FL Lawmaker Proposes Move to DC Plan for State Workers

February 17, 2011 (PLANSPONSOR.com) - Two new bills introduced in the Florida state Senate would require state and local governments to close their traditional retirement plans to new hires and enroll all employees in 401(k)-style plans.

The Miami Herald reports that one of the bills also requires state, school and county employees to pay into the Florida Retirement System for the first time since 1974, but rather than adopt the 5% contribution rate sought by Governor Rick Scott in his budget proposal, the Senate is likely to settle on a lower number.  

The Herald said the two proposals, sponsored by Senator Jeremy Ring, chairman of the Senate Government Accountability Committee, are intended to help local governments shore up their employee retirement accounts as well as relieve the mounting financial obligation local and state governments have made to their retirees. If passed, the changes would take effect July 1.  

Other elements of Ring’s proposed bills include: 

  • Plans must use at least five years to calculate an employee’s average retirement compensation; 
  • Local plans must provide death benefit protections for the spouse and minor children of special risk employees (police, fire, paramedics, prison guards, etc.) killed in the line of duty; 
  • The Department of Financial Services must rate the financial strength of local government defined benefit plans and post it on its Web site and submit a report to the governor and Legislature; and 
  • A task force will be created to study the practice of employees drawing disability pay for health problems associated with lifestyle choices, such as tobacco use. 


According to the news report, Doug Martin, director of governmental affairs for the American Federation of State, Local and Municipal Employees, said the proposal to end the traditional pension plan for new hires “will cost cities, school boards and the state itself billions of dollars over the next 25 years.” He warned that with no new employees going into the plan, the costs of paying off those obligations will rise. In the meantime, new employees will be paying for private management companies to invest their retirement funds.   

However, Ring said the cost of the changes do not outweigh the long-term benefits. The goal, he said, is a viable retirement program that employees can rely on while cities, now crippled by retirement obligations they can’t afford, can start digging out.