Florida Senate - 2014                                    SB 1114
       
       
        
       By the Committee on Community Affairs
       
       
       
       
       
       578-01873-14                                          20141114__
    1                        A bill to be entitled                      
    2         An act relating to the Florida Retirement System;
    3         providing a directive to the Division of Law Revision
    4         and Information; creating s. 121.601, F.S.; providing
    5         definitions; creating s. 121.602, F.S.; requiring the
    6         Trustees of the State Board of Administration to
    7         establish the Florida Retirement System Cash Balance
    8         Plan; requiring employees and employers to make
    9         contributions for funding the plan; providing that the
   10         plan provide a lump-sum or annuity benefit; providing
   11         procedures for employees who are members of the
   12         pension plan or investment plan before a certain date
   13         to transfer to the cash balance plan; providing
   14         procedures for employees employed after a certain date
   15         to be enrolled in the investment plan or cash balance
   16         plan; providing for the distribution of employee and
   17         employer contributions and credits to the cash balance
   18         plan; providing for the establishment of employee
   19         annuity savings accounts and employer retirement
   20         annuity accounts; providing vesting requirements;
   21         providing for the payment of benefits, including
   22         disability and death benefits, and the designation of
   23         a beneficiary; providing for the purchase of
   24         creditable service; providing eligibility for the
   25         retiree health insurance subsidy and social security
   26         coverage; providing for the education of members about
   27         the cash balance plan and requiring the state board to
   28         provide certain information to members on a quarterly
   29         basis; requiring the plan to conform to Internal
   30         Revenue Code requirements; authorizing the state board
   31         to adopt rules relating to maintaining federal status;
   32         providing for plan administration and imposing
   33         fiduciary standards on such management; requiring an
   34         annual actuarial analysis of the plan; directing the
   35         Investment Advisory Council to make recommendations to
   36         the board of directors; requiring the development and
   37         adoption of an Investment Policy Statement; amending
   38         s. 112.363, F.S., relating to the retiree health
   39         insurance subsidy; conforming provisions to changes
   40         made by the act; amending ss. 121.011 and 121.012,
   41         F.S.; conforming cross-references; amending s.
   42         121.021, F.S.; revising the definition of “Florida
   43         Retirement System” to conform to changes made by the
   44         act; amending s. 121.051, F.S.; prohibiting employees
   45         from enrolling in the pension plan after a certain
   46         date; providing exceptions; amending s. 121.052, F.S.;
   47         prohibiting elected officials from joining the Senior
   48         Management Service Class after a specified date;
   49         amending s. 121.055, F.S.; prohibiting an elected
   50         official eligible for membership in the Elected
   51         Officers’ Class from enrolling in Senior Management
   52         Service Class or Senior Management Service Optional
   53         Annuity Program; closing the Senior Management Service
   54         Optional Annuity Program to new members after a
   55         specified date; amending s. 121.091, F.S., relating to
   56         benefits payable under the Florida Retirement System;
   57         conforming provisions to changes made by the act;
   58         amending s. 121.151, F.S., relating to the investment
   59         of retirement funds; conforming provisions to changes
   60         made by the act; amending s. 121.35, F.S.; authorizing
   61         participants in the optional retirement program for
   62         the State University System to enroll in the cash
   63         balance plan as of a specified date; amending s.
   64         121.4501, F.S., relating to the Florida Retirement
   65         System Investment Plan; limiting the ability of
   66         members to enroll in the pension plan after a
   67         specified date; consolidating provisions relating to
   68         past plan elections; providing for certain employees
   69         enrolled in the pension or investment plan to transfer
   70         to the cash balance plan; providing for the
   71         administration of the cash balance plan; revising the
   72         education component to include the cash balance plan;
   73         making conforming changes; amending s. 121.70, F.S.,
   74         relating to legislative purposes for funding
   75         retirement benefits; conforming provisions to changes
   76         made by the act; amending s. 121.71, F.S., relating to
   77         the calculation of contribution rates; conforming
   78         provisions to changes made by the act; creating s.
   79         121.721, F.S.; establishing contribution rates for the
   80         cash balance plan; specifying how interest credit
   81         rates are to be calculated; amending s. 121.73, F.S.;
   82         expanding the section relating to allocations for
   83         disability coverage to also include coverage for
   84         members killed in the line of duty; conforming
   85         provisions to changes made by the act; amending s.
   86         121.74, F.S.; conforming provisions to changes made by
   87         the act; amending s. 121.76, F.S.; conforming a
   88         reference; amending s. 121.78, F.S.; revising
   89         provisions relating to the payment and distribution of
   90         contributions to accommodate members of the cash
   91         balance plan; amending s. 213.136, F.S.; conforming
   92         provisions to changes made by the act; amending ss.
   93         238.072, and 413.051, F.S.; conforming cross
   94         references; providing that the act fulfils an
   95         important state interest; adjusting the required
   96         employer contribution rates for the unfunded actuarial
   97         liability of the Florida Retirement System for select
   98         classes; providing a directive to the Division of Law
   99         Revision and Information; requiring the state board to
  100         request a determination letter from the Internal
  101         Revenue Service; providing an effective date.
  102          
  103  Be It Enacted by the Legislature of the State of Florida:
  104  
  105         Section 1. The Division of Law Revision and Information is
  106  directed to redesignate present part III of chapter 121, Florida
  107  Statutes, consisting of ss. 121.70-121.78, Florida Statutes, as
  108  part IV, and to create a new part III of chapter 121, Florida
  109  Statutes, consisting of ss. 121.601 and 121.602, Florida
  110  Statutes, to be entitled “Florida Retirement System Cash Balance
  111  Plan.”
  112         Section 2. Section 121.601, Florida Statutes, is created to
  113  read:
  114         121.601 Definitions.—As used in this part, the term:
  115         (1) “Active member” means a member who is actively employed
  116  by a participating employer.
