Bill Text: FL S1870 | 2021 | Regular Session | Introduced
Bill Title: Florida Retirement System
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2021-04-30 - Died in Governmental Oversight and Accountability [S1870 Detail]
Download: Florida-2021-S1870-Introduced.html
Florida Senate - 2021 SB 1870 By Senator Ausley 3-01716A-21 20211870__ 1 A bill to be entitled 2 An act relating to the Florida Retirement System; 3 amending s. 121.051, F.S.; providing for compulsory 4 membership in the Florida Retirement System for 5 certain governing bodies established on or after a 6 specified date; amending s. 121.091, F.S.; requiring 7 certain benefits be paid to a beneficiary who does not 8 qualify as a joint annuitant; providing an exception 9 to the employment after retirement limitations for 10 retirees who hold an elective office with a covered 11 employer; amending s. 121.4501, F.S.; authorizing 12 eligible employees an additional opportunity to 13 transfer from the investment plan to the pension plan 14 within a specified timeframe; amending s. 121.71, 15 F.S.; authorizing pension plan members to contribute 16 amounts in addition to the required member rate to the 17 Florida Retirement System for a specified purpose; 18 providing a declaration of important state interest; 19 providing an effective date. 20 21 Be It Enacted by the Legislature of the State of Florida: 22 23 Section 1. Paragraph (b) of subsection (2) of section 24 121.051, Florida Statutes, is amended to read: 25 121.051 Participation in the system.— 26 (2) OPTIONAL PARTICIPATION.— 27 (b)1. Before July 1, 2021, the governing body of any 28 municipality, metropolitan planning organization, or special 29 district in the state may elect to participate in the Florida 30 Retirement System upon proper application to the administrator 31 and may cover all of its units as approved by the Secretary of 32 Health and Human Services and the administrator. The department 33 shall adopt rules establishing procedures for the submission of 34 documents necessary for such application. Before being approved 35 for participation in the system, the governing body of a 36 municipality, metropolitan planning organization, or special 37 district that has a local retirement system must submit to the 38 administrator a certified financial statement showing the 39 condition of the local retirement system within 3 months before 40 the proposed effective date of membership in the Florida 41 Retirement System. The statement must be certified by a 42 recognized accounting firm that is independent of the local 43 retirement system. All required documents necessary for 44 extending Florida Retirement System coverage must be received by 45 the department for consideration at least 15 days before the 46 proposed effective date of coverage. If the municipality, 47 metropolitan planning organization, or special district does not 48 comply with this requirement, the department may require that 49 the effective date of coverage be changed. 50 a.2.A municipality, metropolitan planning organization, or 51 special district that has an existing retirement system covering 52 the employees in the units that are to be brought under the 53 Florida Retirement System may participate only after holding a 54 referendum in which all employees in the affected units have the 55 right to participate. Only those employees electing coverage 56 under the Florida Retirement System by affirmative vote in the 57 referendum are eligible for coverage under this chapter, and 58 those not participating or electing not to be covered by the 59 Florida Retirement System shall remain in their present systems 60 and are not eligible for coverage under this chapter. After the 61 referendum is held, all future employees are compulsory members 62 of the Florida Retirement System. 63 b.3.At the time of joining the Florida Retirement System, 64 the governing body of a municipality, metropolitan planning 65 organization, or special district complying with subparagraph 1. 66 may elect to provide, or not provide, benefits based on past 67 service of officers and employees as described in s. 121.081(1). 68 However, if such employer elects to provide past service 69 benefits, such benefits must be provided for all officers and 70 employees of its covered group. 71 c.4.Once this election is made and approved it may not be 72 revoked, except under sub-subparagraphs d. and e.pursuant to73subparagraphs 5. and 6., and all present officers and employees 74 electing coverage and all future officers and employees are 75 compulsory members of the Florida Retirement System. 