Bill Text: FL S1392 | 2013 | Regular Session | Comm Sub
Bill Title: Retirement
Spectrum: Slight Partisan Bill (? 2-1)
Status: (Introduced - Dead) 2013-04-30 - Laid on Table [S1392 Detail]
Download: Florida-2013-S1392-Comm_Sub.html
Florida Senate - 2013 CS for CS for SB 1392 By the Committees on Appropriations; and Governmental Oversight and Accountability; and Senator Simpson 576-03205-13 20131392c2 1 A bill to be entitled 2 An act relating to retirement; amending s. 121.021, 3 F.S.; revising the definition of “vested” or 4 “vesting”; providing that a member initially enrolled 5 in the Florida Retirement System after a certain date 6 is vested in the pension plan after 10 years of 7 creditable service; amending s. 121.051, F.S.; 8 providing for compulsory membership in the Florida 9 Retirement System Investment Plan for employees in the 10 Elected Officers’ Class or the Senior Management 11 Service Class initially enrolled after a specified 12 date; conforming cross-references to changes made by 13 the act; amending s. 121.052, F.S.; prohibiting 14 members of the Elected Officers’ Class from joining 15 the Senior Management Service Class after a specified 16 date; amending s. 121.055, F.S.; prohibiting an 17 elected official eligible for membership in the 18 Elected Officers’ Class from enrolling in the Senior 19 Management Service Class or in the Senior Management 20 Service Optional Annuity Program; closing the Senior 21 Management Optional Annuity Program to new members 22 after a specified date; amending s. 121.091, F.S.; 23 providing that certain members are entitled to a 24 monthly disability benefit; revising provisions to 25 conform to changes made by the act; amending s. 26 121.4501, F.S.; requiring certain employees initially 27 enrolled in the Florida Retirement System on or after 28 a specified date to be compulsory members of the 29 investment plan; revising the definition of “member” 30 or “employee”; revising a provision relating to 31 acknowledgement of an employee’s election to 32 participate in the investment plan; placing certain 33 employees in the pension plan from their date of hire 34 until they are automatically enrolled in the 35 investment plan or timely elect enrollment in the 36 pension plan; authorizing certain employees to elect 37 to participate in the pension plan, rather than the 38 default investment plan, within a specified time; 39 providing for the transfer of certain contributions; 40 revising the education component; deleting the 41 obligation of system employers to communicate the 42 existence of both retirement plans; conforming 43 provisions and cross-references to changes made by the 44 act; amending s. 121.591, F.S.; revising provisions 45 relating to disability retirement benefits; amending 46 s. 121.71, F.S.; decreasing the employee retirement 47 contribution rates for investment plan members; 48 amending ss. 121.35, 238.072, 413.051, and 1012.875, 49 F.S.; conforming cross-references; providing that the 50 act fulfills an important state interest; providing an 51 effective date. 52 53 Be It Enacted by the Legislature of the State of Florida: 54 55 Section 1. Subsection (45) of section 121.021, Florida 56 Statutes, is amended to read: 57 121.021 Definitions.—The following words and phrases as 58 used in this chapter have the respective meanings set forth 59 unless a different meaning is plainly required by the context: 60 (45) “Vested” or “vesting” means the guarantee that a 61 member is eligible to receive a future retirement benefit upon 62 completion of the required years of creditable service for the 63 employee’s class of membership, even though the member may have 64 terminated covered employment before reaching normal or early 65 retirement date. Being vested does not entitle a member to a 66 disability benefit. Provisions governing entitlement to 67 disability benefits are set forth under s. 121.091(4). 68 (a) Effective July 1, 2001, through June 30, 2011, a 6-year 69 vesting requirement shall be implemented for the Florida 70 Retirement System Pension Plan: 71 1. Any member employed in a regularly established position 72 on July 1, 2001, who completes or has completed a total of 6 73 years of creditable service is considered vested. 74 2. Any member initially enrolled in the Florida Retirement 75 System before July 1, 2001, but not employed in a regularly 76 established position on July 1, 2001, shall be deemed vested 77 upon completion of 6 years of creditable service if such member 78 is employed in a covered position for at least 1 work year after 79 July 1, 2001. However, a member is not required to complete more 80 years of creditable service than would have been required for 81 that member to vest under retirement laws in effect before July 82 1, 2001. 83 3. Any member initially enrolled in the Florida Retirement 84 System on July 1, 2001, through June 30, 2011, shall be deemed 85 vested upon completion of 6 years of creditable service. 86 (b) Any member initially enrolled in the Florida Retirement 87 System onor afterJuly 1, 2011, through June 30, 2014, shall be 88 vested in the pension plan upon completion of 8 years of 89 creditable service. 90 (c) Any member initially enrolled in the Florida Retirement 91 System on or after July 1, 2014, shall be vested in the pension 92 plan upon completion of 10 years of creditable service. 93 Section 2. Paragraph (c) of subsection (2) of section 94 121.051, Florida Statutes, is amended, present subsections (3) 95 through (9) of that section are renumbered as subsections (4) 96 through (10), respectively, and a new subsection (3) is added to 97 that section, to read: 98 121.051 Participation in the system.— 99 (2) OPTIONAL PARTICIPATION.— 100 (c) Employees of public community colleges or charter 101 technical career centers sponsored by public community colleges, 102 designated in s. 1000.21(3), who are members of the Regular 103 Class of the Florida Retirement System and who comply with the 104 criteria set forth in this paragraph and s. 1012.875 may, in 105 lieu of participating in the Florida Retirement System, elect to 106 withdraw from the system altogether and participate in the State 107 Community College System Optional Retirement Program provided by 108 the employing agency under s. 1012.875. 109 1.a. Through June 30, 2001, the cost to the employer for 110 benefits under the optional retirement program equals the normal 111 cost portion of the employer retirement contribution which would 112 be required if the employee were a member of the pension plan’s 113 Regular Class, plus the portion of the contribution rate 114 required by s. 112.363(8) which would otherwise be assigned to 115 the Retiree Health Insurance Subsidy Trust Fund. 116 b. Effective July 1, 2001, through June 30, 2011, each 117 employer shall contribute on behalf of each member of the 118 optional program an amount equal to 10.43 percent of the 119 employee’s gross monthly compensation. The employer shall deduct 120 an amount for the administration of the program. 121 c. Effective July 1, 2011, through June 30, 2012, each 122 member shall contribute an amount equal to the employee 123 contribution required under s. 121.71(3)(a). The employer shall 124 contribute on behalf of each program member an amount equal to 125 the difference between 10.43 percent of the employee’s gross 126 monthly compensation and the employee’s required contribution 127 based on the employee’s gross monthly compensation. 128 d. Effective July 1, 2012, each member shall contribute an 129 amount equal to the employee contribution required under s. 130 121.71(3)(a). The employer shall contribute on behalf of each 131 program member an amount equal to the difference between 8.15 132 percent of the employee’s gross monthly compensation and the 133 employee’s required contribution based on the employee’s gross 134 monthly compensation. 135 e. The employer shall contribute an additional amount to 136 the Florida Retirement System Trust Fund equal to the unfunded 137 actuarial accrued liability portion of the Regular Class 138 contribution rate. 139 2. The decision to participate in the optional retirement 140 program is irrevocable as long as the employee holds a position 141 eligible for participation, except as provided in subparagraph 142 3. Any service creditable under the Florida Retirement System is 143 retained after the member withdraws from the system; however, 144 additional service credit in the system may not be earned while 145 a member of the optional retirement program. 146 3. An employee who has elected to participate in the 147 optional retirement program shall have one opportunity, at the 148 employee’s discretion, to transfer from the optional retirement 149 program to the pension plan of the Florida Retirement System or 150 to the investment plan established under part II of this 151 chapter, subject to the terms of the applicable optional 152 retirement program contracts. 153 a. If the employee chooses to move to the investment plan, 154 any contributions, interest, and earnings creditable to the 155 employee under the optional retirement program are retained by 156 the employee in the optional retirement program, and the 157 applicable provisions of s. 121.4501(4) govern the election. 158 b. If the employee chooses to move to the pension plan of 159 the Florida Retirement System, the employee shall receive 160 service credit equal to his or her years of service under the 161 optional retirement program. 162 (I) The cost for such credit is the amount representing the 163 present value of the employee’s accumulated benefit obligation 164 for the affected period of service. The cost shall be calculated 165 as if the benefit commencement occurs on the first date the 166 employee becomes eligible for unreduced benefits, using the 167 discount rate and other relevant actuarial assumptions that were 168 used to value the Florida Retirement System Pension Plan 169 liabilities in the most recent actuarial valuation. The 170 calculation must include any service already maintained under 171 the pension plan in addition to the years under the optional 172 retirement program. The present value of any service already 173 maintained must be applied as a credit to total cost resulting 174 from the calculation. The division must ensure that the transfer 175 sum is prepared using a formula and methodology certified by an 176 enrolled actuary. 177 (II) The employee must transfer from his or her optional 178 retirement program account and from other employee moneys as 179 necessary, a sum representing the present value of the 180 employee’s accumulated benefit obligation immediately following 181 the time of such movement, determined assuming that attained 182 service equals the sum of service in the pension plan and 183 service in the optional retirement program. 184 4. Participation in the optional retirement program is 185 limited to employees who satisfy the following eligibility 186 criteria: 187 a. The employee is otherwise eligible for membership or 188 renewed membership in the Regular Class of the Florida 189 Retirement System, as provided in s. 121.021(11) and (12) or s. 190 121.122. 