  117         (2) “Annuity savings account” means the account maintained
  118  for member contributions.
  119         (3)“Approved provider” means a private sector company that
  120  is selected and approved by the state board to offer annuity
  121  products to the cash balance plan.
  122         (4) “Cash balance plan” means the Florida Retirement System
  123  Cash Balance Plan created under this part.
  124         (5) “Covered employment” means employment in a regularly
  125  established position as defined in s. 121.021(52).
  126         (6) “Covered position” means a position with a covered
  127  employer that is eligible for membership in the Florida
  128  Retirement System.
  129         (7) “De minimis account” means an account containing
  130  employer and employee contributions of up to $5,000 made under
  131  this chapter.
  132         (8) “Electronic means” means telephone transmission if the
  133  required information is received on a recorded line, or the
  134  Internet if the required information is captured online.
  135         (9) “Eligible employee” means an officer or employee, as
  136  defined in s. 121.021(11), who:
  137         (a) Is a member of, or is eligible for membership in, the
  138  Florida Retirement System, including a renewed member of the
  139  Florida Retirement System initially enrolled before July 1,
  140  2010; or
  141         (b) Participates in, or is eligible to participate in, the
  142  Senior Management Service Optional Annuity Program established
  143  under s. 121.055(6), the State Community College System Optional
  144  Retirement Program established under s. 121.051(2)(c), or the
  145  State University System Optional Retirement Program established
  146  under s. 121.35.
  147  
  148  The term does not include a member participating in the Deferred
  149  Retirement Option Program established under s. 121.091(13), a
  150  retiree of a state-administered retirement system initially
  151  reemployed in a regularly established position on or after July
  152  1, 2010, or a compulsory participant of the State University
  153  System Optional Retirement Program established under s. 121.35.
  154         (10) “Member” or “employee” means an eligible employee who
  155  enrolls in the cash balance plan as provided in this section, or
  156  a beneficiary or alternate payee of a member or employee.
  157         (11) “Member contributions” or “employee contributions”
  158  means the sum of all amounts deducted from the salary of a
  159  member by his or her employer in accordance with s. 121.71(3)
  160  and credited to his or her individual annuity savings account in
  161  the cash balance plan, plus any interest credits on such amounts
  162  and any contributions specified in s. 121.602(4), (5), and (6).
  163         (12) “Normal retirement age” means the date a member
  164  attains his or her normal retirement date as provided in this
  165  section, or the date a member is vested, whichever is later.
  166         (13)“Normal retirement date” means the date a member
  167  attains normal retirement age and is vested pursuant to this
  168  part.
  169         (14)“Quarter” means the 3-month period ending on the last
  170  business day of September, December, March, and June of each
  171  fiscal year.
  172         (15) “Retiree” means a former member of the cash balance
  173  plan who has terminated employment and taken a benefit as
  174  provided in s. 121.602(8), other than a mandatory distribution
  175  of a de minimis account authorized by the state board or a
  176  minimum required distribution provided pursuant to s. 401(a) of
  177  the Internal Revenue Code.
  178         (16) “Retirement annuity account” means the account
  179  established for the employer credits of a member.
  180         (17) “Terminated” or “termination” occurs when a member
  181  ceases all employment relationships with participating employers
  182  for 3 calendar months. However, if a member is employed by a
  183  participating employer within the next 6 calendar months,
  184  termination is deemed not to have occurred. A leave of absence
  185  constitutes a continuation of the employment relationship,
  186  except that a leave of absence without pay due to disability may
  187  constitute termination if such member applies for and is
  188  approved for disability retirement in accordance with s.
  189  121.602(9). The department or state board may require other
  190  evidence of termination as it deems necessary.
  191         (18) “Vested” or “vesting” means the guarantee that a
  192  member is eligible to receive a future retirement benefit upon
  193  completion of the required years of service for the employee’s
  194  class of membership even though the member may have terminated
  195  covered employment before reaching the normal or early
  196  retirement date. Under the cash balance plan, a member is deemed
  197  to be vested and to have met the required years of service after
  198  completing 5 years of creditable service.
  199         Section 3. Section 121.602, Florida Statutes, is created to
  200  read:
  201         121.602Florida Retirement System Cash Balance Plan.—
  202         (1)CREATION.—The Trustees of the State Board of
  203  Administration shall establish a cash balance program called the
  204  “Florida Retirement System Cash Balance Plan” for members of the
  205  Florida Retirement System under which retirement benefits will
  206  be provided for eligible employees who elect to participate in
  207  the plan.
  208         (a) The plan must be a qualified governmental plan pursuant
  209  to ss. 401(a) and 414(d) of the Internal Revenue Code and
  210  related regulations. Assets of the plan shall be held in trust
  211  for the Florida Retirement System. The employer and employee
  212  shall make contributions, as provided in this section and ss.
  213  121.571 and 121.71, to the Florida Retirement System Cash
  214  Balance Trust Fund for funding the benefits of the plan.
  215         (b) The state board shall establish a retirement annuity
  216  account for each member of the cash balance plan, which shall be
  217  credited with employer credits plus interest credits on the
  218  employer credits. The retirement annuity account shall be used
  219  to determine the amount of a lump-sum distribution or an annuity
  220  benefit for a vested member upon retirement as provided under
  221  this part.
  222         (c) The state board shall establish an annuity savings
  223  account for each member of the plan, which shall be credited
  224  with employee contributions plus interest credits on the
  225  employee contributions. For a vested member, the annuity savings
  226  account shall be used to fund the member’s lump-sum distribution
  227  or annuity benefits upon retirement.
  228         (d) The design and administration of the plan must comply
  229  with all applicable provisions of the Internal Revenue Code. The
  230  Legislature may amend the plan to comply with applicable federal
  231  laws and regulations.
