HB 525

1
A bill to be entitled
2An act relating to the Florida Retirement System;
3amending s. 121.021, F.S.; revising definitions of the
4terms "normal retirement date" and "vested" or
5"vesting"; amending s. 121.091, F.S.; revising
6provisions relating to the early retirement benefit
7calculation to conform to changes made by the act;
8amending s. 121.4501, F.S.; requiring new employees
9to, by default, be enrolled in the investment plan;
10extending the period during which employees may elect
11to participate in the pension plan; prohibiting
12certain employees from choosing to move to the pension
13plan after a certain period; providing an effective
14date.
15
16Be It Enacted by the Legislature of the State of Florida:
17
18     Section 1.  Paragraph (b) of subsection (29) and paragraph
19(b) of subsection (45) of section 121.021, Florida Statutes, are
20amended, and paragraph (c) is added to subsection (45) of that
21section, to read:
22     121.021  Definitions.-The following words and phrases as
23used in this chapter have the respective meanings set forth
24unless a different meaning is plainly required by the context:
25     (29)  "Normal retirement date" means the date a member
26attains normal retirement age and is vested, which is determined
27as follows:
28     (b)1.  If a Special Risk Class member initially enrolled
29before July 1, 2011:
30     a.  The first day of the month the member attains age 55
31and completes the years of creditable service in the Special
32Risk Class equal to or greater than the years of service
33required for vesting;
34     b.  The first day of the month following the date the
35member completes 25 years of creditable service in the Special
36Risk Class, regardless of age; or
37     c.  The first day of the month following the date the
38member completes 25 years of creditable service and attains age
3952, which service may include a maximum of 4 years of military
40service credit if such credit is not claimed under any other
41system and the remaining years are in the Special Risk Class.
42     2.  If a Special Risk Class member initially enrolled on or
43after July 1, 2011, but before July 1, 2012:
44     a.  The first day of the month the member attains age 60
45and completes the years of creditable service in the Special
46Risk Class equal to or greater than the years of service
47required for vesting;
48     b.  The first day of the month following the date the
49member completes 30 years of creditable service in the Special
50Risk Class, regardless of age; or
51     c.  The first day of the month following the date the
52member completes 30 years of creditable service and attains age
5357, which service may include a maximum of 4 years of military
54service credit if such credit is not claimed under any other
55system and the remaining years are in the Special Risk Class.
56     3.  If a Special Risk Class member initially enrolled on or
57after July 1, 2012:
58     a.  The first day of the month the member attains age 55
59and completes the years of creditable service in the Special
60Risk Class equal to or greater than the years of service
61required for vesting;
62     b.  The first day of the month the member attains age 48
63and completes 25 years of creditable service in the Special Risk
64Class; or
65     c.  The first day of the month following the date the
66member completes 25 years of creditable service and attains age
6752, which service may include a maximum of 4 years of military
68service credit if such credit is not claimed under any other
69system and the remaining years are in the Special Risk Class.
70
71"Normal retirement age" is attained on the "normal retirement
72date."
73     (45)  "Vested" or "vesting" means the guarantee that a
74member is eligible to receive a future retirement benefit upon
75completion of the required years of creditable service for the
76employee's class of membership, even though the member may have
77terminated covered employment before reaching normal or early
78retirement date. Being vested does not entitle a member to a
79disability benefit. Provisions governing entitlement to
80disability benefits are set forth under s. 121.091(4).
81     (b)  Any member initially enrolled in the Florida
82Retirement System on or after July 1, 2011, but before July 1,
832012, shall be vested upon completion of 8 years of creditable
84service.
85     (c)  Any member initially enrolled in the Florida
86Retirement System on or after July 1, 2012, shall be vested upon
87completion of 10 years of creditable service.
88     Section 2.  Paragraph (a) of subsection (3) of section
89121.091, Florida Statutes, is amended to read:
90     121.091  Benefits payable under the system.-Benefits may
91not be paid under this section unless the member has terminated
92employment as provided in s. 121.021(39)(a) or begun
93participation in the Deferred Retirement Option Program as
94provided in subsection (13), and a proper application has been
95filed in the manner prescribed by the department. The department
96may cancel an application for retirement benefits when the
97member or beneficiary fails to timely provide the information
98and documents required by this chapter and the department's
99rules. The department shall adopt rules establishing procedures
100for application for retirement benefits and for the cancellation
101of such application when the required information or documents
102are not received.
