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FLORIDA RETIREMENT SYSTEM REFORM

FLORIDA RETIREMENT SYSTEM REFORM. Comparative Summary of the Governors Budget Proposal and Senate Bill 1130 . FRS Defined Benefit Plan. Governor Eliminates defined benefit for all new employees hired on or after July1, 2011 Senate Bill 1130 Same. Health Insurance Subsidy. Governor

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FLORIDA RETIREMENT SYSTEM REFORM

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  1. FLORIDA RETIREMENT SYSTEM REFORM Comparative Summary of the Governors Budget Proposal and Senate Bill 1130

  2. FRS Defined Benefit Plan • Governor • Eliminates defined benefit for all new employees hired on or after July1, 2011 • Senate Bill 1130 • Same

  3. Health Insurance Subsidy • Governor • Discontinues subsidy of ($5.00) a month for each year of service up to 30 years after June 30, 2011 • Phases out subsidy beginning July1, 2011 for employees hired on or prior to June 30, 2011. • Example: • Current employee has 15 years in system on June 30, 2011. • That employee works 15 more years. • Only the first 15 years will earn H.I.S. • That employee will have 15 years x $5.00 = $75.00 a month H.I.S.

  4. Health Insurance Subsidy • Senate • No changes for current employees (vested or not) employed on or prior to June 30, 2011. • No effect on current retirees. • Continues H.I.S. for new employees hired after July 1, 2011.

  5. 3 % Cost of Living Adjustment (COLA) • Governor • Phases out COLA beginning July 1, 2011, for employees hired on or prior to June 30, 2011 • e.g. Employee has 15 years in the system on June 30, 2011. That employee works 15 more years after June 30, 2011. Only the first 15 years will be earn COLA. That employee’s COLA will be 3% divided by 2 = 1.5% • Senate • No change for current employees (vested or not) employed on or prior to June 30, 2011. No effect on current retirees.

  6. DROP • Governor • Eliminates DROP effective July 1, 2011. No effect on current participants • Senate • Eliminates DROP effective July1, 2011 for new employees. • No effect on current participants or current employees. • Participation changes from age 62 with six years or more service to age 65 with six years or more service.

  7. Employee Retirement Contribution • Governor • Requires 5% contribution by employees effective July 1, 2011. • Senate • Sets up the mechanism for employee contributions. • Does not specify a percentage. • TBD in the Appropriation Committee.

  8. Community Colleges Optional Retirement Program (CCORP) • Governor • Eliminates • Phases CCORP participants into defined contribution program effective July1, 2011 • Senate • Continues as currently available.

  9. Defined Contribution • Governor • Establishes Defined Contribution as the Florida Retirement Plan for all new employees effective July 1, 2011. It appears to only have one class. • Senate • Establishes Defined Contribution as the Florida Retirement Plan for all new employees effective July 1, 2011. Provides for multiple classes at current contribution rates. • Regular, Special Risk, Senior Management, Elected, Judicial

  10. Vesting • Governor • Appears to be unchanged for current employees. New employees hired after July 1, 2011 go into Defined Contribution. Vesting is unclear. • Senate • Unchanged for current and new employees hired on or before June 30,2011. • Employees hired on or after July 1, 2011 go into Defined Contribution Vesting as follows:

  11. Senate Vesting Plan • If you terminate employment • Prior to 3 years the Employee receives only their contribution three months after termination. • After 3 years the Employee receives 100% of employee and 40% of employer contributions plus earnings. • After 4 years the Employee receives 100% of employee and 80% of employer contributions plus earnings. • After 5 or more years the Employee receives 100% of employee and employer contributions plus earnings. • Retirement Age • 62 years old AND 5 years service

  12. Average Final Compensation(Defined Benefit) • Governor – • Appears to be unchanged for current and new employees hired on or prior to June 30, 2011 • Senate • Eliminating overtime and Annual Leave for average final compensation for current and new employees hired on or prior to June 30, 2011. Unclear as to overloads.

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