  232         (2) RETIREMENT SERVICE CREDIT; TRANSFER OF BENEFITS.—
  233         (a) A member of the pension plan or the investment plan who
  234  is employed in a regularly established position with a
  235  participating employer may elect to:
  236         1. Retain membership in the pension plan or investment
  237  plan; or
  238         2. Make a one-time transfer to the cash balance plan at any
  239  time during his or her active career under the Florida
  240  Retirement System in which he or she is earning service credit
  241  in an employer-employee relationship consistent with s.
  242  121.021(17)(b), excluding leaves of absence without pay. Such
  243  election is effective the first day of the month following the
  244  receipt of the election by the third-party administrator and is
  245  not subject to requirements regarding an employer-employee
  246  relationship or receipt of contributions for the eligible
  247  employee in the effective month except when the election is
  248  received by the administrator. This one-time career transfer is
  249  irrevocable, and no other subsequent transfer is allowed.
  250         (b)A member who uses the one-time transfer under
  251  subparagraph (a)2. to enroll in the cash balance plan may elect
  252  to:
  253         1. Retain all service credit earned under the pension plan
  254  or the investment plan as credited under the Florida Retirement
  255  System and is entitled to a deferred benefit upon termination
  256  from the pension plan or investment plan. However, the election
  257  to enroll in the cash balance plan terminates the active
  258  membership of the member in the pension plan or investment plan,
  259  and the service of a member who has transferred to the cash
  260  balance plan is creditable for purposes of vesting only, and not
  261  creditable for purposes of benefit accrual under the pension
  262  plan or the investment plan; or
  263         2.Elect to transfer a sum representing the present value
  264  of the member’s accumulated benefit obligation under the pension
  265  plan or the value of the member’s investment plan account to the
  266  cash balance plan. Such election is effective the first day of
  267  the month following receipt of the election by the third-party
  268  administrator. Upon transfer, all service credit earned under
  269  the pension plan or investment plan is nullified for purposes of
  270  entitlement to a future benefit under the pension plan or
  271  investment plan. Any amount transferred, regardless of the
  272  original source of the contributions, shall be deemed to be
  273  employer credits in the cash balance plan.
  274         (c) If the eligible employee elects to transfer his or her
  275  accumulated benefit obligation to the cash balance plan under
  276  subparagraph (b)2., and:
  277         1. The employee is a member of the pension plan, the
  278  employee must transfer the present value of the accumulated
  279  benefit obligation under the pension plan.
  280         a. For purposes of this paragraph, the present value of the
  281  member’s accumulated benefit obligation is based upon the
  282  member’s estimated creditable service and estimated average
  283  final compensation under the pension plan, subject to
  284  recalculation under sub-subparagraph b. The actuarial present
  285  value of the member’s accumulated benefit obligation is based on
  286  the following:
  287         (I) The discount rate and other relevant actuarial
  288  assumptions used to value the Florida Retirement System Trust
  289  Fund at the time the amount to be transferred is determined,
  290  consistent with sub-sub-subparagraph (II).
  291         (II) The member’s benefit commencement age, based on the
  292  member’s estimated creditable service as of the estimate date.
  293         (A)Except as provided under sub-sub-sub-subparagraph (B),
  294  the benefit commencement age is the younger of the following,
  295  which may not be younger than the member’s age as of the
  296  estimate date:
  297         i.For a member initially enrolled before July 1, 2011, age
  298  62 or the age the member would attain if the member completed 30
  299  years of service with an employer, assuming that the member
  300  worked continuously from the estimate date, and disregarding any
  301  vesting requirement that would otherwise apply under the pension
  302  plan.
  303         ii.For a member enrolled on or after July 1, 2011, age 65
  304  or the age the member would attain if the member completed 33
  305  years of service with an employer, assuming that the member
  306  worked continuously from the estimate date, and disregarding any
  307  vesting requirement that would otherwise apply under the pension
  308  plan.
  309         (B) The benefit commencement age for members of the Special
  310  Risk Class and for members of the Special Risk Administrative
  311  Support Class entitled to retain the special risk normal
  312  retirement date is the younger of the following, which may not
  313  be younger than the member’s age as of the estimate date:
  314         i.For a member initially enrolled before July 1, 2011, age
  315  55 or the age the member would attain if the member completed 25
  316  years of service with an employer, assuming that the member
  317  worked continuously from the estimate date, and disregarding any
  318  vesting requirement that would otherwise apply under the pension
  319  plan.
  320         ii.For a member enrolled on or after July 1, 2011, age 60
  321  or the age the member would attain if the member completed 30
  322  years of service with an employer, assuming that the member
  323  worked continuously from the estimate date, and disregarding any
  324  vesting requirement that would otherwise apply under the pension
  325  plan.
  326         (III) The calculation disregards vesting requirements and
  327  early retirement reduction factors that would otherwise apply
  328  under the pension plan.
  329         b.The division shall recalculate the amount transferred
  330  under sub-subparagraph a. within 60 days after the actual
  331  transfer of funds based upon the member’s actual creditable
  332  service and actual final average compensation as of the initial
  333  date of participation in the cash balance plan. If the
  334  recalculated amount differs from the amount transferred by $10
  335  or more, the division shall:
  336         (I) Transfer from the Florida Retirement System Trust Fund
  337  to the member’s account the excess, if any, of the recalculated
  338  amount over the previously transferred amount plus any interest
  339  from the initial date of transfer to the date of transfer under
  340  this subparagraph, based upon the effective annual interest rate
  341  equal to the assumed return on the actuarial investment which
  342  was used in the most recent actuarial valuation of the system,
  343  compounded annually.
  344         (II) Transfer, or cause to be transferred, from the
  345  member’s account to the Florida Retirement System Trust Fund the
  346  excess, if any, of the previously transferred amount over the
  347  recalculated amount, plus any interest from the initial date of
  348  transfer to the date of transfer under this subparagraph, based
  349  upon a 6 percent effective annual interest rate, compounded
  350  annually, pro rata based on the member’s allocation under the
  351  cash balance plan.