191 b. The employee is employed in a full-time position 192 classified in the Accounting Manual for Florida’s Public 193 Community Colleges as: 194 (I) Instructional; or 195 (II) Executive Management, Instructional Management, or 196 Institutional Management and the community college determines 197 that recruiting to fill a vacancy in the position is to be 198 conducted in the national or regional market, and the duties and 199 responsibilities of the position include the formulation, 200 interpretation, or implementation of policies, or the 201 performance of functions that are unique or specialized within 202 higher education and that frequently support the mission of the 203 community college. 204 c. The employee is employed in a position not included in 205 the Senior Management Service Class of the Florida Retirement 206 System as described in s. 121.055. 207 5. Members of the program are subject to the same 208 reemployment limitations, renewed membership provisions, and 209 forfeiture provisions applicable to regular members of the 210 Florida Retirement System under ss. 121.091(9), 121.122, and 211 121.091(5), respectively. A member who receives a program 212 distribution funded by employer and required employee 213 contributions is deemed to be retired from a state-administered 214 retirement system if the member is subsequently employed with an 215 employer that participates in the Florida Retirement System. 216 6. Eligible community college employees are compulsory 217 members of the Florida Retirement System until, pursuant to s. 218 1012.875, a written election to withdraw from the system and 219 participate in the optional retirement program is filed with the 220 program administrator and received by the division. 221 a. A community college employee whose program eligibility 222 results from initial employment shall be enrolled in the 223 optional retirement program retroactive to the first day of 224 eligible employment. The employer and employee retirement 225 contributions paid through the month of the employee plan change 226 shall be transferred to the community college to the employee’s 227 optional program account, and, effective the first day of the 228 next month, the employer shall pay the applicable contributions 229 based upon subparagraph 1. 230 b. A community college employee whose program eligibility 231 is due to the subsequent designation of the employee’s position 232 as one of those specified in subparagraph 4., or due to the 233 employee’s appointment, promotion, transfer, or reclassification 234 to a position specified in subparagraph 4., must be enrolled in 235 the program on the first day of the first full calendar month 236 that such change in status becomes effective. The employer and 237 employee retirement contributions paid from the effective date 238 through the month of the employee plan change must be 239 transferred to the community college to the employee’s optional 240 program account, and, effective the first day of the next month, 241 the employer shall pay the applicable contributions based upon 242 subparagraph 1. 243 7. Effective July 1, 2003, through December 31, 2008, any 244 member of the optional retirement program who has service credit 245 in the pension plan of the Florida Retirement System for the 246 period between his or her first eligibility to transfer from the 247 pension plan to the optional retirement program and the actual 248 date of transfer may, during employment, transfer to the 249 optional retirement program a sum representing the present value 250 of the accumulated benefit obligation under the defined benefit 251 retirement program for the period of service credit. Upon 252 transfer, all service credit previously earned under the pension 253 plan during this period is nullified for purposes of entitlement 254 to a future benefit under the pension plan. 255 (3) INVESTMENT PLAN MEMBERSHIP COMPULSORY.— 256 (a) Employees initially enrolled on or after July 1, 2014, 257 in positions covered by the Elected Officers’ Class or the 258 Senior Management Service Class are compulsory members of the 259 investment plan, except those eligible to withdraw from the 260 system under s. 121.052(3)(d) or s. 121.055(1)(b)2., or those 261 eligible for optional retirement programs under paragraph 262 (1)(a), paragraph (2)(c), or s. 121.35. Investment plan 263 membership continues if there is subsequent employment in a 264 position covered by another membership class. Membership in the 265 pension plan is not permitted except as provided in s. 266 121.591(2). Employees initially enrolled in the Florida 267 Retirement System prior to July 1, 2014, may retain their 268 membership in the pension plan or investment plan and are 269 eligible to use the election opportunity specified in s. 270 121.4501(4)(f). Employees initially enrolled on or after July 1, 271 2014, are not eligible to use the election opportunity specified 272 in s. 121.4501(4)(f). 273 (b) Employees eligible to withdraw from the system under s. 274 121.052(3)(d) or s. 121.055(1)(b)2. may choose to withdraw from 275 the system or to participate in the investment plan as provided 276 in these sections. Employees eligible for optional retirement 277 programs under paragraph (2)(c) or s. 121.35 may choose to 278 participate in the optional retirement program or the investment 279 plan as provided in this paragraph or this section. Eligible 280 employees required to participate pursuant to (1)(a) in the 281 optional retirement program as provided under s. 121.35 must 282 participate in the investment plan when employed in a position 283 not eligible for the optional retirement program. 284 Section 3. Paragraph (c) of subsection (3) of section 285 121.052, Florida Statutes, is amended to read: 286 121.052 Membership class of elected officers.— 287 (3) PARTICIPATION AND WITHDRAWAL, GENERALLY.—Effective July 288 1, 1990, participation in the Elected Officers’ Class shall be 289 compulsory for elected officers listed in paragraphs (2)(a)-(d) 290 and (f) assuming office on or after said date, unless the 291 elected officer elects membership in another class or withdraws 292 from the Florida Retirement System as provided in paragraphs 293 (3)(a)-(d): 294 (c) Before July 1, 2014, any elected officer may, within 6 295 months after assuming office, or within 6 months after this act 296 becomes a law for serving elected officers, elect membership in 297 the Senior Management Service Class as provided in s. 121.055 in 298 lieu of membership in the Elected Officers’ Class. Any such 299 election made by a county elected officer shall have no effect 300 upon the statutory limit on the number of nonelective full-time 301 positions that may be designated by a local agency employer for 302 inclusion in the Senior Management Service Class under s. 303 121.055(1)(b)1. 304 Section 4. Paragraph (f) of subsection (1) and paragraph 305 (c) of subsection (6) of section 121.055, Florida Statutes, are 306 amended to read: 307 121.055 Senior Management Service Class.—There is hereby 308 established a separate class of membership within the Florida 309 Retirement System to be known as the “Senior Management Service 310 Class,” which shall become effective February 1, 1987. 311 (1) 312 (f) Effective July 1, 1997, through June 30, 2014: 313 1. Except as provided in subparagraphssubparagraph3. and 314 4., an elected state officer eligible for membership in the 315 Elected Officers’ Class under s. 121.052(2)(a), (b), or (c) who 316 elects membership in the Senior Management Service Class under 317 s. 121.052(3)(c) may, within 6 months after assuming office or 318 within 6 months after this act becomes a law for serving elected 319 state officers, elect to participate in the Senior Management 320 Service Optional Annuity Program, as provided in subsection (6), 321 in lieu of membership in the Senior Management Service Class. 322 2. Except as provided in subparagraphssubparagraph3. and 323 4., an elected officer of a local agency employer eligible for 324 membership in the Elected Officers’ Class under s. 121.052(2)(d) 325 who elects membership in the Senior Management Service Class 326 under s. 121.052(3)(c) may, within 6 months after assuming 327 office, or within 6 months after this act becomes a law for 328 serving elected officers of a local agency employer, elect to 329 withdraw from the Florida Retirement System, as provided in 330 subparagraph (b)2., in lieu of membership in the Senior 331 Management Service Class. 332 3. A retiree of a state-administered retirement system who 333 is initially reemployed in a regularly established position on 334 or after July 1, 2010, as an elected official eligible for the 335 Elected Officers’ Class may not be enrolled in renewed 336 membership in the Senior Management Service Class or in the 337 Senior Management Service Optional Annuity Program as provided 338 in subsection (6), and may not withdraw from the Florida 339 Retirement System as a renewed member as provided in 340 subparagraph (b)2., as applicable, in lieu of membership in the 341 Senior Management Service Class. 342 4. On or after July 1, 2014, an elected officer eligible 343 for membership in the Elected Officers’ Class may not be 344 enrolled in the Senior Management Service Class or in the Senior 345 Management Service Optional Annuity Program as provided in 346 subsection (6). 347 (6) 348 (c) Participation.— 349 1. An eligible employee who is employed on or before 350 February 1, 1987, may elect to participate in the optional 351 annuity program in lieu of participating in the Senior 352 Management Service Class. Such election must be made in writing 353 and filed with the department and the personnel officer of the 354 employer on or before May 1, 1987. An eligible employee who is 355 employed on or before February 1, 1987, and who fails to make an 356 election to participate in the optional annuity program by May 357 1, 1987, shall be deemed to have elected membership in the 358 Senior Management Service Class. 359 2. Except as provided in subparagraph 6., an employee who 360 becomes eligible to participate in the optional annuity program 361 by reason of initial employment commencing after February 1, 362 1987, may, within 90 days after the date of commencing 363 employment, elect to participate in the optional annuity 364 program. Such election must be made in writing and filed with 365 the personnel officer of the employer. An eligible employee who 366 does not within 90 days after commencing employment elect to 367 participate in the optional annuity program shall be deemed to 368 have elected membership in the Senior Management Service Class. 369 3. A person who is appointed to a position in the Senior 370 Management Service Class and who is a member of an existing 371 retirement system or the Special Risk or Special Risk 372 Administrative Support Classes of the Florida Retirement System 373 may elect to remain in such system or class in lieu of 374 participating in the Senior Management Service Class or optional 375 annuity program. Such election must be made in writing and filed 376 with the department and the personnel officer of the employer 377 within 90 days after such appointment. An eligible employee who 378 fails to make an election to participate in the existing system, 379 the Special Risk Class of the Florida Retirement System, the 380 Special Risk Administrative Support Class of the Florida 381 Retirement System, or the optional annuity program shall be 382 deemed to have elected membership in the Senior Management 383 Service Class. 