76 d.5.Subject to sub-subparagraph e.subparagraph 6., the 77 governing body of a hospital licensed under chapter 395 which is 78 governed by the governing body of a special district as defined 79 in s. 189.012 or by the board of trustees of a public health 80 trust created under s. 154.07, hereinafter referred to as 81 “hospital district,” and which participates in the Florida 82 Retirement System, may elect to cease participation in the 83 system with regard to future employees in accordance with the 84 following: 85 (I)a.No more than 30 days and at least 7 days before 86 adopting a resolution to partially withdraw from the system and 87 establish an alternative retirement plan for future employees, a 88 public hearing must be held on the proposed withdrawal and 89 proposed alternative plan. 90 (II)b.From 7 to 15 days before such hearing, notice of 91 intent to withdraw, specifying the time and place of the 92 hearing, must be provided in writing to employees of the 93 hospital district proposing partial withdrawal and must be 94 published in a newspaper of general circulation in the area 95 affected, as provided by ss. 50.011-50.031. Proof of publication 96 must be submitted to the Department of Management Services. 97 (III)c.The governing body of a hospital district seeking 98 to partially withdraw from the system must, before such hearing, 99 have an actuarial report prepared and certified by an enrolled 100 actuary, as defined in s. 112.625, illustrating the cost to the 101 hospital district of providing, through the retirement plan that 102 the hospital district is to adopt, benefits for new employees 103 comparable to those provided under the system. 104 (IV)d.Upon meeting all applicable requirements of this 105 sub-subparagraphsubparagraph, and subject to sub-subparagraph 106 e.subparagraph 6., partial withdrawal from the system and 107 adoption of the alternative retirement plan may be accomplished 108 by resolution duly adopted by the hospital district board. The 109 hospital district board must provide written notice of such 110 withdrawal to the division by mailing a copy of the resolution 111 to the division, postmarked by December 15, 1995. The withdrawal 112 shall take effect January 1, 1996. 113 e.6.Following the adoption of a resolution under sub-sub 114 subparagraph d.(IV)sub-subparagraph 5.d., all employees of the 115 withdrawing hospital district who were members of the system 116 before January 1, 1996, shall remain as members of the system 117 for as long as they are employees of the hospital district, and 118 all rights, duties, and obligations between the hospital 119 district, the system, and the employees remain in full force and 120 effect. Any employee who is hired or appointed on or after 121 January 1, 1996, may not participate in the system, and the 122 withdrawing hospital district has no obligation to the system 123 with respect to such employees. 124 2.a. On or after July 1, 2021, the governing body of any 125 newly created municipality, metropolitan planning organization, 126 or special district in the state must participate in the Florida 127 Retirement System. 128 b. At the time of joining the Florida Retirement System, 129 the governing body of a municipality, metropolitan planning 130 organization, or special district may elect to provide, or not 131 provide, benefits based on past service of officers and 132 employees as described in s. 121.081(1). However, if such 133 employer elects to provide past service benefits, such benefits 134 must be provided for all officers and employees of its covered 135 group. 136 Section 2. Paragraph (b) of subsection (7) of section 137 121.091, Florida Statutes, is amended, and paragraph (g) is 138 added to subsection (9) of that section, to read: 139 121.091 Benefits payable under the system.—Benefits may not 140 be paid under this section unless the member has terminated 141 employment as provided in s. 121.021(39)(a) or begun 142 participation in the Deferred Retirement Option Program as 143 provided in subsection (13), and a proper application has been 144 filed in the manner prescribed by the department. The department 145 may cancel an application for retirement benefits when the 146 member or beneficiary fails to timely provide the information 147 and documents required by this chapter and the department’s 148 rules. The department shall adopt rules establishing procedures 149 for application for retirement benefits and for the cancellation 150 of such application when the required information or documents 151 are not received. 152 (7) DEATH BENEFITS.— 153 (b) If the employment of an active member who may or may 154 not have applied for retirement is terminated by reason of his 155 or her death subsequent to becoming vested and beforeprior to156 his or her effective date of retirement, if established, it is 157shall beassumed that the member retired as of the date of death 158 in accordance with subsection (1) if eligible for normal 159 retirement benefits, subsection (2) if eligible for benefits 160 payable for dual normal retirement, or subsection (3) if 161 eligible for early retirement benefits. Benefits payable to the 162 designated beneficiary shall be as follows: 163 1. For a beneficiary who qualifies as a joint annuitant, 164 the optional form of payment provided in accordance with 165 subparagraph (6)(a)3. shall be paid for the joint annuitant’s 166 lifetime. 