Florida State Board of Administration, Tallahassee, would move to an exclusively defined contribution system for new employees under two bills introduced in the state Legislature.
Public employees hired as of Jan. 1, 2011, would be enrolled in the Florida Public Employee Optional Retirement Program, a 401(a) plan also called the Florida Retirement System Investment Plan, said state Sen. Mike Fasano, who introduced Senate Bill 660, which would require the change.
Current employees may enroll in either the defined benefit Florida Retirement System or the FRS Investment Plan.
The $133.7 billion FSBA’s oversight includes the assets of both the $113 billion defined benefit and $4.6 billion defined contribution funds.
Mr. Fasano said House Bill 413, introduced by state Rep. John Wood and state Rep. Stephen L. Precourt, is identical in its requirements. Messrs. Wood and Precourt couldn’t be reached for comment.
The Florida legislative session convenes March 2, but Mr. Fasano said he expects his bill to be assigned to a committee in January, when committee hearings begin. A similar timetable is expected for the House bill, according to legislative aides.
Mr. Fasano said he introduced the bill because of rising costs.
“We aren’t getting the returns to keep up with the cost,” he said. When investment returns aren’t adequate, “contributions … have to rise,” which causes participating state, local and other government entities … to raise property taxes, Mr. Fasano said.
A change to limit new employees to a DC plan “would save taxpayers hundreds of millions of dollars down the road,” Mr. Fasano said.
“It might take a couple of years to get it passed,” Mr. Fasano said of the legislation. “We have a hurdle to convince my colleagues how important it is to look at this issue to save tax dollars … and ensure benefits (participants) owed will be paid,” he added.
The FRS defined benefit plan is about 97% funded, according to information presented at an FSBA investment advisory council meeting Dec. 3.
Dennis D. MacKee, FSBA communications director, said: “We do not take a position on non-investment-related issues.”