384 4. Except as provided in subparagraph 5., an employee’s 385 election to participate in the optional annuity program is 386 irrevocable if the employee continues to be employed in an 387 eligible position and continues to meet the eligibility 388 requirements set forth in this paragraph. 389 5. Effective from July 1, 2002, through September 30, 2002, 390 an active employee in a regularly established position who has 391 elected to participate in the Senior Management Service Optional 392 Annuity Program has one opportunity to choose to move from the 393 Senior Management Service Optional Annuity Program to the 394 Florida Retirement System Pension Plan. 395 a. The election must be made in writing and must be filed 396 with the department and the personnel officer of the employer 397 before October 1, 2002, or, in the case of an active employee 398 who is on a leave of absence on July 1, 2002, within 90 days 399 after the conclusion of the leave of absence. This election is 400 irrevocable. 401 b. The employee shall receive service credit under the 402 pension plan equal to his or her years of service under the 403 Senior Management Service Optional Annuity Program. The cost for 404 such credit is the amount representing the present value of that 405 employee’s accumulated benefit obligation for the affected 406 period of service. 407 c. The employee must transfer the total accumulated 408 employer contributions and earnings on deposit in his or her 409 Senior Management Service Optional Annuity Program account. If 410 the transferred amount is not sufficient to pay the amount due, 411 the employee must pay a sum representing the remainder of the 412 amount due. The employee may not retain any employer 413 contributions or earnings from the Senior Management Service 414 Optional Annuity Program account. 415 6. A retiree of a state-administered retirement system who 416 is initially reemployed on or after July 1, 2010, may not renew 417 membership in the Senior Management Service Optional Annuity 418 Program. 419 7. Effective July 1, 2014, the Senior Management Service 420 Optional Annuity Program is closed to new members. Members 421 enrolled in the Senior Management Service Optional Annuity 422 Program before July 1, 2014, may retain their membership in the 423 annuity program. 424 Section 5. Paragraph (a) of subsection (4) of section 425 121.091, Florida Statutes, is amended to read: 426 121.091 Benefits payable under the system.—Benefits may not 427 be paid under this section unless the member has terminated 428 employment as provided in s. 121.021(39)(a) or begun 429 participation in the Deferred Retirement Option Program as 430 provided in subsection (13), and a proper application has been 431 filed in the manner prescribed by the department. The department 432 may cancel an application for retirement benefits when the 433 member or beneficiary fails to timely provide the information 434 and documents required by this chapter and the department’s 435 rules. The department shall adopt rules establishing procedures 436 for application for retirement benefits and for the cancellation 437 of such application when the required information or documents 438 are not received. 439 (4) DISABILITY RETIREMENT BENEFIT.— 440 (a) Disability retirement; entitlement and effective date.— 441 1.a. A member who becomes totally and permanently disabled, 442 as defined in paragraph (b), after completing 5 years of 443 creditable service, or a member who becomes totally and 444 permanently disabled in the line of duty regardless of service, 445 is entitled to a monthly disability benefit; except that any 446 member with less than 5 years of creditable service on July 1, 447 1980, or any person who becomes a member of the Florida 448 Retirement System on or after such date must have completed 10 449 years of creditable service before becoming totally and 450 permanently disabled in order to receive disability retirement 451 benefits for any disability which occurs other than in the line 452 of duty. However, if a member employed on July 1, 1980, who has 453 less than 5 years of creditable service as of that date becomes 454 totally and permanently disabled after completing 5 years of 455 creditable service and is found not to have attained fully 456 insured status for benefits under the federal Social Security 457 Act, such member is entitled to a monthly disability benefit. 458 b. Effective July 1, 2001, a member of the pension plan 459 initially enrolled before July 1, 2014, who becomes totally and 460 permanently disabled, as defined in paragraph (b), after 461 completing 8 years of creditable service, or a member who 462 becomes totally and permanently disabled in the line of duty 463 regardless of service, is entitled to a monthly disability 464 benefit. 465 c. Effective July 1, 2014, a member of the pension plan 466 initially enrolled on or after July 1, 2014, who becomes totally 467 and permanently disabled, as defined in paragraph (b), after 468 completing 10 years of creditable service, or a member who 469 becomes totally and permanently disabled in the line of duty 470 regardless of service, is entitled to a monthly disability 471 benefit. 472 2. If the division has received from the employer the 473 required documentation of the member’s termination of 474 employment, the effective retirement date for a member who 475 applies and is approved for disability retirement shall be 476 established by rule of the division. 477 3. For a member who is receiving Workers’ Compensation 478 payments, the effective disability retirement date may not 479 precede the date the member reaches Maximum Medical Improvement 480 (MMI), unless the member terminates employment before reaching 481 MMI. 482 Section 6. Subsection (1), paragraph (i) of subsection (2), 483 paragraph (b) of subsection (3), subsection (4), paragraph (c) 484 of subsection (5), subsection (8), and paragraphs (a), (b), (c), 485 and (h) of subsection (10) of section 121.4501, Florida 486 Statutes, are amended to read: 487 121.4501 Florida Retirement System Investment Plan.— 488 (1) The Trustees of the State Board of Administration shall 489 establish a defined contribution program called the “Florida 490 Retirement System Investment Plan” or “investment plan” for 491 members of the Florida Retirement System under which retirement 492 benefits will be provided for eligible employees who elect to 493 participate in the program and for employees initially enrolled 494 on or after July 1, 2014, in positions covered by the Elected 495 Officers’ Class or the Senior Management Service Class and are 496 compulsory members of the investment plan unless otherwise 497 eligible to withdraw from the system under s. 121.052(3)(d) or 498 s. 121.055(1)(b)2., or to participate in an optional retirement 499 program under s. 121.051(1)(a), s. 121.051(2)(c), or s. 121.35. 500 Investment plan membership continues if there is subsequent 501 employment in a position covered by another membership class. 502 The retirement benefits shall be provided through member 503 directed investments, in accordance with s. 401(a) of the 504 Internal Revenue Code and related regulations. The employer and 505 employee shall make contributions, as provided in this section 506 and ss. 121.571 and 121.71, to the Florida Retirement System 507 Investment Plan Trust Fund toward the funding of benefits. 508 (2) DEFINITIONS.—As used in this part, the term: 509 (i) “Member” or “employee” means an eligible employee who 510 enrolls in or is defaulted into the investment plan as provided 511 in subsection (4), a terminated Deferred Retirement Option 512 Program member as described in subsection (21), or a beneficiary 513 or alternate payee of a member or employee. 514 (3) RETIREMENT SERVICE CREDIT; TRANSFER OF BENEFITS.— 515 (b) Notwithstanding paragraph (a), an eligible employee who 516 elects to participate in or is defaulted into the investment 517 plan and establishes one or more individual member accounts may 518 elect to transfer to the investment plan a sum representing the 519 present value of the employee’s accumulated benefit obligation 520 under the pension plan, except as provided in paragraph (4)(b). 521 Upon transfer, all service credit earned under the pension plan 522 is nullified for purposes of entitlement to a future benefit 523 under the pension plan. A member may not transfer the 524 accumulated benefit obligation balance from the pension plan 525 after the time period for enrolling in the investment plan has 526 expired. 527 1. For purposes of this subsection, the present value of 528 the member’s accumulated benefit obligation is based upon the 529 member’s estimated creditable service and estimated average 530 final compensation under the pension plan, subject to 531 recomputation under subparagraph 2. For state employees, initial 532 estimates shall be based upon creditable service and average 533 final compensation as of midnight on June 30, 2002; for district 534 school board employees, initial estimates shall be based upon 535 creditable service and average final compensation as of midnight 536 on September 30, 2002; and for local government employees, 537 initial estimates shall be based upon creditable service and 538 average final compensation as of midnight on December 31, 2002. 539 The dates specified are the “estimate date” for these employees. 540 The actuarial present value of the employee’s accumulated 541 benefit obligation shall be based on the following: 542 a. The discount rate and other relevant actuarial 543 assumptions used to value the Florida Retirement System Trust 544 Fund at the time the amount to be transferred is determined, 545 consistent with the factors provided in sub-subparagraphs b. and 546 c. 547 b. A benefit commencement age, based on the member’s 548 estimated creditable service as of the estimate date. 549 c. Except as provided under sub-subparagraph d., for a 550 member initially enrolled: 551 (I) Before July 1, 2011, the benefit commencement age is 552 the younger of the following, but may not be younger than the 553 member’s age as of the estimate date: 554 (A) Age 62; or 555 (B) The age the member would attain if the member completed 556 30 years of service with an employer, assuming the member worked 557 continuously from the estimate date, and disregarding any 558 vesting requirement that would otherwise apply under the pension 559 plan. 560 (II) On or after July 1, 2011, the benefit commencement age 561 is the younger of the following, but may not be younger than the 562 member’s age as of the estimate date: 563 (A) Age 65; or 564 (B) The age the member would attain if the member completed 565 33 years of service with an employer, assuming the member worked 566 continuously from the estimate date, and disregarding any 567 vesting requirement that would otherwise apply under the pension 568 plan. 569 d. For members of the Special Risk Class and for members of 570 the Special Risk Administrative Support Class entitled to retain 571 the special risk normal retirement date: 572 (I) Initially enrolled before July 1, 2011, the benefit 573 commencement age is the younger of the following, but may not be 574 younger than the member’s age as of the estimate date: 575 (A) Age 55; or 576 (B) The