103     (3)  EARLY RETIREMENT BENEFIT.-Upon retirement on his or
104her early retirement date, the member shall receive an immediate
105monthly benefit that shall begin to accrue on the first day of
106the month of the retirement date and be payable on the last day
107of that month and each month thereafter during his or her
108lifetime. Such benefit shall be calculated as follows:
109     (a)  For a member initially enrolled:
110     1.  Before July 1, 2011, the amount of each monthly payment
111shall be computed in the same manner as for a normal retirement
112benefit, in accordance with subsection (1), but shall be based
113on the member's average monthly compensation and creditable
114service as of the member's early retirement date. The benefit so
115computed shall be reduced by five-twelfths of 1 percent for each
116complete month by which the early retirement date precedes the
117normal retirement date of age 62 for a member of the Regular
118Class, Senior Management Service Class, or the Elected Officers'
119Class, and age 55 for a member of the Special Risk Class, or age
12052 if a Special Risk member has completed 25 years of creditable
121service in accordance with s. 121.021(29)(b)1.c.
122     2.  On or after July 1, 2011, but before July 1, 2012, the
123amount of each monthly payment shall be computed in the same
124manner as for a normal retirement benefit, in accordance with
125subsection (1), but shall be based on the member's average
126monthly compensation and creditable service as of the member's
127early retirement date. The benefit so computed shall be reduced
128by five-twelfths of 1 percent for each complete month by which
129the early retirement date precedes the normal retirement date of
130age 65 for a member of the Regular Class, Senior Management
131Service Class, or the Elected Officers' Class, and age 60 for a
132member of the Special Risk Class, or age 57 if a Special Risk
133member has completed 30 years of creditable service in
134accordance with s. 121.021(29)(b)2.c.
135     3.  On or after July 1, 2012, the amount of each monthly
136payment shall be computed in the same manner as for a normal
137retirement benefit, in accordance with subsection (1), but shall
138be based on the member's average monthly compensation and
139creditable service as of the member's early retirement date. The
140benefit so computed shall be reduced by five-twelfths of 1
141percent for each complete month by which the early retirement
142date precedes the normal retirement date of age 62 for a member
143of the Regular Class, Senior Management Service Class, or the
144Elected Officers' Class, and age 55 for a member of the Special
145Risk Class, or age 48 if a Special Risk member has completed 25
146years of creditable service in accordance with s.
147121.021(29)(b)3.c.
148     Section 3.  Subsection (4) of section 121.4501, Florida
149Statutes, is amended to read:
150     121.4501  Florida Retirement System Investment Plan.-
151     (4)  PARTICIPATION; ENROLLMENT.-
152     (a)1.  With respect to an eligible employee who is employed
153in a regularly established position on June 1, 2002, by a state
154employer:
155     a.  Any such employee may elect to participate in the
156investment plan in lieu of retaining his or her membership in
157the pension plan. The election must be made in writing or by
158electronic means and must be filed with the third-party
159administrator by August 31, 2002, or, in the case of an active
160employee who is on a leave of absence on April 1, 2002, by the
161last business day of the 5th month following the month the leave
162of absence concludes. This election is irrevocable, except as
163provided in paragraph (g). Upon making such election, the
164employee shall be enrolled as a member of the investment plan,
165the employee's membership in the Florida Retirement System is
166governed by the provisions of this part, and the employee's
167membership in the pension plan terminates. The employee's
168enrollment in the investment plan is effective the first day of
169the month for which a full month's employer contribution is made
170to the investment plan.
171     b.  Any such employee who fails to elect to participate in
172the investment plan within the prescribed time period is deemed
173to have elected to retain membership in the pension plan, and
174the employee's option to elect to participate in the investment
175plan is forfeited.
176     2.  With respect to employees who become eligible to
177participate in the investment plan by reason of employment in a
178regularly established position with a state employer commencing
179after April 1, 2002, but before July 1, 2012:
180     a.  Any such employee shall, by default, be enrolled in the
181pension plan at the commencement of employment, and may, by the
182last business day of the 5th month following the employee's
183month of hire, elect to participate in the investment plan. The
184employee's election must be made in writing or by electronic
185means and must be filed with the third-party administrator. The
186election to participate in the investment plan is irrevocable,
187except as provided in paragraph (g).
188     b.  If the employee files such election within the
189prescribed time period, enrollment in the investment plan is
190effective on the first day of employment. The retirement
191contributions paid through the month of the employee plan change
192shall be transferred to the investment program, and, effective
193the first day of the next month, the employer and employee must
194pay the applicable contributions based on the employee
195membership class in the program.
196     c.  An employee who fails to elect to participate in the
197investment plan within the prescribed time period is deemed to
198have elected to retain membership in the pension plan, and the
199employee's option to elect to participate in the investment plan
200is forfeited.