  352         c. If contribution adjustments are made due to any employer
  353  errors or corrections, including plan corrections, following
  354  recalculation of the amount transferred under this subparagraph,
  355  the member is entitled to the additional contributions or is
  356  responsible for returning any excess contributions resulting
  357  from the correction. A return of such erroneous excess pretax
  358  contribution by the plan must be made within the period allowed
  359  by the Internal Revenue Service. The present value of the
  360  member’s accumulated benefit obligation may not be recalculated.
  361         2.The employee is a member of the investment plan, the
  362  employee must transfer the sum representing the account balance
  363  of the investment plan as of the transfer date.
  364         a. Upon receipt of the employee contributions from the
  365  member’s investment plan account, the contributions shall be
  366  credited to the annuity savings account of the member.
  367         b. Upon receipt of the employer contributions from the
  368  member’s investment plan account, the contributions shall be
  369  credited to the retirement annuity account of the member.
  370         c. Within 60 days after the transfer date, the third-party
  371  administrator shall transfer any residual contributions due to
  372  the member of the cash balance plan for the benefit of the
  373  member and credited to the retirement annuity account or the
  374  annuity savings account of the member, as applicable.
  375         d. If contribution adjustments are made due to employer
  376  errors or corrections, including plan corrections, following
  377  calculation of the amount transferred under this subparagraph,
  378  the member is entitled to the additional contributions or shall
  379  return any excess contributions resulting from the correction. A
  380  return of such erroneous excess pretax contribution by the plan
  381  must be made within the period allowed by the Internal Revenue
  382  Service.
  383         3. As directed by the member, the state board shall
  384  transfer the appropriate amounts to the cash balance plan within
  385  30 days after the effective date of the member’s participation
  386  in the cash balance plan, unless the major financial markets for
  387  securities available for a transfer are seriously disrupted by
  388  an unforeseen event that causes the suspension of trading on the
  389  national securities exchange in the country where the securities
  390  were issued. In that event, the 30-day period may be extended by
  391  a resolution of the board. Transfers are not commissionable or
  392  subject to other fees and may be in the form of securities or
  393  cash, as determined by the board. Such securities are valued as
  394  of the date of receipt in the member’s account.
  395         4. If the state board receives notification from the
  396  Internal Revenue Service that this paragraph or any portion of
  397  this paragraph will cause the Florida Retirement System, or a
  398  portion thereof, to be disqualified for tax purposes under the
  399  Internal Revenue Code, the portion that will cause the
  400  disqualification does not apply. Upon such notice, the board or
  401  the division shall notify the presiding officers of the
  402  Legislature.
  403         (3) PARTICIPATION; ENROLLMENT.—
  404         (a)An eligible employee who is initially employed on or
  405  after July 1, 2015, in a covered position eligible to
  406  participate in the Special Risk Class and who is earning service
  407  credit in an employer-employee relationship that is consistent
  408  with s. 121.021(17)(b), excluding leaves of absence without pay,
  409  shall be enrolled in the cash balance plan at the commencement
  410  of employment.
  411         1. The employee must elect to participate in the pension
  412  plan, cash balance plan, or investment plan by the last business
  413  day of the 8th month following the employee’s month of hire. The
  414  employee’s election must be in writing or by electronic means
  415  and filed with the third-party administrator.
  416         2. If the employee files such election within the
  417  prescribed time period, enrollment in the pension plan, cash
  418  balance plan, or the investment plan is effective on the 1st day
  419  of employment. The retirement contributions paid through the
  420  month of the employee plan change shall be transferred to the
  421  pension plan, cash balance plan, or investment plan, and,
  422  effective the 1st day of the next month, the employer and
  423  employee shall pay the applicable contributions based on the
  424  employee membership class in the plan.
  425         3. If the employee fails to make an election of the cash
  426  balance plan or investment plan by the last business day of the
  427  8th month following the employee’s month of hire, the employee
  428  is deemed to have elected the investment plan and will be
  429  defaulted into the investment plan retroactively to the
  430  employee’s date of employment.
  431         4. The amount of the employee and employer contributions
  432  paid before the default to the investment plan shall be
  433  transferred to the investment plan and placed in a default fund
  434  as designated by the state board. The employee may move the
  435  contributions once an account is activated in the investment
  436  plan.
  437         5. After the prescribed time period during which an
  438  eligible employee can elect participation in the pension plan,
  439  cash balance plan, or the investment plan, or after the month
  440  following such election, if sooner, the employee shall have one
  441  opportunity to move between the pension plan, investment plan,
  442  and the cash balance plan. If the employee is no longer eligible
  443  to participate in the Special Risk Class at the time of such
  444  election, the employee may only elect to move to the investment
  445  plan or the cash balance plan. Such elections are effective on
  446  the first day of the month following the receipt of the election
  447  by the third-party administrator. This paragraph is contingent
  448  upon approval by the Internal Revenue Service.
  449         (b) An eligible employee who is initially employed on or
  450  after July 1, 2015, in a covered position eligible to
  451  participate in a class other than the Special Risk Class and who
  452  is earning service credit in an employer-employee relationship
  453  that is consistent with s. 121.021(17)(b), excluding leaves of
  454  absence without pay, shall be enrolled in the cash balance plan
  455  at the commencement of employment.
  456         1. The employee must elect to participate in the cash
  457  balance plan or the investment plan by the last business day of
  458  the 8th month following the employee’s month of hire. The
  459  employee’s election must be in writing or by electronic means
  460  and filed with the third-party administrator.
  461         2. If the employee files such election within the
  462  prescribed time period, enrollment in the cash balance plan or
  463  the investment plan is effective on the 1st day of employment.
  464  The retirement contributions paid through the month of the
  465  employee plan change shall be transferred to the cash balance
  466  plan or the investment plan, and, effective the 1st day of the
  467  next month, the employer and employee shall pay the applicable
  468  contributions based on the employee membership class in the
  469  plan.
