at Reason Foundation played an integral role in thought leadership related to this landmark reform, educating policymakers on the issue for years. These plans are primarily employer-funded accounts with employees making a mandatory 3% contribution regardless of the plan chosen. Click on the link below, then theLaunch Presentation button to start the video. All Executive Service (AEX), Faculty, Administrative & Professional (A&P), and University Support Personnel System (USPS) employees participate in a State of Florida retirement program. <>/ExtGState<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> <> There appears to be a clear understanding within the FRS of what is needed to properly fund an individuals retirement, given the rates already used for specific employment classes. Florida policymakers and those involved in this reform process deserve credit for achieving meaningful and lasting change. Participants are vested upon completion of one year of creditable service and decide how to allocate contributions among offered investment funds. These bills establish the Florida Retirement System (FRS) employer contribution rates for the 2019-20 plan year. Copyright 2023,University of South Florida. In combination with previous reforms, the Florida Retirement System Investment Plan (FRS IP) rate changes in House Bill 5007 make Florida a leader in providing attractive, choice-based, and affordable benefits to an increasingly flexible and diverse workforce. Interest Rate The change also improves the footing of the states defined contribution plan, which plays a critical role in addressing the financial risks borne by public employers and taxpayers. Providing annuities to improve members retirement security has long been an established practice in the FRS IP, but it could still be improved. It is hard to design a retirement plan and then measure its effectiveness if its very objective is unclear. The annual interest rate has tripled from 1.3% to 4%, compounded monthly, for the accrued monthly DROP benefit. Financial advisors and industry experts typically recommend total contributions into a plan like the FRS IP should total at least 10% of an employees paywith many even preferring 12% to 15% percent to ensure benefit adequacyfor the eventual accrued benefits to be sufficient for retirement. Your Retirement Plan Options / Financial Future | MyBenefits University of Florida From there, we engaged in educational outreach with policymakers, detailing the problem and proposing potential solutions to help bring the FRS Investment Plan up to industry standards. as well as mandatory employee According to the Houses The objectives should further include that this benefit is provided in a cost-efficient way, and without the creation of unfunded liabilities, or debt. FRS Investment Plan Employer Handbook. (202) 986-0916. Implementing the recommendations discussed here will provide public employees and taxpayers more stability, predictability, and accountability, ensuring FRS can provide financially sustainable and attractive benefits for generations to come. Seeing that most public employees werent staying in the system long enough to maximize their pension benefits, Florida lawmakers appropriately switched the FRS IP to be the default choice for most new workers (excluding first responders in the Special Risk class) in 2016. PDF The Florida Senate BILL ANALYSIS AND FISCAL IMPACT STATEMENT Between 2002 and 2017, the percentage of active members who had selected the FRS Investment Plan option increased steadily, exceeding 20% before it was made the default option in 2018. The collaborative effort was rewarded when Gov. Senior Managing Director, Transportation Policy. Modern public retirement plans need to reflect realistic employment patterns, focus on income replacement, and meet individual needs. Members own all employer contributions and earnings in their Investment Planaccount after completing 1 year of service. <>>> Election Window Suite 600 Ron DeSantis and members of the state legislature deserve recognition for their work to bring the Florida Retirement System one step closer to becoming a model for public retirement systems around the country. As states around the country scramble to recruit qualified employees, HB 5007 and the FRS Investment Plan will make Florida a more competitive employment option for new workers, especially those highly skilled technical professionals the state expects it will need in the future. fiscal analysis Gov. The new rates should be reflected on your first payroll dated on or after July 1, 2019. This site is protected by reCAPTCHA and the Google Privacy Eligibility TEAMS USPS The Florida legislature has been a national leader in introducing retirement choice and plan design options that empower public employees to choose the best retirement path for themselves and their families. Senior Managing Director, Transportation Policy. Freedom First Budget The uniform contribution rate system will continue. Chief among these is the Special Risk classification which covers police, fire, corrections and certain other employees. Note: Employees appointed to a Faculty position in the College of Medicine are required Our monthly newsletter highlights the latest actuarial analysis and policy insights from our team. Contact the Central Human Resources Benefits Office at benefits@usf.edu or your Regional HR office (USF St. Petersburg or USF Sarasota-Manatee) to set up a retirement appointment. With the passage of HB 5007, lawmakers have moved the state into a more competitive position by providing employees with more resources to meet their retirement needs. % Framing explicit language delineating the specific objectives of the Investment Plansuch as lifetime income and retirement securitycould help communicate the goals of the plan to new and existing public workers. endobj Today, over a quarter of the FRS membership has either selected or defaulted into the Investment Plan, and its share continues to grow rapidly. SUSORP is a defined contribution plan. A few changes, most notably