201     3.  With respect to employees who become eligible to
202participate in the investment plan pursuant to s.
203121.051(2)(c)3. or s. 121.35(3)(i), the employee may elect to
204participate in the investment plan in lieu of retaining his or
205her membership in the State Community College System Optional
206Retirement Program or the State University System Optional
207Retirement Program. The election must be made in writing or by
208electronic means and must be filed with the third-party
209administrator. This election is irrevocable, except as provided
210in paragraph (g). Upon making such election, the employee shall
211be enrolled as a member in the investment plan, the employee's
212membership in the Florida Retirement System is governed by the
213provisions of this part, and the employee's participation in the
214State Community College System Optional Retirement Program or
215the State University System Optional Retirement Program
216terminates. The employee's enrollment in the investment plan is
217effective on the first day of the month for which a full month's
218employer and employee contribution is made to the investment
219plan.
220     4.  With respect to employees who become eligible to
221participate in the investment plan by reason of employment in a
222regularly established position with a state employer commencing
223on or after July 1, 2012:
224     a.  Any such employee shall, by default, be enrolled in the
225investment plan at the commencement of employment, and may, by
226the last business day of the 12th month following the employee's
227month of hire, elect to participate in the pension plan. The
228employee's election must be made in writing or by electronic
229means and must be filed with the third-party administrator.
230     b.  If the employee files such election within the
231prescribed time period, enrollment in the pension plan is
232effective on the first day of employment. The present value of
233his or her retirement contributions under the investment plan
234paid through the month of the employee plan change shall be
235transferred to the pension plan, and, effective the first day of
236the next month, the employer and employee must pay the
237applicable contributions based on the employee membership class
238in the pension plan.
239     c.  An employee who fails to elect to participate in the
240pension plan within the prescribed time period is deemed to have
241elected to retain membership in the investment plan, and the
242employee's option to elect to participate in the pension plan is
243forfeited.
244     5.4.  For purposes of this paragraph, "state employer"
245means any agency, board, branch, commission, community college,
246department, institution, institution of higher education, or
247water management district of the state, which participates in
248the Florida Retirement System for the benefit of certain
249employees.
250     (b)1.  With respect to an eligible employee who is employed
251in a regularly established position on September 1, 2002, by a
252district school board employer:
253     a.  Any such employee may elect to participate in the
254investment plan in lieu of retaining his or her membership in
255the pension plan. The election must be made in writing or by
256electronic means and must be filed with the third-party
257administrator by November 30, or, in the case of an active
258employee who is on a leave of absence on July 1, 2002, by the
259last business day of the 5th month following the month the leave
260of absence concludes. This election is irrevocable, except as
261provided in paragraph (g). Upon making such election, the
262employee shall be enrolled as a member of the investment plan,
263the employee's membership in the Florida Retirement System is
264governed by the provisions of this part, and the employee's
265membership in the pension plan terminates. The employee's
266enrollment in the investment plan is effective the first day of
267the month for which a full month's employer contribution is made
268to the investment program.
269     b.  Any such employee who fails to elect to participate in
270the investment plan within the prescribed time period is deemed
271to have elected to retain membership in the pension plan, and
272the employee's option to elect to participate in the investment
273plan is forfeited.
274     2.  With respect to employees who become eligible to
275participate in the investment plan by reason of employment in a
276regularly established position with a district school board
277employer commencing after July 1, 2002, but before July 1, 2012:
278     a.  Any such employee shall, by default, be enrolled in the
279pension plan at the commencement of employment, and may, by the
280last business day of the 5th month following the employee's
281month of hire, elect to participate in the investment plan. The
282employee's election must be made in writing or by electronic
283means and must be filed with the third-party administrator. The
284election to participate in the investment plan is irrevocable,
285except as provided in paragraph (g).
286     b.  If the employee files such election within the
287prescribed time period, enrollment in the investment plan is
288effective on the first day of employment. The employer
289retirement contributions paid through the month of the employee
290plan change shall be transferred to the investment plan, and,
291effective the first day of the next month, the employer shall
292pay the applicable contributions based on the employee
293membership class in the investment plan.
294     c.  Any such employee who fails to elect to participate in
295the investment plan within the prescribed time period is deemed
296to have elected to retain membership in the pension plan, and
297the employee's option to elect to participate in the investment
298plan is forfeited.
299     3.  With respect to employees who become eligible to
300participate in the investment plan by reason of employment in a
301regularly established position with a district school board
302employer commencing on or after July 1, 2012:
303     a.  Any such employee shall, by default, be enrolled in the
304investment plan at the commencement of employment, and may, by
305the last business day of the 12th month following the employee's
306month of hire, elect to participate in the pension plan. The
307employee's election must be made in writing or by electronic
308means and must be filed with the third-party administrator.