age the member would attain if the member completed 577 25 years of service with an employer, assuming the member worked 578 continuously from the estimate date, and disregarding any 579 vesting requirement that would otherwise apply under the pension 580 plan. 581 (II) Initially enrolled on or after July 1, 2011, the 582 benefit commencement age is the younger of the following, but 583 may not be younger than the member’s age as of the estimate 584 date: 585 (A) Age 60; or 586 (B) The age the member would attain if the member completed 587 30 years of service with an employer, assuming the member worked 588 continuously from the estimate date, and disregarding any 589 vesting requirement that would otherwise apply under the pension 590 plan. 591 e. The calculation must disregard vesting requirements and 592 early retirement reduction factors that would otherwise apply 593 under the pension plan. 594 2. For each member who elects to transfer moneys from the 595 pension plan to his or her account in the investment plan, the 596 division shall recompute the amount transferred under 597 subparagraph 1. within 60 days after the actual transfer of 598 funds based upon the member’s actual creditable service and 599 actual final average compensation as of the initial date of 600 participation in the investment plan. If the recomputed amount 601 differs from the amount transferred by $10 or more, the division 602 shall: 603 a. Transfer, or cause to be transferred, from the Florida 604 Retirement System Trust Fund to the member’s account the excess, 605 if any, of the recomputed amount over the previously transferred 606 amount together with interest from the initial date of transfer 607 to the date of transfer under this subparagraph, based upon the 608 effective annual interest equal to the assumed return on the 609 actuarial investment which was used in the most recent actuarial 610 valuation of the system, compounded annually. 611 b. Transfer, or cause to be transferred, from the member’s 612 account to the Florida Retirement System Trust Fund the excess, 613 if any, of the previously transferred amount over the recomputed 614 amount, together with interest from the initial date of transfer 615 to the date of transfer under this subparagraph, based upon 6 616 percent effective annual interest, compounded annually, pro rata 617 based on the member’s allocation plan. 618 3. If contribution adjustments are made as a result of 619 employer errors or corrections, including plan corrections, 620 following recomputation of the amount transferred under 621 subparagraph 1., the member is entitled to the additional 622 contributions or is responsible for returning any excess 623 contributions resulting from the correction. However, any return 624 of such erroneous excess pretax contribution by the plan must be 625 made within the period allowed by the Internal Revenue Service. 626 The present value of the member’s accumulated benefit obligation 627 shall not be recalculated. 628 4. As directed by the member, the state board shall 629 transfer or cause to be transferred the appropriate amounts to 630 the designated accounts within 30 days after the effective date 631 of the member’s participation in the investment plan unless the 632 major financial markets for securities available for a transfer 633 are seriously disrupted by an unforeseen event that causes the 634 suspension of trading on any national securities exchange in the 635 country where the securities were issued. In that event, the 30 636 day period may be extended by a resolution of the state board. 637 Transfers are not commissionable or subject to other fees and 638 may be in the form of securities or cash, as determined by the 639 state board. Such securities are valued as of the date of 640 receipt in the member’s account. 641 5. If the state board or the division receives notification 642 from the United States Internal Revenue Service that this 643 paragraph or any portion of this paragraph will cause the 644 retirement system, or a portion thereof, to be disqualified for 645 tax purposes under the Internal Revenue Code, the portion that 646 will cause the disqualification does not apply. Upon such 647 notice, the state board and the division shall notify the 648 presiding officers of the Legislature. 649 (4) PARTICIPATION; ENROLLMENT.— 650 (a)1. Effective June 1, 2002, through February 28, 2003, a 651 90-day election period was provided to each eligible employee 652 participating in the Florida Retirement System, preceded by a 653 90-day education period, permitting each eligible employee to 654 elect membership in the investment plan, and an employee who 655 failed to elect the investment plan during the election period 656 remained in the pension plan. An eligible employee who was 657 employed in a regularly established position during the election 658 period was granted the option to make one subsequent election, 659 as provided in paragraph (f). With respect to an eligible 660 employee who did not participate in the initial election period 661 or who are initiallyemployee who isemployed in a regularly 662 established position after the close of the initial election 663 period but before July 1, 2014,on June 1, 2002, by a state664employer:665a. Any such employee may elect to participate in the666investment plan in lieu of retaining his or her membership in667the pension plan. The election must be made in writing or by668electronic means and must be filed with the third-party669administrator by August 31, 2002, or, in the case of an active670employee who is on a leave of absence on April 1, 2002, by the671last business day of the 5th month following the month the leave672of absence concludes. This election is irrevocable, except as673provided in paragraph (g). Upon making such election, the674employee shall be enrolled as a member of the investment plan,675the employee’s membership in the Florida Retirement System is676governed by the provisions of this part, and the employee’s677membership in the pension plan terminates. The employee’s678enrollment in the investment plan is effective the first day of679the month for which a full month’s employer contribution is made680to the investment plan.681b. Any such employee who fails to elect to participate in682the investment plan within the prescribed time period is deemed683to have elected to retain membership in the pension plan, and684the employee’s option to elect to participate in the investment685plan is forfeited.6862. With respect to employees who become eligible to687participate in the investment plan by reason of employment in a688regularly established position with a state employer commencing689after April 1, 2002:690a. Anysuch employee shall, by default, be enrolled in the 691 pension plan at the commencement of employment, and may, by the 692 last business day of the 5th month following the employee’s 693 month of hire, elect to participate in the investment plan. The 694 employee’s election must be made in writing or by electronic 695 means and must be filed with the third-party administrator. The 696 election to participate in the investment plan is irrevocable, 697 except as provided in paragraph (f)(g). 698 a.b.If the employee files such election within the 699 prescribed time period, enrollment in the investment plan is 700 effective on the first day of employment. The retirement 701 contributions paid through the month of the employee plan change 702 shall be transferred to the investment program, and, effective 703 the first day of the next month, the employer and employee must 704 pay the applicable contributions based on the employee 705 membership class in the program. 706 b.c.An employee who fails to elect to participate in the 707 investment plan within the prescribed time period is deemed to 708 have elected to retain membership in the pension plan, and the 709 employee’s option to elect to participate in the investment plan 710 is forfeited. 711 2.3.With respect to employees who become eligible to 712 participate in the investment plan pursuant to s. 713 121.051(2)(c)3. or s. 121.35(3)(i), the employee may elect to 714 participate in the investment plan in lieu of retaining his or 715 her membership in the State Community College System Optional 716 Retirement Program or the State University System Optional 717 Retirement Program. The election must be made in writing or by 718 electronic means and must be filed with the third-party 719 administrator. This election is irrevocable, except as provided 720 in paragraph (f)(g). Upon making such election, the employee 721 shall be enrolled as a member in the investment plan, the 722 employee’s membership in the Florida Retirement System is 723 governed by the provisions of this part, and the employee’s 724 participation in the State Community College System Optional 725 Retirement Program or the State University System Optional 726 Retirement Program terminates. The employee’s enrollment in the 727 investment plan is effective on the first day of the month for 728 which a full month’s employer and employee contribution is made 729 to the investment plan. 730 (b)1. With respect to employees who become eligible to 731 participate in the investment plan, except as provided in 732 paragraph (g), by reason of employment in a regularly 733 established position commencing on or after July 1, 2014, any 734 such employee shall be enrolled in the pension plan at the 735 commencement of employment and may, by the last business day of 736 the 5th month following the employee’s month of hire, elect to 737 participate in the pension plan or the investment plan. Eligible 738 employees may make a plan election only if they are earning 739 service credit in an employer-employee relationship consistent 740 with s. 121.021(17)(b), excluding leaves of absence without pay. 741 2. The employee’s election must be made in writing or by 742 electronic means and must be filed with the third-party 743 administrator. The election to participate in the pension plan 744 or investment plan is irrevocable, except as provided in 745 paragraph (f). 746 3. If the employee fails to make an election of the pension 747 plan or investment plan within 5 months following the month of 748 hire, the employee is deemed to have elected the investment plan 749 and will be defaulted into the investment plan retroactively to 750 the employee’s date of employment. The employee’s option to 751 participate in the pension plan is forfeited, except as provided 752 in paragraph (f). 753 4. The amount of the employee and employer contributions 754 paid before the default to the investment plan shall be 755 transferred to the investment plan and shall be placed in a 756 default fund as designated by the State Board of Administration. 