  470         3. If the employee fails to make an election of the cash
  471  balance plan or investment plan by the last business day of the
  472  8th month following the employee’s month of hire, the employee
  473  is deemed to have elected the investment plan and will be
  474  defaulted into the investment plan retroactively to the
  475  employee’s date of employment.
  476         4. The amount of the employee and employer contributions
  477  paid before the default to the investment plan shall be
  478  transferred to the investment plan and placed in a default fund
  479  as designated by the state board. The employee may move the
  480  contributions once an account is activated in the investment
  481  plan.
  482         5. After the prescribed time period during which an
  483  eligible employee can elect the cash balance plan or the
  484  investment plan, or after the month following such election, if
  485  sooner, the employee shall have one opportunity to choose to
  486  move between the investment plan and the cash balance plan. If
  487  the employee is eligible to participate in the Special Risk
  488  Class at the time of such election, the employee may also elect
  489  to move to the pension plan. Such elections are effective on the
  490  first day of the month following the receipt of the election by
  491  the third-party administrator. This paragraph is contingent upon
  492  approval by the Internal Revenue Service.
  493         (c)An employee who becomes eligible to participate in the
  494  cash balance plan pursuant to s. 121.051(2)(c)3. or s.
  495  121.35(3)(i) may elect to participate in the cash balance plan
  496  in lieu of retaining his or her membership in the State
  497  Community College System Optional Retirement Program or the
  498  State University System Optional Retirement Program.
  499         1. The election must be made in writing or by electronic
  500  means and filed with the third-party administrator.
  501         2. Upon making such election, the employee shall be
  502  enrolled as a member of the cash balance plan, the employee’s
  503  membership in the Florida Retirement System shall be governed by
  504  this part, and the employee’s participation in the State
  505  Community College System Optional Retirement Program or the
  506  State University System Optional Retirement Program terminates.
  507         3. The employee’s enrollment in the cash balance plan is
  508  effective on the first day of the month for which a full month’s
  509  employer and employee contribution is made to the cash balance
  510  plan.
  511         (d) A retiree who is initially reemployed in a regularly
  512  established position on or after July 1, 2010, is not eligible
  513  to be enrolled in renewed membership in the Florida Retirement
  514  System except as provided in s. 121.122.
  515         (e) Eligible employees may elect to move between plans only
  516  if they are earning service credit in an employer-employee
  517  relationship consistent with s. 121.021(17)(b), excluding leaves
  518  of absence without pay. Such elections are effective on the
  519  first day of the month following receipt of the election by the
  520  third-party administrator. This paragraph is contingent upon
  521  approval by the Internal Revenue Service.
  522         1. If the employee chooses to move from the pension plan to
  523  the investment plan, s. 121.4501(3) governs the transfer.
  524         2. If the employee chooses to move from the pension plan or
  525  investment plan to the cash balance plan, subsection (2) governs
  526  the transfer.
  527         3. If the employee chooses to move from the cash balance
  528  plan to the investment plan and establishes one or more
  529  individual member accounts, the employee may elect to transfer a
  530  sum representing the balance of the member’s cash balance
  531  accounts to the investment plan. Upon transfer, all service
  532  credit earned under the cash balance plan is nullified for
  533  purposes of entitlement to a future benefit under the cash
  534  balance plan.
  535         4. If an employee participating in the Special Risk Class
  536  chooses to move to the pension plan, the employee must transfer
  537  from his or her investment plan account or cash balance accounts
  538  and from other employee moneys as necessary, a sum representing
  539  the present value of the employee’s accumulated benefit
  540  obligation immediately following the time of such movement,
  541  determined by assuming that attained service equals the sum of
  542  service in the pension plan, service in the investment plan, and
  543  service in the cash balance plan. Benefit commencement occurs on
  544  the first date the employee is eligible for unreduced benefits
  545  using the discount rate and other relevant actuarial assumptions
  546  that were used to value the pension plan liabilities in the most
  547  recent actuarial valuation. For an employee who, at the time of
  548  the election, already maintains an accrued benefit amount in the
  549  pension plan, the then-present value of the accrued benefit is
  550  deemed part of the required transfer amount. The division must
  551  ensure that the transfer sum is prepared using a formula and
  552  methodology certified by an enrolled actuary. A refund of
  553  employee contributions or additional member payments made which
  554  exceed the employee contributions that would have accrued had
  555  the member remained in the pension plan and not transferred to
  556  the investment plan or cash balance plan is not permitted.
  557         5. An employee’s ability to transfer from the pension plan
  558  to the investment plan or cash balance plan, and the ability of
  559  a current employee to have the option to later transfer back
  560  into the pension plan, shall be deemed a significant system
  561  amendment. Pursuant to s. 121.031(4), any resulting unfunded
  562  liability arising from actual original transfers from the
  563  pension plan to the investment plan must be amortized within 30
  564  plan years as a separate unfunded actuarial base independent of
  565  the reserve stabilization mechanism described in s.
  566  121.031(3)(f). For the first 25 years, a direct amortization
  567  payment may not be calculated for this base. During this period,
  568  the separate base shall be used to offset the impact of
  569  employees exercising their option to transfer back into the
  570  pension plan. The actuarial funded status of the pension plan is
  571  not affected by such second program elections in a significant
  572  manner after due recognition of the separate unfunded actuarial
  573  base. Following the initial 25-year period, any remaining
  574  balance of the original separate base shall be amortized over
  575  the remaining 5 years of the required 30-year amortization
  576  period.
  577         6. If an employee participating in the Special Risk Class
  578  chooses to transfer from the investment plan or cash balance
  579  plan to the pension plan and retains an excess account balance
  580  in the investment plan after satisfying the buy-in requirements
  581  under this paragraph, the excess may not be distributed until
  582  the member retires from the pension plan. The excess account
  583  balance may be rolled over to the pension plan and used to
  584  purchase service credit or upgrade creditable service in the
  585  pension plan.