167 2. For a beneficiary who does not qualify as a joint 168 annuitant, any benefits payable shall be paid as provided in the 169 option selected by the member; or if the member has not selected 170 an option, benefits shall be paid in the optional form of 171 payment provided in subparagraph (6)(a)1no continuing monthly172benefit shall be paid and the beneficiary shall be entitled only173to the return of the member’s personal contributions. If there 174 is no monetary interest in the member’s retirement account for 175 which such beneficiary is eligible, the beneficiary shall be the 176 next named beneficiary or, if no other beneficiary is named, the 177 beneficiary shall be the next eligible beneficiary according to 178 subsection (8). 179 (9) EMPLOYMENT AFTER RETIREMENT; LIMITATION.— 180 (g) Any person whose retirement is effective on or after 181 July 1, 2021, or whose participation in the Deferred Retirement 182 Option Program terminates on or after July 1, 2021, who is 183 retired under this chapter, except under the disability 184 retirement provisions of subsection (4) or as provided in s. 185 121.053, may hold an elective public office that is covered by 186 the Florida Retirement System. Such person shall receive his or 187 her retirement benefits in addition to the compensation of the 188 elective office without regards to the time limitations 189 otherwise provided in this subsection. 190 Section 3. Paragraph (f) of subsection (4) of section 191 121.4501, Florida Statutes, is amended to read: 192 121.4501 Florida Retirement System Investment Plan.— 193 (4) PARTICIPATION; ENROLLMENT.— 194 (f) After the period during which an eligible employee had 195 the choice to elect the pension plan or the investment plan, or 196 the month following the receipt of the eligible employee’s plan 197 election, if sooner, the employee shall have one opportunity, at 198 the employee’s discretion, to choose to move from the pension 199 plan to the investment plan or from the investment plan to the 200 pension plan. Beginning July 1, 2021, a 90-day election period 201 shall be provided to permit each eligible employee who elected 202 between June 1, 2002, and June 30, 2011, to move from the 203 pension plan to the investment plan one opportunity to elect, at 204 the employee’s discretion, to move from the investment plan back 205 to the pension plan. Eligible employees may elect to move 206 between plans only if they are earning service credit in an 207 employer-employee relationship consistent with s. 208 121.021(17)(b), excluding leaves of absence without pay. 209 Effective July 1, 2005, such elections are effective on the 210 first day of the month following the receipt of the election by 211 the third-party administrator and are not subject to the 212 requirements regarding an employer-employee relationship or 213 receipt of contributions for the eligible employee in the 214 effective month, except when the election is received by the 215 third-party administrator. This paragraph is contingent upon 216 approval by the Internal Revenue Service. 217 1. If the employee chooses to move to the investment plan, 218 the provisions of subsection (3) govern the transfer. 219 2. If the employee chooses to move to the pension plan, the 220 employee must transfer from his or her investment plan account, 221 and from other employee moneys as necessary, a sum representing 222 the present value of that employee’s accumulated benefit 223 obligation immediately following the time of such movement, 224 determined assuming that attained service equals the sum of 225 service in the pension plan and service in the investment plan. 226 Benefit commencement occurs on the first date the employee is 227 eligible for unreduced benefits, using the discount rate and 228 other relevant actuarial assumptions that were used to value the 229 pension plan liabilities in the most recent actuarial valuation. 230 For any employee who, at the time of the second election, 231 already maintains an accrued benefit amount in the pension plan, 232 the then-present value of the accrued benefit is deemed part of 233 the required transfer amount. The division must ensure that the 234 transfer sum is prepared using a formula and methodology 235 certified by an enrolled actuary. A refund of any employee 236 contributions or additional member payments made which exceed 237 the employee contributions that would have accrued had the 238 member remained in the pension plan and not transferred to the 239 investment plan is not permitted. 240 3. Notwithstanding subparagraph 2., an employee who chooses 241 to move to the pension plan and who became eligible to 242 participate in the investment plan by reason of employment in a 243 regularly established position with a state employer after June 244 1, 2002; a district school board employer after September 1, 245 2002; or a local employer after December 1, 2002, must transfer 246 from his or her investment plan account, and from other employee 247 moneys as necessary, a sum representing the employee’s actuarial 248 accrued liability. A refund of any employee contributions or 249 additional member payments made which exceed the employee 250 contributions that would have accrued had the member remained in 251 the pension plan and not transferred to the investment plan is 252 not permitted. 