757 The employee may move the contributions once an account is 758 activated in the investment plan. 759 5. Effective the first day of the month after an eligible 760 employee makes a plan election of the pension plan or investment 761 plan, or after the month of default to the investment plan, the 762 employee and employer shall pay the applicable contributions 763 based on the employee membership class in the pension plan or 764 investment plan. 7654. For purposes of this paragraph, “state employer” means766any agency, board, branch, commission, community college,767department, institution, institution of higher education, or768water management district of the state, which participates in769the Florida Retirement System for the benefit of certain770employees.771(b)1. With respect to an eligible employee who is employed772in a regularly established position on September 1, 2002, by a773district school board employer:774a. Any such employee may elect to participate in the775investment plan in lieu of retaining his or her membership in776the pension plan. The election must be made in writing or by777electronic means and must be filed with the third-party778administrator by November 30, or, in the case of an active779employee who is on a leave of absence on July 1, 2002, by the780last business day of the 5th month following the month the leave781of absence concludes. This election is irrevocable, except as782provided in paragraph (g). Upon making such election, the783employee shall be enrolled as a member of the investment plan,784the employee’s membership in the Florida Retirement System is785governed by the provisions of this part, and the employee’s786membership in the pension plan terminates. The employee’s787enrollment in the investment plan is effective the first day of788the month for which a full month’s employer contribution is made789to the investment program.790b. Any such employee who fails to elect to participate in791the investment plan within the prescribed time period is deemed792to have elected to retain membership in the pension plan, and793the employee’s option to elect to participate in the investment794plan is forfeited.7952. With respect to employees who become eligible to796participate in the investment plan by reason of employment in a797regularly established position with a district school board798employer commencing after July 1, 2002:799a. Any such employee shall, by default, be enrolled in the800pension plan at the commencement of employment, and may, by the801last business day of the 5th month following the employee’s802month of hire, elect to participate in the investment plan. The803employee’s election must be made in writing or by electronic804means and must be filed with the third-party administrator. The805election to participate in the investment plan is irrevocable,806except as provided in paragraph (g).807b. If the employee files such election within the808prescribed time period, enrollment in the investment plan is809effective on the first day of employment. The employer810retirement contributions paid through the month of the employee811plan change shall be transferred to the investment plan, and,812effective the first day of the next month, the employer shall813pay the applicable contributions based on the employee814membership class in the investment plan.815c. Any such employee who fails to elect to participate in816the investment plan within the prescribed time period is deemed817to have elected to retain membership in the pension plan, and818the employee’s option to elect to participate in the investment819plan is forfeited.8203. For purposes of this paragraph, “district school board821employer” means any district school board that participates in822the Florida Retirement System for the benefit of certain823employees, or a charter school or charter technical career824center that participates in the Florida Retirement System as825provided in s.121.051(2)(d).826(c)1. With respect to an eligible employee who is employed827in a regularly established position on December 1, 2002, by a828local employer:829a. Any such employee may elect to participate in the830investment plan in lieu of retaining his or her membership in831the pension plan. The election must be made in writing or by832electronic means and must be filed with the third-party833administrator by February 28, 2003, or, in the case of an active834employee who is on a leave of absence on October 1, 2002, by the835last business day of the 5th month following the month the leave836of absence concludes. This election is irrevocable, except as837provided in paragraph (g). Upon making such election, the838employee shall be enrolled as a participant of the investment839plan, the employee’s membership in the Florida Retirement System840is governed by the provisions of this part, and the employee’s841membership in the pension plan terminates. The employee’s842enrollment in the investment plan is effective the first day of843the month for which a full month’s employer contribution is made844to the investment plan.845b. Any such employee who fails to elect to participate in846the investment plan within the prescribed time period is deemed847to have elected to retain membership in the pension plan, and848the employee’s option to elect to participate in the investment849plan is forfeited.8502. With respect to employees who become eligible to851participate in the investment plan by reason of employment in a852regularly established position with a local employer commencing853after October 1, 2002:854a. Any such employee shall, by default, be enrolled in the855pension plan at the commencement of employment, and may, by the856last business day of the 5th month following the employee’s857month of hire, elect to participate in the investment plan. The858employee’s election must be made in writing or by electronic859means and must be filed with the third-party administrator. The860election to participate in the investment plan is irrevocable,861except as provided in paragraph (g).862b. If the employee files such election within the863prescribed time period, enrollment in the investment plan is864effective on the first day of employment. The employer865retirement contributions paid through the month of the employee866plan change shall be transferred to the investment plan, and,867effective the first day of the next month, the employer shall868pay the applicable contributions based on the employee869membership class in the investment plan.870c. Any such employee who fails to elect to participate in871the investment plan within the prescribed time period is deemed872to have elected to retain membership in the pension plan, and873the employee’s option to elect to participate in the investment874plan is forfeited.8753. For purposes of this paragraph, “local employer” means876any employer not included in paragraph (a) or paragraph (b).877 (c)(d)Contributions available for self-direction by a 878 member who has not selected one or more specific investment 879 products shall be allocated as prescribed by the state board. 880 The third-party administrator shall notify the member at least 881 quarterly that the member should take an affirmative action to 882 make an asset allocation among the investment products. 883 (d)(e)On or after July 1, 2011, a member of the pension 884 plan who obtains a refund of employee contributions retains his 885 or her prior plan choice upon return to employment in a 886 regularly established position with a participating employer. 887 (e)(f)A member of the investment plan who takes a 888 distribution of any contributions from his or her investment 889 plan account is considered a retiree. A retiree who is initially 890 reemployed in a regularly established position on or after July 891 1, 2010, is not eligible to be enrolled in renewed membership. 892 (f)(g)After the period during which an eligible employee 893 had the choice to elect the pension plan or the investment plan, 894 or the month following the receipt of the eligible employee’s 895 plan election, if sooner, the employee shall have one 896 opportunity, at the employee’s discretion, to choose to move 897 from the pension plan to the investment plan or from the 898 investment plan to the pension plan. Eligible employees may 899 elect to move between plans only if they are earning service 900 credit in an employer-employee relationship consistent with s. 901 121.021(17)(b), excluding leaves of absence without pay. 902 Effective July 1, 2005, such elections are effective on the 903 first day of the month following the receipt of the election by 904 the third-party administrator and are not subject to the 905 requirements regarding an employer-employee relationship or 906 receipt of contributions for the eligible employee in the 907 effective month, except when the election is received by the 908 third-party administrator. This paragraph is contingent upon 909 approval by the Internal Revenue Service. This paragraph is not 910 applicable to compulsory investment plan members under paragraph 911 (g). 912 1. If the employee chooses to move to the investment plan, 913 the provisions of subsection (3) govern the transfer. 914 2. If the employee chooses to move to the pension plan, the 915 employee must transfer from his or her investment plan account, 916 and from other employee moneys as necessary, a sum representing 917 the present value of that employee’s accumulated benefit 918 obligation immediately following the time of such movement, 919 determined assuming that attained service equals the sum of 920 service in the pension plan and service in the investment plan. 921 Benefit commencement occurs on the first date the employee is 922 eligible for unreduced benefits, using the discount rate and 923 other relevant actuarial assumptions that were used to value the 924 pension plan liabilities in the most recent actuarial valuation. 925 For any employee who, at the time of the second election, 926 already maintains an accrued benefit amount in the pension plan, 927 the then-present value of the accrued benefit is deemed part of 928 the required transfer amount. The division must ensure that the 929 transfer sum is prepared using a formula and methodology 930 certified by an enrolled actuary. A refund of any employee 931 contributions or additional member payments made which exceed 932 the employee contributions that would have accrued had the 933 member remained in the pension plan and not transferred to the 934 investment plan is not permitted. 935 3. Notwithstanding subparagraph 2., an employee who chooses 936 to move to the pension plan and who became eligible to 937 participate in the investment plan by reason of employment in a 938 regularly established position with a state employer after June 939 1, 2002; a district school board employer after September 1, 940 2002; or a local employer after December 1, 2002, must transfer 941 from his or her investment plan account, and from other employee 942 moneys as necessary, a sum representing the employee’s actuarial 943 accrued liability. A refund of any employee contributions or 944 additional memberparticipantpayments made which exceed the 945 employee contributions that would have accrued had the member 946 remained in the pension plan and not transferred to the 947 investment plan is not permitted. 948 4. An employee’s ability to transfer from the pension plan 949 to the investment plan pursuant to paragraphs (a) and (b) 950paragraphs (a)-(d), and the ability of a current employee to 951 have an option to later transfer back into the pension plan 952 under subparagraph 2., shall be deemed a significant system 953 amendment. Pursuant to s. 121.031(4), any resulting unfunded 954 liability arising from actual original transfers from the 955 pension plan to the investment plan must be amortized within 30 956 plan years as a separate unfunded actuarial base independent of 957 the reserve stabilization mechanism defined in s. 121.031(3)(f). 