  586         (4) CONTRIBUTIONS AND CREDITS.—
  587         (a) The employee and employer shall make the required
  588  contributions to the cash balance plan based on a percentage of
  589  the employee’s gross monthly compensation, as provided in s.
  590  121.71.
  591         (b) Employee contributions shall be deposited into the
  592  annuity savings account of the member pursuant to s. 121.721,
  593  and employer contributions shall be deposited into the
  594  retirement savings account pursuant to s. 121.721.
  595         (c) A member may not make voluntary contributions to the
  596  cash balance plan.
  597         (d) The state board, acting as a fiduciary to the cash
  598  balance plan, must ensure that all plan assets are held in a
  599  trust pursuant to s. 401 of the Internal Revenue Code. The
  600  fiduciary must ensure that such contributions are allocated as
  601  follows:
  602         1. The employer and employee contribution portions
  603  earmarked for member retirement annuity and annuity savings
  604  accounts shall be credited to the appropriate account.
  605         2. The employer contribution portion earmarked for
  606  administrative and educational expenses shall be transferred to
  607  the Florida Retirement System Cash Balance Plan Trust Fund.
  608         3. The employer contribution portion earmarked for
  609  disability benefits shall be transferred to the Florida
  610  Retirement System Trust Fund.
  611         4. The employer contribution portions earmarked for
  612  amortization of the unfunded actuarial liability of the pension
  613  plan and the cash balance plan shall be transferred to the
  614  Florida Retirement System Trust Fund.
  615         (e) The third-party administrator shall monitor and notify
  616  employers of the maximum contribution levels allowed for members
  617  under the Internal Revenue Code. If a member contributes to any
  618  other tax-deferred plan, the member must ensure that total
  619  contributions made to the cash balance plan and to any other
  620  such plan do not exceed the federally allowed maximum.
  621         (5) ANNUITY SAVINGS ACCOUNT CREDITS.—A member’s annuity
  622  savings account is the sum of the member’s mandatory credits
  623  plus the interest credits on those credits.
  624         (a) The service credits shall be credited as provided in s.
  625  121.71 on a monthly basis.
  626         (b)The interest credits shall be credited as provided in
  627  s. 121.721. The Legislature reserves the right to prospectively
  628  change the interest credits.
  629         (c) The member’s annuity savings account is vested from the
  630  date the employee becomes a member of the cash balance plan.
  631         (6) EMPLOYER RETIREMENT ANNUITY CREDITS.—A member’s
  632  retirement annuity account is the sum of all employer credits to
  633  the account plus the interest credits on those credits.
  634         (a) The service credits shall be credited on a monthly
  635  basis as provided in s. 121.71.
  636         (b) The interest credits shall be credited as provided in
  637  s. 121.721. The Legislature expressly reserves the right to
  638  prospectively change the interest credits.
  639         (7) VESTING REQUIREMENTS.—
  640         (a) A member is fully and immediately vested in all
  641  employee credits plus interest credits paid to an annuity
  642  savings account as provided in subsection (5).
  643         (b) A member is vested in all employer credits plus
  644  interest credits paid to the retirement annuity account on
  645  behalf of the member as provided in subsection (6), upon
  646  completion of 5 years of creditable service.
  647         1.If a member has not vested in the member’s retirement
  648  annuity account at termination, has not withdrawn such member’s
  649  annuity savings account, and is reemployed as an eligible
  650  employee within 15 years after the member’s most recent
  651  termination, such member’s prior years of service, employer
  652  credits, and interest credits are restored upon reemployment.
  653         2.If a member has not vested in the member’s retirement
  654  annuity account at termination and has not withdrawn such
  655  member’s annuity savings account, but is not reemployed as an
  656  eligible employee within 15 years after the member’s most recent
  657  termination, any nonvested employer credits and interest
  658  credits, including accompanying service credit, are forfeited.
  659         (c)A member is vested in any benefits transferred from the
  660  pension plan or investment plan to the cash balance plan upon
  661  meeting the vesting requirements of the member’s membership
  662  class set forth in s. 121.021(45) or s. 121.4501(6), as
  663  applicable. The third-party administrator shall notify the
  664  member when the member has satisfied the vesting period.
  665         1.If a member has not vested in the benefit transferred
  666  from the pension plan or investment plan at termination of
  667  employment, has not withdrawn such member’s annuity savings
  668  account, and is reemployed as an eligible employee within 15
  669  years after such member’s most recent termination, the member’s
  670  prior years of service, employer credits, and interest credits
  671  are restored upon reemployment.
  672         2. If a member is not vested in the benefit transferred
  673  from the pension plan or investment plan at termination of
  674  employment, has not withdrawn such member’s annuity savings
  675  account, and is not reemployed as an eligible employee within 15
  676  years after such member’s most recent termination, such member’s
  677  prior years of service, employer credits, and interest credits
  678  shall be forfeited.
  679         (d) If the member elects to receive any of his or her
  680  vested annuity savings account upon termination of employment as
  681  provided in s. 121.021(39)(a), except for a mandatory
  682  distribution of a de minimis account authorized by the state
  683  board or a minimum required distribution provided under s.
  684  401(a)(9) of the Internal Revenue Code, the member shall forfeit
  685  all nonvested retirement annuity credits, interest credits, and
  686  accompanying service credit paid on behalf of the member to the
  687  cash balance plan.
  688         (8) BENEFITS PAYMENTS.—
  689         (a) Benefits may not be paid under the cash balance plan
  690  unless the member has terminated employment or is deceased and a
  691  proper application prescribed by the state board has been filed
  692  by the member or beneficiary.
