)1.
  202         5. A member may change employers while participating in
  203  DROP, subject to the following:
  204         a. A change of employment takes place without a break in
  205  service so that the member receives salary for each month of
  206  continuous DROP participation. If a member receives no salary
  207  during a month, DROP participation ceases unless the employer
  208  verifies a continuation of the employment relationship for such
  209  member pursuant to s. 121.021(39)(b).
  210         b. The member and new employer notify the division of the
  211  identity of the new employer on forms required by the division.
  212         c. The new employer acknowledges, in writing, the member’s
  213  DROP termination date, which may be extended but not beyond the
  214  maximum participation period provided in subparagraph (b)1.,
  215  acknowledges liability for any additional retirement
  216  contributions and interest required if the member fails to
  217  timely terminate employment, and is subject to the adjustment
  218  required in sub-subparagraph (c)5.d.
  219         6. Effective July 1, 2001, for instructional personnel as
  220  defined in s. 1012.01(2), election to participate in DROP may be
  221  made at any time following the date on which the member first
  222  reaches normal retirement date. The member shall advise his or
  223  her employer and the division in writing of the date on which
  224  DROP begins. When establishing eligibility of the member to
  225  participate in DROP for the 60-month participation period
  226  provided in subparagraph (b)1., the member may elect to include
  227  or exclude any optional service credit purchased by the member
  228  from the total service used to establish the normal retirement
  229  date. A member who has dual normal retirement dates is eligible
  230  to elect to participate in either class.
  231         Section 3. Paragraph (b) of subsection (3) of section
  232  121.4501, Florida Statutes, is amended to read:
  233         121.4501 Florida Retirement System Investment Plan.—
  234         (3) RETIREMENT SERVICE CREDIT; TRANSFER OF BENEFITS.—
  235         (b) Notwithstanding paragraph (a), an eligible employee who
  236  elects to participate in, or who defaults into, the investment
  237  plan and establishes one or more individual member accounts may
  238  elect to transfer to the investment plan a sum representing the
  239  present value of the employee’s accumulated benefit obligation
  240  under the pension plan, except as provided in paragraph (4)(b).
  241  Upon transfer, all service credit earned under the pension plan
  242  is nullified for purposes of entitlement to a future benefit
  243  under the pension plan. A member may not transfer the
  244  accumulated benefit obligation balance from the pension plan
  245  after the time period for enrolling in the investment plan has
  246  expired.
  247         1. For purposes of this subsection, the present value of
  248  the member’s accumulated benefit obligation is based upon the
  249  member’s estimated creditable service and estimated average
  250  final compensation under the pension plan, subject to
  251  recomputation under subparagraph 2. For state employees, initial
  252  estimates shall be based upon creditable service and average
  253  final compensation as of midnight on June 30, 2002; for district
  254  school board employees, initial estimates shall be based upon
  255  creditable service and average final compensation as of midnight
  256  on September 30, 2002; and for local government employees,
  257  initial estimates shall be based upon creditable service and
  258  average final compensation as of midnight on December 31, 2002.
  259  The dates specified are the “estimate date” for these employees.
  260  The actuarial present value of the employee’s accumulated
  261  benefit obligation shall be based on the following:
  262         a. The discount rate and other relevant actuarial
  263  assumptions used to value the Florida Retirement System Trust
  264  Fund at the time the amount to be transferred is determined,
  265  consistent with the factors provided in sub-subparagraphs b. and
  266  c.
  267         b. A benefit commencement age, based on the member’s
  268  estimated creditable service as of the estimate date.
  269         c. Except as provided under sub-subparagraph d., for a
  270  member initially enrolled:
  271         (I) Before July 1, 2011, the benefit commencement age is
  272  the younger of the following, but may not be younger than the
  273  member’s age as of the estimate date:
  274         (A) Age 62; or
  275         (B) The age the member would attain if the member completed
  276  30 years of service with an employer, assuming the member worked
  277  continuously from the estimate date, and disregarding any
  278  vesting requirement that would otherwise apply under the pension
  279  plan.
  280         (II) On or after July 1, 2011, the benefit commencement age
  281  is the younger of the following, but may not be younger than the
  282  member’s age as of the estimate date:
  283         (A) Age 65; or
  284         (B) The age the member would attain if the member completed
  285  33 years of service with an employer, assuming the member worked
  286  continuously from the estimate date, and disregarding any
  287  vesting requirement that would otherwise apply under the pension
  288  plan.
  289         d. For members of the Special Risk Class and for members of
  290  the Special Risk Administrative Support Class entitled to retain
  291  the special risk normal retirement date:
  292         (I)Initially enrolled before July 1, 2011, the benefit
  293  commencement age is the younger of the following, but may not be
  294  younger than the member’s age as of the estimate date:
  295         (I)(A) Age 55; or
  296         (II)(B) The age the member would attain if the member
  297  completed 25 years of service with an employer, assuming the
  298  member worked continuously from the estimate date, and
  299  disregarding any vesting requirement that would otherwise apply
  300  under the pension plan.
