Florida Gov. Rick Scott, one of the three trustees of the $156.8 billion Florida State Board of Administration, Tallahassee, on April 12 endorsed a new coalition's effort to replace the defined benefit plan of the Florida Retirement System and other public-sector sponsors in the state with defined contribution plans.
Called Floridians for Sustainable Pensions, the coalition lists as its top priority recommendation “to bring the public sector more in line with the private sector by replacing taxpayer-guaranteed pension promises with 401(k)-type personal retirement savings plans which government employees own and control,” according to a statement from the coalition.
Mr. Scott said at a news conference announcing the formation of the coalition: “Government pension reform is a priority issue for me. In the past few months, I've heard from concerned citizens across the state about the problems Florida could face if we do not make real and significant changes to the current system. I am hopeful we will continue to look for ways to improve the system next legislative session. I'm confident that FSP will make a difference in those discussions by their ability to ensure Floridians have an organized and research-backed voice to urge action.”
Mr. Scott is not a member of the coalition, according to Valerie Wickboldt, coalition spokeswoman. Its members include the Florida Chamber of Commerce, Florida National Federation of Independent Businesses, and Associated Industries of Florida.
“Although the Florida Retirement System is better off than the pension plans of some of Florida's major cities, improvements are still needed to create a system that is viable for years to come,” coalition member J. Robert McClure III, president and CEO of the James Madison Institute, a public policy organization, said in the statement. Citing an institute study, “Protecting Florida's Cities Through Pension Reform,” he said the potential pension financial problem “can be addressed by encouraging local governments to place all new employees in a 401(k)-style defined contribution plan rather than defined benefit. ... It's time for politicians to quit making pension promises that the next generation will have to finance.”
The Florida Retirement System, which the FSBA oversees, offers participants a choice between a $128.4 billion defined benefit plan and its $6.3 billion 401(a) defined contribution plan. As of Dec. 30, 15% of actively employed participants had moved to the defined contribution plan and 21% to 26% of new hires annually have chosen the DC plan, according to an FSBA report.
Alexis Lambert, spokeswoman for the office of Florida CFO Jeff Atwater — an FSBA trustee — said Mr. Atwater isn't familiar with the coalition's goals. She couldn't respond about Mr. Atwater's view on moving to a defined contribution system.
Molly McFarland, spokeswoman in the office of Florida Attorney General Pamela Jo Bondi — the other FSBA trustee — didn't respond to a request for comment.
FSBA officials declined to comment on the coalition or its effort, said John Kuczwanski, communications manager.