Changes modestly improve Senate Pension bill

February 24, 2011. Legislation remains a tax on teachers, public employees, Forces new hires into 401(K) style plan

(February 23, 2011)                                 Contact: Mark Pudlow, 850.201.3223 or 850.508.9756

TALLAHASSEE – Changes made in a Senate committee Tuesday to a proposal that would introduce sweeping changes into pension plans for public employees throughout Florida represent a slightly positive change, the Florida Education Association said today. But teachers, custodians, bus drivers, cafeteria workers, other school employees, law enforcement officers, firefighters and other state workers still face a tax on their earnings under the proposal.

Further, the proposed legislation still forces all new employees into the defined contribution plan – a 401(k)-style plan. Closing the current defined benefit pan and forcing employees toward the investment plan will cost the system significant sums of money. This is an additional hidden cost of these proposals.

Florida is already contemplating slashing the education budget, which will lead to decreased salaries and benefits. Piling on this pension reduction hits school employees yet again.

None of these proposed changes have been voted on by the committee and are scheduled to be discussed Thursday at 3:30 p.m.

“These so-called pension reforms, even with the proposed improvement, remains a tax on every teacher in Florida as well as thousands of other public employees around the state,” said FEA President Andy Ford. “While these hardworking Floridians are struggling to educate our children and protect our communities, the absolute last thing Tallahassee politicians need to be doing is balancing the budget by imposing a new tax on educators, law enforcement officers, firefighters and nurses.”

Ford also noted that requiring public employees to contribute any of their pay to their retirement fund while Florida cuts education budgets and salaries would mean that money would come right out of local communities throughout Florida at a time when the economy is still struggling to recover from a long downturn.

The Florida Education Association is the state’s largest association of professional employees, with more than 140,000 members. FEA represents pre K-12 teachers, higher education faculty, educational support professionals, students at our colleges and universities preparing to become teachers and retired education employees.

Pension Plan Change Would Seem Like Default

February 10, 2011. “Gov. Rick Scott’s proposal to change the FRS for current state employees is the same as defaulting on those obligations to the employees.”

(February 08, 2011)

By Stanley Smith

As people discuss the Florida Retirement System, they should differentiate between current employees and future employees.

Gov. Rick Scott’s proposal to change the FRS for current state employees is the same as defaulting on those obligations to the employees. Investopedia describes default as follows: “Default occurs when a debtor is unable to meet the legal obligation of debt repayment. Borrowers may default when they are unable to make the required payment or are unwilling to honor the debt.”

The state employees accepted, as part of their compensation, a financial obligation from the state identifying what payments the retirees would receive if they put part of their compensation with the FRS instead of in a defined-contribution plan with different investment companies.

Those employees who chose the FRS did not expect the state to default on its financial obligations to the employees when they were counting on those payments to have some dignity in their retirement years.