  301         (II)Initially enrolled on or after July 1, 2011, the
  302  benefit commencement age is the younger of the following, but
  303  may not be younger than the member’s age as of the estimate
  304  date:
  305         (A)Age 60; or
  306         (B)The age the member would attain if the member completed
  307  30 years of service with an employer, assuming the member worked
  308  continuously from the estimate date, and disregarding any
  309  vesting requirement that would otherwise apply under the pension
  310  plan.
  311         e. The calculation must disregard vesting requirements and
  312  early retirement reduction factors that would otherwise apply
  313  under the pension plan.
  314         2. For each member who elects to transfer moneys from the
  315  pension plan to his or her account in the investment plan, the
  316  division shall recompute the amount transferred under
  317  subparagraph 1. within 60 days after the actual transfer of
  318  funds based upon the member’s actual creditable service and
  319  actual final average compensation as of the initial date of
  320  participation in the investment plan. If the recomputed amount
  321  differs from the amount transferred by $10 or more, the division
  322  shall:
  323         a. Transfer, or cause to be transferred, from the Florida
  324  Retirement System Trust Fund to the member’s account the excess,
  325  if any, of the recomputed amount over the previously transferred
  326  amount together with interest from the initial date of transfer
  327  to the date of transfer under this subparagraph, based upon the
  328  effective annual interest equal to the assumed return on the
  329  actuarial investment which was used in the most recent actuarial
  330  valuation of the system, compounded annually.
  331         b. Transfer, or cause to be transferred, from the member’s
  332  account to the Florida Retirement System Trust Fund the excess,
  333  if any, of the previously transferred amount over the recomputed
  334  amount, together with interest from the initial date of transfer
  335  to the date of transfer under this subparagraph, based upon 6
  336  percent effective annual interest, compounded annually, pro rata
  337  based on the member’s allocation plan.
  338         3. If contribution adjustments are made as a result of
  339  employer errors or corrections, including plan corrections,
  340  following recomputation of the amount transferred under
  341  subparagraph 1., the member is entitled to the additional
  342  contributions or is responsible for returning any excess
  343  contributions resulting from the correction. However, a return
  344  of such erroneous excess pretax contribution by the plan must be
  345  made within the period allowed by the Internal Revenue Service.
  346  The present value of the member’s accumulated benefit obligation
  347  may not be recalculated.
  348         4. As directed by the member, the state board shall
  349  transfer or cause to be transferred the appropriate amounts to
  350  the designated accounts within 30 days after the effective date
  351  of the member’s participation in the investment plan unless the
  352  major financial markets for securities available for a transfer
  353  are seriously disrupted by an unforeseen event that causes the
  354  suspension of trading on a national securities exchange in the
  355  country where the securities were issued. In that event, the 30
  356  day period may be extended by a resolution of the state board.
  357  Transfers are not commissionable or subject to other fees and
  358  may be in the form of securities or cash, as determined by the
  359  state board. Such securities are valued as of the date of
  360  receipt in the member’s account.
  361         5. If the state board or the division receives notification
  362  from the United States Internal Revenue Service that this
  363  paragraph or any portion of this paragraph will cause the
  364  retirement system, or a portion thereof, to be disqualified for
  365  tax purposes under the Internal Revenue Code, the portion that
  366  will cause the disqualification does not apply. Upon such
  367  notice, the state board and the division shall notify the
  368  presiding officers of the Legislature.
  369         Section 4. Members of the Special Risk Class of the Florida
  370  Retirement System who have not reached eligibility for
  371  participation in the Deferred Retirement Option Program (DROP)
  372  and who would be past their 12-month DROP election limitation
  373  period upon enactment of this act may apply for participation in
  374  DROP within the 12 months immediately following the effective
  375  date of this act.
  376         Section 5. (1)In order to fund the benefit changes
  377  provided in this act, the required employer contribution rates
  378  for the members of the Florida Retirement System established in
  379  s. 121.71(4), Florida Statutes, are increased as follows:
  380         (a) By 0.87 percentage point for the Special Risk Class.
  381         (b) By 0.20 percentage point for the Deferred Retirement
  382  Option Program.
  383         (2)In order to fund the benefit changes provided in this
  384  act, the required employer contribution rates for the unfunded
  385  actuarial liability of the Florida Retirement System established
  386  in s. 121.71(5), Florida Statutes, are increased by 0.40
  387  percentage point for the Special Risk Class.
  388         (3)The adjustments provided in subsections (1) and (2) are
  389  in addition to any other changes to such contribution rates
  390  which may be enacted into law to take effect on July 1, 2023.
  391  The Division of Law Revision is directed to adjust accordingly
  392  the contribution rates provided in s. 121.71, Florida Statutes.
  393         Section 6. The Legislature finds that a proper and
  394  legitimate state purpose is served when employees and retirees
  395  of the state and its political subdivisions, and the dependents,
  396  survivors, and beneficiaries of such employees and retirees, are
  397  extended the basic protections afforded by governmental
  398  retirement systems that provide fair and adequate benefits and
  399  that are managed, administered, and funded in an actuarially
  400  sound manner as required by s. 14, Article X of the State
  401  Constitution and part VII of chapter 112, Florida Statutes.
  402  Therefore, the Legislature determines and declares that this act
  403  fulfills an important state interest.
  404         Section 7. This act shall take effect July 1, 2023.

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