958 For the first 25 years, a direct amortization payment may not be 959 calculated for this base. During this 25-year period, the 960 separate base shall be used to offset the impact of employees 961 exercising their second program election under this paragraph. 962 The actuarial funded status of the pension plan will not be 963 affected by such second program elections in any significant 964 manner, after due recognition of the separate unfunded actuarial 965 base. Following the initial 25-year period, any remaining 966 balance of the original separate base shall be amortized over 967 the remaining 5 years of the required 30-year amortization 968 period. 969 5. If the employee chooses to transfer from the investment 970 plan to the pension plan and retains an excess account balance 971 in the investment plan after satisfying the buy-in requirements 972 under this paragraph, the excess may not be distributed until 973 the member retires from the pension plan. The excess account 974 balance may be rolled over to the pension plan and used to 975 purchase service credit or upgrade creditable service in the 976 pension plan. 977 (g)1. All employees initially enrolled on or after July 1, 978 2014, in positions covered by the Elected Officers’ Class or the 979 Senior Management Service Class are compulsory members of the 980 investment plan, except those eligible to withdraw from the 981 system under s. 121.052(3)(d) or s. 121.055(1)(b)2., or those 982 eligible for optional retirement programs under s. 983 121.051(1)(a), s. 121.051(2)(c), or s. 121.35. Employees 984 eligible to withdraw from the system under s. 121.052(3)(d) or 985 s. 121.055(1)(b)2. may choose to withdraw from the system or to 986 participate in the investment plan as provided in those 987 sections. Employees eligible for optional retirement programs 988 under s. 121.051(2)(c) or s. 121.35, except as provided in s. 989 121.051(1)(a), may choose to participate in the optional 990 retirement program or the investment plan as provided in those 991 sections. Investment plan membership continues if there is 992 subsequent employment in a position covered by another 993 membership class. Membership in the pension plan is not 994 permitted except as provided in s. 121.591(2). Employees 995 initially enrolled in the Florida Retirement System prior to 996 July 1, 2014, may retain their membership in the pension plan or 997 investment plan and are eligible to use the election opportunity 998 specified in s. 121.4501(4)(f). 999 2. Employees initially enrolled on or after July 1, 2014, 1000 are not permitted to use the election opportunity specified in 1001 paragraph (f). 1002 3. The amount of retirement contributions paid by the 1003 employee and employer, as required under s. 121.72, shall be 1004 placed in a default fund as designated by the state board, until 1005 an account is activated in the investment plan, at which time 1006 the member may move the contributions from the default fund to 1007 other funds provided in the investment plan. 1008 (5) CONTRIBUTIONS.— 1009 (c) The state board, acting as plan fiduciary, must ensure 1010 that all plan assets are held in a trust, pursuant to s. 401 of 1011 the Internal Revenue Code. The fiduciary must ensure that such 1012 contributions are allocated as follows: 1013 1. The employer and employee contribution portion earmarked 1014 for member accounts shall be used to purchase interests in the 1015 appropriate investment vehicles as specified by the member, or 1016 in accordance with paragraph (4)(c)(4)(d). 1017 2. The employer contribution portion earmarked for 1018 administrative and educational expenses shall be transferred to 1019 the Florida Retirement System Investment Plan Trust Fund. 1020 3. The employer contribution portion earmarked for 1021 disability benefits shall be transferred to the Florida 1022 Retirement System Trust Fund. 1023 (8) INVESTMENT PLAN ADMINISTRATION.—The investment plan 1024 shall be administered by the state board and affected employers. 1025 The state board may require oaths, by affidavit or otherwise, 1026 and acknowledgments from persons in connection with the 1027 administration of its statutory duties and responsibilities for 1028 the investment plan. An oath, by affidavit or otherwise, may not 1029 be required of a member at the time of enrollment. 1030 Acknowledgment of an employee’s election to participate in the 1031 program shall be no greater than necessary to confirm the 1032 employee’s election except for members initially enrolled on or 1033 after July 1, 2014, as provided in paragraph (4)(g). The state 1034 board shall adopt rules to carry out its statutory duties with 1035 respect to administering the investment plan, including 1036 establishing the roles and responsibilities of affected state, 1037 local government, and education-related employers, the state 1038 board, the department, and third-party contractors. The 1039 department shall adopt rules necessary to administer the 1040 investment plan in coordination with the pension plan and the 1041 disability benefits available under the investment plan. 1042 (a)1. The state board shall select and contract with a 1043 third-party administrator to provide administrative services if 1044 those services cannot be competitively and contractually 1045 provided by the division. With the approval of the state board, 1046 the third-party administrator may subcontract to provide 1047 components of the administrative services. As a cost of 1048 administration, the state board may compensate any such 1049 contractor for its services, in accordance with the terms of the 1050 contract, as is deemed necessary or proper by the board. The 1051 third-party administrator may not be an approved provider or be 1052 affiliated with an approved provider. 1053 2. These administrative services may include, but are not 1054 limited to, enrollment of eligible employees, collection of 1055 employer and employee contributions, disbursement of 1056 contributions to approved providers in accordance with the 1057 allocation directions of members; services relating to 1058 consolidated billing; individual and collective recordkeeping 1059 and accounting; asset purchase, control, and safekeeping; and 1060 direct disbursement of funds to and from the third-party 1061 administrator, the division, the state board, employers, 1062 members, approved providers, and beneficiaries. This section 1063 does not prevent or prohibit a bundled provider from providing 1064 any administrative or customer service, including accounting and 1065 administration of individual member benefits and contributions; 1066 individual member recordkeeping; asset purchase, control, and 1067 safekeeping; direct execution of the member’s instructions as to 1068 asset and contribution allocation; calculation of daily net 1069 asset values; direct access to member account information; or 1070 periodic reporting to members, at least quarterly, on account 1071 balances and transactions, if these services are authorized by 1072 the state board as part of the contract. 1073 (b)1. The state board shall select and contract with one or 1074 more organizations to provide educational services. With 1075 approval of the state board, the organizations may subcontract 1076 to provide components of the educational services. As a cost of 1077 administration, the state board may compensate any such 1078 contractor for its services in accordance with the terms of the 1079 contract, as is deemed necessary or proper by the board. The 1080 education organization may not be an approved provider or be 1081 affiliated with an approved provider. 1082 2. Educational services shall be designed by the state 1083 board and department to assist employers, eligible employees, 1084 members, and beneficiaries in order to maintain compliance with 1085 United States Department of Labor regulations under s. 404(c) of 1086 the Employee Retirement Income Security Act of 1974 and to 1087 assist employees in their choice of pension plan or investment 1088 plan retirement alternatives. Educational services include, but 1089 are not limited to, disseminating educational materials; 1090 providing retirement planning education; explaining the pension 1091 plan and the investment plan; and offering financial planning 1092 guidance on matters such as investment diversification, 1093 investment risks, investment costs, and asset allocation. An 1094 approved provider may also provide educational information, 1095 including retirement planning and investment allocation 1096 information concerning its products and services. 1097 (c)1. In evaluating and selecting a third-party 1098 administrator, the state board shall establish criteria for 1099 evaluating the relative capabilities and qualifications of each 1100 proposed administrator. In developing such criteria, the state 1101 board shall consider: 1102 a. The administrator’s demonstrated experience in providing 1103 administrative services to public or private sector retirement 1104 systems. 1105 b. The administrator’s demonstrated experience in providing 1106 daily valued recordkeeping to defined contribution programs. 1107 c. The administrator’s ability and willingness to 1108 coordinate its activities with employers, the state board, and 1109 the division, and to supply to such employers, the board, and 1110 the division the information and data they require, including, 1111 but not limited to, monthly management reports, quarterly member 1112 reports, and ad hoc reports requested by the department or state 1113 board. 1114 d. The cost-effectiveness and levels of the administrative 1115 services provided. 1116 e. The administrator’s ability to interact with the 1117 members, the employers, the state board, the division, and the 1118 providers; the means by which members may access account 1119 information, direct investment of contributions, make changes to 1120 their accounts, transfer moneys between available investment 1121 vehicles, and transfer moneys between investment products; and 1122 any fees that apply to such activities. 1123 f. Any other factor deemed necessary by the state board. 1124 2. In evaluating and selecting an educational provider, the 1125 state board shall establish criteria under which it shall 1126 consider the relative capabilities and qualifications of each 1127 proposed educational provider. In developing such criteria, the 1128 state board shall consider: 1129 a. Demonstrated experience in providing educational 1130 services to public or private sector retirement systems. 1131 b. Ability and willingness to coordinate its activities 1132 with the employers, the state board, and the division, and to 1133 supply to such employers, the board, and the division the 1134 information and data they require, including, but not limited 1135 to, reports on educational contacts. 1136 c. The cost-effectiveness and levels of the educational 1137 services provided. 1138 d. Ability to provide educational services via different 1139 media, including, but not limited to, the Internet, personal 1140 contact, seminars, brochures, and newsletters. 1141 e. Any other factor deemed necessary by the state board. 1142 3. The establishment of the criteria shall be solely within 1143 the discretion of the state board. 