  693         (b) If a member elects to receive his or her benefits upon
  694  termination of employment, the member must submit a written
  695  application or an application by electronic means to the third
  696  party administrator indicating his or her preferred benefit
  697  payment date and selecting an authorized method of benefit
  698  payment as provided in paragraph (d). The member may defer
  699  receipt of benefits until he or she chooses to make such
  700  application, subject to federal requirements.
  701         (c)The state board may cancel an application for
  702  retirement benefits if the member or beneficiary fails to timely
  703  provide the information and documents required by this chapter
  704  and the rules of the board. The state board shall adopt rules
  705  establishing procedures for the application for retirement
  706  benefits and for the cancellation of such application if the
  707  required information or documents are not received.
  708         (d) Upon receipt by the third-party administrator of a
  709  properly executed application for benefit payments, the total
  710  accumulated benefit is payable to the member pro rata across all
  711  Florida Retirement System benefit sources as:
  712         1. A lump-sum or partial benefit payment to the member;
  713         2. A lump-sum direct rollover benefit payment whereby all
  714  accrued benefits, plus interest credits, are paid from the
  715  member’s account directly to the custodian of an eligible
  716  retirement plan, as defined in s. 402(c)(8)(B) of the Internal
  717  Revenue Code, on behalf of the member;
  718         3.An annuity with a guaranteed benefit under any one of
  719  the options offered under the investment plan; or
  720         4.A combination of 1.-3.
  721         (e) The benefit payment method selected by the member or
  722  beneficiary, and the retirement of the member, are final and
  723  irrevocable at the time a benefit payment is cashed, deposited,
  724  or transferred to another financial institution. Any additional
  725  service that remains unclaimed at retirement may not be claimed
  726  or purchased, and the type of retirement may not be changed,
  727  except that if a member recovers from a disability, the member
  728  may subsequently request benefits under subsection (9).
  729         (f) Benefits in the form of vested accumulations as
  730  described in subsection (7) are payable in accordance with all
  731  of the following terms and conditions:
  732         1. Benefits are payable only to a member, an alternate
  733  payee of a qualified domestic relations order, or a beneficiary.
  734         2. Benefits shall be paid by the third-party administrator
  735  or designated approved providers in accordance with the law, the
  736  contracts, and any applicable state board rule or policy.
  737         3. The member must be terminated from all employment as
  738  provided in s. 121.021(39).
  739         4. Benefit payments may not be made until the member has
  740  been terminated for 3 calendar months.
  741         5.If a member or former member of the Florida Retirement
  742  System receives an invalid benefit payment, such person must
  743  repay the full amount within 90 days after receipt of final
  744  notification by the state board or the third-party administrator
  745  that the benefit payment was invalid, or, in lieu of repayment,
  746  the member must terminate employment from all participating
  747  employers.
  748         a. If the member or former member fails to repay the full
  749  invalid benefit payment within 90 days after receipt of final
  750  notification, the person may be deemed retired from the cash
  751  balance plan by the board and is subject to s. 121.122. If such
  752  person is deemed retired, any joint and several liability set
  753  out in s. 121.091(9)(d)2. is void, and the board, the
  754  department, or the employing agency is not liable for interest
  755  credits on contributions that have not been deposited into the
  756  person’s cash balance account in the cash balance plan, pending
  757  resolution of the invalid benefit payment.
  758         b. The member or former member who has been deemed retired
  759  or who has been determined by the board to have taken an invalid
  760  benefit payment may appeal the agency decision through the
  761  complaint process under s. 121.4501(8)(g). As used in this
  762  subparagraph, the term “invalid benefit payment” means any
  763  payment from an account in the cash balance plan which is taken
  764  in violation of this section or s. 121.091(9).
  765         (g) Benefits, including the annuity savings account, are
  766  not payable under the cash balance plan for employee hardships,
  767  unforeseeable emergencies, loans, medical expenses, educational
  768  expenses, purchase of a principal residence, payments necessary
  769  to prevent eviction from or foreclosure on an employee’s
  770  principal residence, or any other reason except a requested
  771  distribution for retirement, a mandatory de minimis account
  772  distribution authorized by the third-party administrator, or a
  773  required minimum distribution provided pursuant to the Internal
  774  Revenue Code.
  775         (h)The state board may cash out a de minimis account of a
  776  member who has been terminated from Florida Retirement System
  777  employment for a minimum of 6 calendar months. Such cash-out
  778  must be a complete lump-sum liquidation of the vested account
  779  balance, subject to the Internal Revenue Code, or a lump-sum
  780  direct rollover distribution paid directly to the custodian of
  781  an eligible retirement plan, as defined by the code, on behalf
  782  of the member.
  783         (i)If any instrument issued for the payment of retirement
  784  benefits under this section is not presented for payment within
  785  180 days after the last day of the month in which it was
  786  originally issued, the third-party administrator or other
  787  authorized agent of the state board shall cancel the instrument
  788  and credit the amount of the instrument to the Florida
  789  Retirement System Cash Balance Plan Trust Fund. Any amounts so
  790  credited to the trust fund, not including earnings thereon, are
  791  payable upon proper application as provided in this section
  792  within 10 years after the last day of the month in which the
  793  financial instrument was originally issued, after which time
  794  such amounts and any earnings attributable to employer
  795  retirement annuity credits are forfeited. Any forfeited amounts
  796  are assets of the trust fund and not subject to chapter 717.
  797         (j) A member may not receive a distribution of employee
  798  contributions if a pending qualified domestic relations order is
  799  filed against the member’s cash balance plan account.
  800         (k) The benefits payable to any person under the cash
  801  balance plan, and any contributions and credits accumulated
  802  under the plan, are not subject to assignment, execution,
  803  attachment, or any legal process, except for qualified domestic
  804  relations orders, income deduction orders as provided in s.
  805  61.1301, and federal income tax levies.