309     b.  If the employee files such election within the
310prescribed time period, enrollment in the pension plan is
311effective on the first day of employment. The present value of
312his or her retirement contributions under the investment plan
313paid through the month of the employee plan change shall be
314transferred to the pension plan, and, effective the first day of
315the next month, the employer shall pay the applicable
316contributions based on the employee membership class in the
317pension plan.
318     c.  Any such employee who fails to elect to participate in
319the pension plan within the prescribed time period is deemed to
320have elected to retain membership in the investment plan, and
321the employee's option to elect to participate in the pension
322plan is forfeited.
323     4.3.  For purposes of this paragraph, "district school
324board employer" means any district school board that
325participates in the Florida Retirement System for the benefit of
326certain employees, or a charter school or charter technical
327career center that participates in the Florida Retirement System
328as provided in s. 121.051(2)(d).
329     (c)1.  With respect to an eligible employee who is employed
330in a regularly established position on December 1, 2002, by a
331local employer:
332     a.  Any such employee may elect to participate in the
333investment plan in lieu of retaining his or her membership in
334the pension plan. The election must be made in writing or by
335electronic means and must be filed with the third-party
336administrator by February 28, 2003, or, in the case of an active
337employee who is on a leave of absence on October 1, 2002, by the
338last business day of the 5th month following the month the leave
339of absence concludes. This election is irrevocable, except as
340provided in paragraph (g). Upon making such election, the
341employee shall be enrolled as a participant of the investment
342plan, the employee's membership in the Florida Retirement System
343is governed by the provisions of this part, and the employee's
344membership in the pension plan terminates. The employee's
345enrollment in the investment plan is effective the first day of
346the month for which a full month's employer contribution is made
347to the investment plan.
348     b.  Any such employee who fails to elect to participate in
349the investment plan within the prescribed time period is deemed
350to have elected to retain membership in the pension plan, and
351the employee's option to elect to participate in the investment
352plan is forfeited.
353     2.  With respect to employees who become eligible to
354participate in the investment plan by reason of employment in a
355regularly established position with a local employer commencing
356after October 1, 2002, but before July 1, 2012:
357     a.  Any such employee shall, by default, be enrolled in the
358pension plan at the commencement of employment, and may, by the
359last business day of the 5th month following the employee's
360month of hire, elect to participate in the investment plan. The
361employee's election must be made in writing or by electronic
362means and must be filed with the third-party administrator. The
363election to participate in the investment plan is irrevocable,
364except as provided in paragraph (g).
365     b.  If the employee files such election within the
366prescribed time period, enrollment in the investment plan is
367effective on the first day of employment. The employer
368retirement contributions paid through the month of the employee
369plan change shall be transferred to the investment plan, and,
370effective the first day of the next month, the employer shall
371pay the applicable contributions based on the employee
372membership class in the investment plan.
373     c.  Any such employee who fails to elect to participate in
374the investment plan within the prescribed time period is deemed
375to have elected to retain membership in the pension plan, and
376the employee's option to elect to participate in the investment
377plan is forfeited.
378     3.  With respect to employees who become eligible to
379participate in the investment plan by reason of employment in a
380regularly established position with a local employer commencing
381on or after July 1, 2012:
382     a.  Any such employee shall, by default, be enrolled in the
383investment plan at the commencement of employment, and may, by
384the last business day of the 12th month following the employee's
385month of hire, elect to participate in the pension plan. The
386employee's election must be made in writing or by electronic
387means and must be filed with the third-party administrator.
388     b.  If the employee files such election within the
389prescribed time period, enrollment in the pension plan is
390effective on the first day of employment. The present value of
391his or her employer retirement contributions under the
392investment plan paid through the month of the employee plan
393change shall be transferred to the pension plan, and, effective
394the first day of the next month, the employer shall pay the
395applicable contributions based on the employee membership class
396in the pension plan.
397     c.  Any such employee who fails to elect to participate in
398the pension plan within the prescribed time period is deemed to
399have elected to retain membership in the investment plan, and
400the employee's option to elect to participate in the pension
401plan is forfeited.
402     4.3.  For purposes of this paragraph, "local employer"
403means any employer not included in paragraph (a) or paragraph
404(b).
405     (d)  Contributions available for self-direction by a member
406who has not selected one or more specific investment products
407shall be allocated as prescribed by the state board. The third-
408party administrator shall notify the member at least quarterly
409that the member should take an affirmative action to make an
410asset allocation among the investment products.