253 4. An employee’s ability to transfer from the pension plan 254 to the investment plan underpursuant toparagraphs (a) and (b), 255 and the ability of a current employee to have an option to later 256 transfer back into the pension plan under subparagraph 2., is 257 consideredshall be deemeda significant system amendment. Under 258Pursuant tos. 121.031(4), any resulting unfunded liability 259 arising from actual original transfers from the pension plan to 260 the investment plan must be amortized within 30 plan years as a 261 separate unfunded actuarial base independent of the reserve 262 stabilization mechanism defined in s. 121.031(3)(f). For the 263 first 25 years, a direct amortization payment may not be 264 calculated for this base. During this 25-year period, the 265 separate base shall be used to offset the impact of employees 266 exercising their second program election under this paragraph. 267 The actuarial funded status of the pension plan will not be 268 affected by such second program elections in any significant 269 manner, after due recognition of the separate unfunded actuarial 270 base. Following the initial 25-year period, any remaining 271 balance of the original separate base shall be amortized over 272 the remaining 5 years of the required 30-year amortization 273 period. 274 5. If the employee chooses to transfer from the investment 275 plan to the pension plan and retains an excess account balance 276 in the investment plan after satisfying the buy-in requirements 277 under this paragraph, the excess may not be distributed until 278 the member retires from the pension plan. The excess account 279 balance may be rolled over to the pension plan and used to 280 purchase service credit or upgrade creditable service in the 281 pension plan. 282 Section 4. Subsection (2) of section 121.71, Florida 283 Statutes, is amended to read: 284 121.71 Uniform rates; process; calculations; levy.— 285 (2)(a) Based on the uniform rates set forth in subsections 286 (3), (4), and (5), employees and employers shall make monthly 287 contributions to the Division of Retirement as required in s. 288 121.061(1), which shall initially deposit the funds into the 289 Florida Retirement System Contributions Clearing Trust Fund. A 290 change in a contribution rate is effective the first day of the 291 month for which a full month’s employer and employee 292 contribution may be made on or after the beginning date of the 293 change. Beginning July 1, 2011, each employee shall contribute 294 the contributions required in subsection (3). The employer shall 295 deduct the contribution from the employee’s monthly salary, and 296 the contribution shall be submitted to the division. These 297 contributions shall be reported as employer-paid employee 298 contributions, and credited to the account of the employee. The 299 contributions shall be deducted from the employee’s salary 300 before the computation of applicable federal taxes and treated 301 as employer contributions under 26 U.S.C. s. 414(h)(2). The 302 employer specifies that the contributions, although designated 303 as employee contributions, are being paid by the employer in 304 lieu of contributions by the employee. The employee does not 305 have the option of choosing to receive the contributed amounts 306 directly instead of having them paid by the employer to the 307 plan. Such contributions are mandatory, and each employee is 308 considered to have consented to payroll deductions. Payment of 309 an employee’s salary or wages, less the contribution, is a full 310 and complete discharge and satisfaction of all claims and 311 demands for the service rendered by employees during the period 312 covered by the payment, except their claims to the benefits to 313 which they may be entitled under this chapter. 314 (b) Effective July 1, 2021, employees in the pension plan 315 may contribute an amount in addition to the required retirement 316 contribution rate provided in subsection (3). Any amount 317 contributed in excess of the rate under subsection (3) must be 318 segregated from the employees’ required retirement contribution 319 and used to purchase additional retirement service credit in the 320 membership class in which the member belongs. Additional service 321 purchased under this paragraph must be added to the credible 322 service of the member and used to vest for retirement 323 eligibility, and must be used in the calculation of benefits. 324 Section 5. The Legislature finds that a proper and 325 legitimate state purpose is served when employees and retirees 326 of the state and its political subdivisions, and the dependents, 327 survivors, and beneficiaries of such employees and retirees, are 328 extended the basic protections afforded by governmental 329 retirement systems. These persons must be provided benefits that 330 are fair and adequate and that are managed, administered, and 331 funded in an actuarially sound manner, as required by s. 14, 332 Article X of the State Constitution and part VII of chapter 112, 333 Florida Statutes. Therefore, the Legislature determines and 334 declares that this act fulfills an important state interest. 335 Section 6. This act shall take effect July 1, 2021.