to the contribution rate, would enable it to align with industry best practices and serve as an effective retirement vehicle for state employees. switched The monthly retiree Health Insurance Subsidy is increased by 50% from $5 to $7.50 for each year of creditable service. Major Florida legislation improves the state's default defined PDF Frequently Asked Questions - Employer - Florida The contribution rate paid by employers into FRS Investment Plan accounts is increased by 2% in ALL membership classes. account, and you will be able to select how to allocate the contributions among various The FRS Investment Plan offers: USPS employees will elect to participate in either the Florida Retirement System (FRS) Pension Plan or the FRS Investment Plan. Employees must execute a contract with at least one Investment Provider Company to establish a SUSORP account. In combination with their own 3% contribution, which will remain unchanged, the total contribution into the IP plan for Regular Class members will now be 9.3%. The amount of the retirement benefit is determined by the employer and employee contributions and the performance of the investment fund choices. There is little reference in the FRS Investment Plan material that specifically speaks to plan objectives. This notable step also improves the long-term viability of the Florida Retirement System. The largest grouping of employeesthe Regular Class, which includes teachers and most non-public safety workerswill see the employer rates into their IP accounts rise from 3.3% of pay to 6.3%. But a couple of critical factors are not met, however, and these factors need addressing for the Florida Retirement Systems Investment Plan to be an effective and adequate primary retirement vehicle for Floridas state employees. The chapters listed below are available in Adobe Acrobat PDF format and are intended to be duplex printed on letter-sized, three-hole-punched paper. Florida policymakers and those involved in this reform process deserve credit for achieving meaningful and lasting change. With this move, Florida continues to demonstrate its commitment to maintaining a %PDF-1.5 This site is protected by reCAPTCHA and the Google Privacy investment funds. The FRS Pension Plan is a defined benefit plan in which participants are guaranteed a benefit at retirement. Los Angeles, CA 90230 Policy and Terms of This field is for validation purposes and should be left unchanged. It is republished by the Washington Examiner with the Reason Foundation's kind permission. The second area of opportunity lies in the types of investments offered to those participating in the Investment Plan. This shortcoming also creates more immediate challenges that can impact many stakeholders. Those in the Special Risk class, which includes public safety officerswill see their total contributions rise from 14% to 17%. The Investment Plan directs contributions to individual member accounts, and you allocate your contributions and account balance among various investment funds. (310) 391-2245, 1630 Connecticut Ave NW PDF House of Representatives Staff Analysis recommending an improved defined contribution retirement benefit for teachers and most public employees statewide, For the sake of this analysis, the objective of the FRS IP should be to provide for meeting employer workplace needs in the recruiting and retention of qualified workers, and for the maintenance of an employees standard of living, in combination with social security and personal savings, following a full career of employment. Full Testimony Presentation: FRS Investment Plan Assessment and Recommendations. Originally adopted during the 2000 legislative session as an alternative option to the states traditional defined benefit pension, the Florida Retirement System Investment Plan (FRS IP) has taken on increasing importance in Florida state and local government administration and now serves as the states primary vehicle for providing retirement security to most public workers. Benefits below industry standards and below those available in the private sector can significantly hinder the states ability to compete for talentespecially in areas like information technology and data securityto ensure the continued delivery of quality public services to Floridians. Policy and Terms of In combination with previous reforms, the Florida Retirement System Investment Plan (FRS IP) rate changes in House Bill 5007 make Florida a leader in providing attractive, choice-based, and affordable benefits to an increasingly flexible and diverse workforce. For these employees, the state contribution rate is 11 percent of their salary while the employee contribution remains at 3 percent. (HB 5007), which grants a 3% benefit increase to all active plan members, is now law. PDF July 2022 2 - MyFRS Prepared for: Florida Senate Committee on Governmental Oversight and Accountability, Prepared by: Zachary Christensen, Steven Gassenberger, Leonard Gilroy, & Ryan Frost, Presented by: Zachary Christensen Date: October 20, 2021. The Florida Retirement System (FRS) Investment Plan is a defined contribution plan Ron DeSantis and members of the state legislature deserve recognition for their work to bring the Florida Retirement System one step closer to becoming a model for public retirement systems around the country. by the Reason Foundation. Ron DeSantis released his There are a number of straightforward plan design principles, such as benefit portability and adequate contribution requirements, that when carefully incorporated into defined contribution (DC) plans, serve to create a sound retirement plan option. Contribution Rates / Employers / Retirement / Workforce Operations When you work for the state, the Florida Retirement System (FRS) offers two retirement options: The FRS Pension Plan provides a monthly benefit to you when you retire. A generation of retirees inadequately prepared for retirement creates a risk of increased reliance on the states social safety net. Rates displayed for Florida FRS are for the Regular Class, which includes most members.