411     (e)  On or after July 1, 2011, a member of the pension plan
412who obtains a refund of employee contributions retains his or
413her prior plan choice upon return to employment in a regularly
414established position with a participating employer.
415     (f)  A member of the investment plan who takes a
416distribution of any contributions from his or her investment
417plan account is considered a retiree. A retiree who is initially
418reemployed on or after July 1, 2010, is not eligible for renewed
419membership.
420     (g)  After the period during which an eligible employee had
421the choice to elect the pension plan or the investment plan, or
422the month following the receipt of the eligible employee's plan
423election, if sooner, the employee shall have one opportunity, at
424the employee's discretion, to choose to move from the pension
425plan to the investment plan or from the investment plan to the
426pension plan. However, employees initially enrolled in the
427investment plan on or after July 1, 2012, may not move from the
428investment plan to the pension plan after the close of the
429initial prescribed time period to do so. Eligible employees may
430elect to move between plans only if they are earning service
431credit in an employer-employee relationship consistent with s.
432121.021(17)(b), excluding leaves of absence without pay.
433Effective July 1, 2005, such elections are effective on the
434first day of the month following the receipt of the election by
435the third-party administrator and are not subject to the
436requirements regarding an employer-employee relationship or
437receipt of contributions for the eligible employee in the
438effective month, except when the election is received by the
439third-party administrator. This paragraph is contingent upon
440approval by the Internal Revenue Service.
441     1.  If the employee chooses to move to the investment plan,
442the provisions of subsection (3) govern the transfer.
443     2.  If the employee chooses to move to the pension plan,
444the employee must transfer from his or her investment plan
445account, and from other employee moneys as necessary, a sum
446representing the present value of that employee's accumulated
447benefit obligation immediately following the time of such
448movement, determined assuming that attained service equals the
449sum of service in the pension plan and service in the investment
450plan. Benefit commencement occurs on the first date the employee
451is eligible for unreduced benefits, using the discount rate and
452other relevant actuarial assumptions that were used to value the
453pension plan liabilities in the most recent actuarial valuation.
454For any employee who, at the time of the second election,
455already maintains an accrued benefit amount in the pension plan,
456the then-present value of the accrued benefit is deemed part of
457the required transfer amount. The division must ensure that the
458transfer sum is prepared using a formula and methodology
459certified by an enrolled actuary. A refund of any employee
460contributions or additional member payments made which exceed
461the employee contributions that would have accrued had the
462member remained in the pension plan and not transferred to the
463investment plan is not permitted.
464     3.  Notwithstanding subparagraph 2., an employee who
465chooses to move to the pension plan and who became eligible to
466participate in the investment plan by reason of employment in a
467regularly established position with a state employer after June
4681, 2002; a district school board employer after September 1,
4692002; or a local employer after December 1, 2002, must transfer
470from his or her investment plan account, and from other employee
471moneys as necessary, a sum representing the employee's actuarial
472accrued liability. A refund of any employee contributions or
473additional participant payments made which exceed the employee
474contributions that would have accrued had the member remained in
475the pension plan and not transferred to the investment plan is
476not permitted.
477     4.  An employee's ability to transfer from the pension plan
478to the investment plan pursuant to paragraphs (a)-(d), and the
479ability of a current employee to have an option to later
480transfer back into the pension plan under subparagraph 2., shall
481be deemed a significant system amendment. Pursuant to s.
482121.031(4), any resulting unfunded liability arising from actual
483original transfers from the pension plan to the investment plan
484must be amortized within 30 plan years as a separate unfunded
485actuarial base independent of the reserve stabilization
486mechanism defined in s. 121.031(3)(f). For the first 25 years, a
487direct amortization payment may not be calculated for this base.
488During this 25-year period, the separate base shall be used to
489offset the impact of employees exercising their second program
490election under this paragraph. The actuarial funded status of
491the pension plan will not be affected by such second program
492elections in any significant manner, after due recognition of
493the separate unfunded actuarial base. Following the initial 25-
494year period, any remaining balance of the original separate base
495shall be amortized over the remaining 5 years of the required
49630-year amortization period.
497     5.  If the employee chooses to transfer from the investment
498plan to the pension plan and retains an excess account balance
499in the investment plan after satisfying the buy-in requirements
500under this paragraph, the excess may not be distributed until
501the member retires from the pension plan. The excess account
502balance may be rolled over to the pension plan and used to
503purchase service credit or upgrade creditable service in the
504pension plan.
505     Section 4.  This act shall take effect July 1, 2012.


CODING: Words stricken are deletions; words underlined are additions.