1144 (d) The state board shall develop the form and content of 1145 any contracts to be offered under the investment plan. In 1146 developing the contracts, the board shall consider: 1147 1. The nature and extent of the rights and benefits to be 1148 afforded in relation to the contributions required under the 1149 plan. 1150 2. The suitability of the rights and benefits provided and 1151 the interests of employers in the recruitment and retention of 1152 eligible employees. 1153 (e)1. The state board may contract for professional 1154 services, including legal, consulting, accounting, and actuarial 1155 services, deemed necessary to implement and administer the 1156 investment plan. The state board may enter into a contract with 1157 one or more vendors to provide low-cost investment advice to 1158 members, supplemental to education provided by the third-party 1159 administrator. All fees under any such contract shall be paid by 1160 those members who choose to use the services of the vendor. 1161 2. The department may contract for professional services, 1162 including legal, consulting, accounting, and actuarial services, 1163 deemed necessary to implement and administer the investment plan 1164 in coordination with the pension plan. The department, in 1165 coordination with the state board, may enter into a contract 1166 with the third-party administrator in order to coordinate 1167 services common to the various programs within the Florida 1168 Retirement System. 1169 (f) The third-party administrator may not receive direct or 1170 indirect compensation from an approved provider, except as 1171 specifically provided for in the contract with the state board. 1172 (g) The state board shall receive and resolve member 1173 complaints against the program, the third-party administrator, 1174 or any program vendor or provider; shall resolve any conflict 1175 between the third-party administrator and an approved provider 1176 if such conflict threatens the implementation or administration 1177 of the program or the quality of services to employees; and may 1178 resolve any other conflicts. The third-party administrator shall 1179 retain all member records for at least 5 years for use in 1180 resolving any member conflicts. The state board, the third-party 1181 administrator, or a provider is not required to produce 1182 documentation or an audio recording to justify action taken with 1183 regard to a member if the action occurred 5 or more years before 1184 the complaint is submitted to the state board. It is presumed 1185 that all action taken 5 or more years before the complaint is 1186 submitted was taken at the request of the member and with the 1187 member’s full knowledge and consent. To overcome this 1188 presumption, the member must present documentary evidence or an 1189 audio recording demonstrating otherwise. 1190 (10) EDUCATION COMPONENT.— 1191 (a) The state board, in coordination with the department, 1192 shall provide for an education component for eligible employees 1193system membersin a manner consistent with the provisions of 1194 this subsectionsection.The education component must be1195available to eligible employees at least 90 days prior to the1196beginning date of the election period for the employees of the1197respective types of employers.1198 (b) The education component must provide system members 1199 with impartial and balanced information about plan choices 1200 except for members initially enrolled on or after July 1, 2014, 1201 as provided in paragraph (4)(g). The education component must 1202 involve multimedia formats. Program comparisons must, to the 1203 greatest extent possible, be based upon the retirement income 1204 that different retirement programs may provide to the member. 1205 The state board shall monitor the performance of the contract to 1206 ensure that the program is conducted in accordance with the 1207 contract, applicable law, and the rules of the state board. 1208 (c) The state board, in coordination with the department, 1209 shall provide for an initial and ongoing transfer education 1210 component to provide system members except for those members 1211 initially enrolled on or after July 1, 2014, as provided in 1212 paragraph (4)(g), with information necessary to make informed 1213 plan choice decisions. The transfer education component must 1214 include, but is not limited to, information on: 1215 1. The amount of money available to a member to transfer to 1216 the defined contribution program. 1217 2. The features of and differences between the pension plan 1218 and the defined contribution program, both generally and 1219 specifically, as those differences may affect the member. 1220 3. The expected benefit available if the member were to 1221 retire under each of the retirement programs, based on 1222 appropriate alternative sets of assumptions. 1223 4. The rate of return from investments in the defined 1224 contribution program and the period of time over which such rate 1225 of return must be achieved to equal or exceed the expected 1226 monthly benefit payable to the member under the pension plan. 1227 5. The historical rates of return for the investment 1228 alternatives available in the defined contribution programs. 1229 6. The benefits and historical rates of return on 1230 investments available in a typical deferred compensation plan or 1231 a typical plan under s. 403(b) of the Internal Revenue Code for 1232 which the employee may be eligible. 1233 7. The program choices available to employees of the State 1234 University System and the comparative benefits of each available 1235 program, if applicable. 1236 8. Payout options available in each of the retirement 1237 programs. 1238(h) Pursuant to subsection (8), all Florida Retirement1239System employers have an obligation to regularly communicate the1240existence of the two Florida Retirement System plans and the1241plan choice in the natural course of administering their1242personnel functions, using the educational materials supplied by1243the state board and the Department of Management Services.1244 Section 7. Paragraph (b) of subsection (2) of section 1245 121.591, Florida Statutes, is amended to read: 1246 121.591 Payment of benefits.—Benefits may not be paid under 1247 the Florida Retirement System Investment Plan unless the member 1248 has terminated employment as provided in s. 121.021(39)(a) or is 1249 deceased and a proper application has been filed as prescribed 1250 by the state board or the department. Benefits, including 1251 employee contributions, are not payable under the investment 1252 plan for employee hardships, unforeseeable emergencies, loans, 1253 medical expenses, educational expenses, purchase of a principal 1254 residence, payments necessary to prevent eviction or foreclosure 1255 on an employee’s principal residence, or any other reason except 1256 a requested distribution for retirement, a mandatory de minimis 1257 distribution authorized by the administrator, or a required 1258 minimum distribution provided pursuant to the Internal Revenue 1259 Code. The state board or department, as appropriate, may cancel 1260 an application for retirement benefits if the member or 1261 beneficiary fails to timely provide the information and 1262 documents required by this chapter and the rules of the state 1263 board and department. In accordance with their respective 1264 responsibilities, the state board and the department shall adopt 1265 rules establishing procedures for application for retirement 1266 benefits and for the cancellation of such application if the 1267 required information or documents are not received. The state 1268 board and the department, as appropriate, are authorized to cash 1269 out a de minimis account of a member who has been terminated 1270 from Florida Retirement System covered employment for a minimum 1271 of 6 calendar months. A de minimis account is an account 1272 containing employer and employee contributions and accumulated 1273 earnings of not more than $5,000 made under the provisions of 1274 this chapter. Such cash-out must be a complete lump-sum 1275 liquidation of the account balance, subject to the provisions of 1276 the Internal Revenue Code, or a lump-sum direct rollover 1277 distribution paid directly to the custodian of an eligible 1278 retirement plan, as defined by the Internal Revenue Code, on 1279 behalf of the member. Any nonvested accumulations and associated 1280 service credit, including amounts transferred to the suspense 1281 account of the Florida Retirement System Investment Plan Trust 1282 Fund authorized under s. 121.4501(6), shall be forfeited upon 1283 payment of any vested benefit to a member or beneficiary, except 1284 for de minimis distributions or minimum required distributions 1285 as provided under this section. If any financial instrument 1286 issued for the payment of retirement benefits under this section 1287 is not presented for payment within 180 days after the last day 1288 of the month in which it was originally issued, the third-party 1289 administrator or other duly authorized agent of the state board 1290 shall cancel the instrument and credit the amount of the 1291 instrument to the suspense account of the Florida Retirement 1292 System Investment Plan Trust Fund authorized under s. 1293 121.4501(6). Any amounts transferred to the suspense account are 1294 payable upon a proper application, not to include earnings 1295 thereon, as provided in this section, within 10 years after the 1296 last day of the month in which the instrument was originally 1297 issued, after which time such amounts and any earnings 1298 attributable to employer contributions shall be forfeited. Any 1299 forfeited amounts are assets of the trust fund and are not 1300 subject to chapter 717. 1301 (2) DISABILITY RETIREMENT BENEFITS.—Benefits provided under 1302 this subsection are payable in lieu of the benefits that would 1303 otherwise be payable under the provisions of subsection (1). 1304 Such benefits must be funded from employer contributions made 1305 under s. 121.571, transferred employee contributions and funds 1306 accumulated pursuant to paragraph (a), and interest and earnings 1307 thereon. 1308 (b) Disability retirement; entitlement.— 1309 1.a. A member of the investment plan initially enrolled 1310 before July 1, 2014, who becomes totally and permanently 1311 disabled, as defined in paragraph (d), after completing 8 years 1312 of creditable service, or a member who becomes totally and 1313 permanently disabled in the line of duty regardless of length of 1314 service, is entitled to a monthly disability benefit. 1315 b. A member of the investment plan initially enrolled on or 1316 after July 1, 2014, who becomes totally and permanently 1317 disabled, as defined in paragraph (d), after completing 10 years 1318 of creditable service, or a member who becomes totally and 1319 permanently disabled in the line of duty regardless of service, 1320 is entitled to a monthly disability benefit. 1321 2. In order for service to apply toward the8years of 1322 creditable service required for regular disability benefits, or 1323 toward the creditable service used in calculating a service 1324 based benefit as provided under paragraph (g), the service must 1325 be creditable service as described below: 1326 a. The member’s period of service under the investment plan 1327 shall be considered creditable service, except as provided in 1328 subparagraph d. 1329 b. If the member has elected to retain credit for service 1330 under the pension plan as provided under s. 121.4501(3), all 1331 such service shall be considered creditable service. 1332 c. If the member elects to transfer to his or her member 1333 accounts a sum representing the present value of his or her 1334 retirement credit under the pension plan as provided under s. 1335 121.4501(3), the period of service under the pension plan 1336 represented in the present value amounts transferred shall be 1337 considered creditable service, except as provided in 1338 subparagraph d. 1339 d. If a member has terminated employment and has taken 1340 distribution of his or her funds as provided in subsection (1), 1341 all creditable service represented by such distributed funds is 1342 forfeited for purposes of this subsection. 1343 Section 8. Subsection (3) of section 121.71, Florida 1344 Statutes, is amended to read: 1345 121.71 Uniform rates; process; calculations; levy.— 1346 (3)(a) Required employee retirement contribution rates for 1347 each membership class and subclass of the Florida Retirement 1348 System for the pension planboth retirement plansare as 1349 follows: 1350 Membership Class Percentage ofGrossCompensation,EffectiveJuly 1, 2011 1351 1352 Regular Class 3.00% 1353 Special Risk Class 3.00% 1354 Special Risk Administrative Support Class 3.00% 1355 Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders 3.00% 1356 Elected Officers’ Class— Justices, Judges 3.00% 1357 Elected Officers’ Class— County Elected Officers 3.00% 1358 Senior Management Service Class 3.00% 1359 DROP 0.00% 1360 1361 1362 1363 1364 1365 1366 1367 1368 1369 (b) Required employee retirement contribution rates for 1370 each membership class and subclass of the Florida Retirement 1371 System for the investment plan are as follows: 1372 1373 Membership Class Percentage ofGrossCompensation,EffectiveJuly 1, 2011Percentage ofGrossCompensation,EffectiveJuly 1, 2014 1374 1375 Regular Class 3.00% 2.00% 1376 Special Risk Class 3.00% 2.00% 1377 Special Risk Administrative Support Class 3.00% 2.00% 1378 Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders 3.00% 2.00% 1379 Elected Officers’ Class— Justices, Judges 3.00% 2.00% 1380 Elected Officers’ Class— County Elected Officers 3.00% 2.00% 1381 Senior Management Service Class 3.00% 2.00% 1382 1383 1384 1385 Section 9. Paragraph (a) of subsection (4) of section 1386 121.35, Florida Statutes, is amended to read: 1387 121.35 Optional retirement program for the State University 1388 System.— 1389 (4) CONTRIBUTIONS.— 1390 (a)1. Through June 30, 2001, each employer shall contribute 1391 on behalf of each member of the optional retirement program an 1392 amount equal to the normal cost portion of the employer 1393 retirement contribution which would be required if the employee 1394 were a regular member of the Florida Retirement System Pension 1395 Plan, plus the portion of the contribution rate required in s. 1396 112.363(8) that would otherwise be assigned to the Retiree 1397 Health Insurance Subsidy Trust Fund. 1398 2. Effective July 1, 2001, through June 30, 2011, each 1399 employer shall contribute on behalf of each member of the 1400 optional retirement program an amount equal to 10.43 percent of 1401 the employee’s gross monthly compensation. 1402 3. Effective July 1, 2011, through June 30, 2012, each 1403 member of the optional retirement program shall contribute an 1404 amount equal to the employee contribution required in s. 1405 121.71(3)(a). The employer shall contribute on behalf of each 1406 such member an amount equal to the difference between 10.43 1407 percent of the employee’s gross monthly compensation and the 1408 amount equal to the employee’s required contribution based on 1409 the employee’s gross monthly compensation. 1410 4. Effective July 1, 2012, each member of the optional 1411 retirement program shall contribute an amount equal to the 1412 employee contribution required in s. 121.71(3)(a). The employer 1413 shall contribute on behalf of each such member an amount equal 1414 to the difference between 8.15 percent of the employee’s gross 1415 monthly compensation and the amount equal to the employee’s 1416 required contribution based on the employee’s gross monthly 1417 compensation. 1418 5. The payment of the contributions, including 1419 contributions by the employee, shall be made by the employer to 1420 the department, which shall forward the contributions to the 1421 designated company or companies contracting for payment of 1422 benefits for members of the program. However, such contributions 1423 paid on behalf of an employee described in paragraph (3)(c) may 1424 not be forwarded to a company and do not begin to accrue 1425 interest until the employee has executed a contract and notified 1426 the department. The department shall deduct an amount from the 1427 contributions to provide for the administration of this program. 1428 Section 10. Section 238.072, Florida Statutes, is amended 1429 to read: 1430 238.072 Special service provisions for extension 1431 personnel.—All state and county cooperative extension personnel 1432 holding appointments by the United States Department of 1433 Agriculture for extension work in agriculture and home economics 1434 in this state who are joint representatives of the University of 1435 Florida and the United States Department of Agriculture, as 1436 provided in s. 121.051(8)121.051(7), who are members of the 1437 Teachers’ Retirement System, chapter 238, and who are prohibited 1438 from transferring to and participating in the Florida Retirement 1439 System, chapter 121, may retire with full benefits upon 1440 completion of 30 years of creditable service and shall be 1441 considered to have attained normal retirement age under this 1442 chapter, any law to the contrary notwithstanding. In order to 1443 comply with the provisions of s. 14, Art. X of the State 1444 Constitution, any liability accruing to the Florida Retirement 1445 System Trust Fund as a result of the provisions of this section 1446 shall be paid on an annual basis from the General Revenue Fund. 1447 Section 11. Subsection (11) of section 413.051, Florida 1448 Statutes, is amended to read: 1449 413.051 Eligible blind persons; operation of vending 1450 stands.— 1451 (11) Effective July 1, 1996, blind licensees who remain 1452 members of the Florida Retirement System pursuant to s. 1453 121.051(7)(b)1.121.051(6)(b)1.shall pay any unappropriated 1454 retirement costs from their net profits or from program income. 1455 Within 30 days after the effective date of this act, each blind 1456 licensee who is eligible to maintain membership in the Florida 1457 Retirement System under s. 121.051(7)(b)1.121.051(6)(b)1., but 1458 who elects to withdraw from the system as provided in s. 1459 121.051(7)(b)3.121.051(6)(b)3., must, on or before July 31, 1460 1996, notify the Division of Blind Services and the Department 1461 of Management Services in writing of his or her election to 1462 withdraw. Failure to timely notify the divisions shall be deemed 1463 a decision to remain a compulsory member of the Florida 1464 Retirement System. However, if, at any time after July 1, 1996, 1465 sufficient funds are not paid by a blind licensee to cover the 1466 required contribution to the Florida Retirement System, that 1467 blind licensee shall become ineligible to participate in the 1468 Florida Retirement System on the last day of the first month for 1469 which no contribution is made or the amount contributed is 1470 insufficient to cover the required contribution. For any blind 1471 licensee who becomes ineligible to participate in the Florida 1472 Retirement System as described in this subsection, no creditable 1473 service shall be earned under the Florida Retirement System for 1474 any period following the month that retirement contributions 1475 ceased to be reported. However, any such person may participate 1476 in the Florida Retirement System in the future if employed by a 1477 participating employer in a covered position. 1478 Section 12. Paragraph (a) of subsection (4) of section 1479 1012.875, Florida Statutes, is amended to read: 1480 1012.875 State Community College System Optional Retirement 1481 Program.—Each Florida College System institution may implement 1482 an optional retirement program, if such program is established 1483 therefor pursuant to s. 1001.64(20), under which annuity or 1484 other contracts providing retirement and death benefits may be 1485 purchased by, and on behalf of, eligible employees who 1486 participate in the program, in accordance with s. 403(b) of the 1487 Internal Revenue Code. Except as otherwise provided herein, this 1488 retirement program, which shall be known as the State Community 1489 College System Optional Retirement Program, may be implemented 1490 and administered only by an individual Florida College System 1491 institution or by a consortium of Florida College System 1492 institutions. 1493 (4)(a)1. Through June 30, 2011, each college must 1494 contribute on behalf of each program member an amount equal to 1495 10.43 percent of the employee’s gross monthly compensation. 1496 2. Effective July 1, 2011, through June 30, 2012, each 1497 member shall contribute an amount equal to the employee 1498 contribution required under s. 121.71(3)(a). The employer shall 1499 contribute on behalf of each program member an amount equal to 1500 the difference between 10.43 percent of the employee’s gross 1501 monthly compensation and the employee’s required contribution 1502 based on the employee’s gross monthly compensation. 1503 3. Effective July 1, 2012, each member shall contribute an 1504 amount equal to the employee contribution required under s. 1505 121.71(3)(a). The employer shall contribute on behalf of each 1506 program member an amount equal to the difference between 8.15 1507 percent of the employee’s gross monthly compensation and the 1508 employee’s required contribution based on the employee’s gross 1509 monthly compensation. 1510 4. The college shall deduct an amount approved by the 1511 district board of trustees of the college to provide for the 1512 administration of the optional retirement program. Payment of 1513 this contribution must be made directly by the college or 1514 through the program administrator to the designated company 1515 contracting for payment of benefits to the program member. 1516 Section 13. The Legislature finds that a proper and 1517 legitimate state purpose is served when employees and retirees 1518 of the state and its political subdivisions, and the dependents, 1519 survivors, and beneficiaries of such employees and retirees, are 1520 extended the basic protections afforded by governmental 1521 retirement systems. These persons must be provided benefits that 1522 are fair and adequate and that are managed, administered, and 1523 funded in an actuarially sound manner, as required by s. 14, 1524 Article X of the State Constitution and part VII of chapter 112, 1525 Florida Statutes. Therefore, the Legislature determines and 1526 declares that this act fulfills an important state interest. 1527 Section 14. This act shall take effect July 1, 2014.