  806         (9) DISABILITY BENEFITS.—
  807         (a) For any member of the cash balance plan who becomes
  808  totally and permanently disabled, benefits must be paid in
  809  accordance with the following:
  810         1.The member may elect to receive benefits pursuant to s.
  811  121.591(2); or
  812         2.The member may elect to receive the vested balance of
  813  his or her cash balance annuity savings account and the vested
  814  balance of his or her retirement annuity account.
  815         (b) Pursuant to s. 121.73, an employer shall contribute a
  816  percentage of gross monthly compensation to provide disability
  817  coverage for active members in the cash balance plan.
  818         (10) DEATH BENEFITS.—Under the cash balance plan:
  819         (a) Survivor benefits of a deceased member are payable in
  820  accordance with the following terms and conditions:
  821         1. To the extent vested, benefits are payable only to a
  822  member’s beneficiary or beneficiaries as designated by the
  823  member as provided in subsection (11).
  824         2. Benefits shall be paid by the third-party administrator
  825  or designated approved providers in accordance with the law, the
  826  contracts, and any applicable rule or policy of the state board.
  827         (b) In the event of a member’s death, all vested
  828  accumulations as described in subsections (5) and (6), less
  829  withholding taxes remitted to the Internal Revenue Service,
  830  shall be distributed as provided in paragraph (c) or as
  831  described in subsection (8) as if the member retired on the date
  832  of death. No other death benefits are available for survivors of
  833  members, except for benefits, or coverage for benefits, as are
  834  otherwise provided by law or separately provided by the
  835  employer, at the employer’s discretion.
  836         (c) Upon receipt by the third-party administrator of a
  837  properly executed application for the distribution of benefits,
  838  the total accumulated benefit is payable by the administrator to
  839  the member’s surviving beneficiary or beneficiaries as:
  840         1. A lump-sum distribution payable to the beneficiary or
  841  beneficiaries as provided in subsection (11);
  842         2. An eligible rollover distribution, if allowed, on behalf
  843  of the surviving beneficiary of a deceased member, whereby all
  844  accrued benefits, plus interest credits, are paid from the
  845  deceased member’s account directly to the custodian of an
  846  eligible retirement plan, as described in s. 402(c)(8)(B) of the
  847  Internal Revenue Code, on behalf of the surviving beneficiary;
  848         3.An annuity with a guaranteed benefit under any one of
  849  the options offered under the investment plan; or
  850         4.A combination of 1.-3.
  851         (d) Notwithstanding any other provision of this chapter:
  852         1. The surviving spouse of any member killed in the line of
  853  duty may receive a monthly benefit equal to one-half of the
  854  monthly salary that was received by the member at the time of
  855  death for the rest of the surviving spouse’s lifetime if all
  856  service and interest credits that have accumulated in the
  857  member’s accounts are transferred to the pension plan; or, if
  858  the member had vested, the surviving spouse may elect to receive
  859  a benefit as provided in paragraph (c). Benefits provided by
  860  this paragraph supersede any other distribution that may have
  861  been provided by the member’s designation of beneficiary.
  862         2. If the surviving spouse of a member killed in the line
  863  of duty dies, the monthly payments that would have been payable
  864  to the surviving spouse had the surviving spouse lived shall be
  865  paid for the use and benefit of the member’s child or children
  866  younger than 18 years of age and unmarried until the 18th
  867  birthday of the member’s youngest child.
  868         3. If a member killed in the line of duty leaves no
  869  surviving spouse but is survived by a child or children younger
  870  than 18 years of age, the benefits normally payable to a
  871  surviving spouse under subparagraph 1. shall be paid for the use
  872  and benefit of the member’s child or children younger than 18
  873  years of age and unmarried until the 18th birthday of the
  874  member’s youngest child.
  875  
  876  This paragraph does not abrogate other applicable provisions of
  877  state or federal law providing for payment of death benefits.
  878         (11)DESIGNATION OF BENEFICIARIES.—Section 121.4501(20)
  879  governs the designation of beneficiaries for the cash balance
  880  plan.
  881         (12)PURCHASE OF CREDITABLE SERVICE.—
  882         (a) Creditable service of a member includes military
  883  service in the Armed Forces of the United States as provided
  884  under s. 121.111(1).
  885         (b) A member may purchase creditable service for up to 2
  886  work years of authorized leaves of absence, including any leaves
  887  of absence covered under the Family Medical Leave Act as
  888  provided under s. 121.121.
  889         (c) Except as provided in this subsection, no other service
  890  for periods of employment may be purchased by or on behalf of a
  891  member.
  892         (13) RETIREE HEALTH INSURANCE SUBSIDY.—All eligible
  893  employees who are members of the cash balance plan are eligible
  894  to receive the retiree health insurance subsidy, subject to s.
  895  112.363.
  896         (14) SOCIAL SECURITY COVERAGE.—Social security coverage
  897  shall be provided for all eligible employees who become members
  898  of the cash balance plan. Any modification of the present
  899  agreement with the Social Security Administration, or referendum
  900  required under the Social Security Act, for the purpose of
  901  providing social security coverage for a member shall be
  902  requested by the state agency in compliance with the applicable
  903  provisions of the Social Security Act. However, retroactive
  904  social security coverage for service with the employer before
  905  December 1, 1970, may not be provided for a member who was not
  906  covered under the agreement as of November 30, 1970.
  907         (15) CASH BALANCE PLAN EDUCATION.—Section 121.4501(10)
  908  governs the education of members who are in the cash balance
  909  plan.
  910         (16) MEMBER INFORMATION REQUIREMENTS.—Each quarter the
  911  state board shall provide each member of the cash balance plan a
  912  quarterly statement of benefits which provides the member with
  913  basic data about the member’s retirement account. At a minimum,
  914  the statement must include:
  915         (a)The member’s accrued service credit;
  916         (b)The member’s balance of the retirement annuity account
  917  and the annuity savings account at the close of the current
  918  quarter and previous quarter;
  919         (c)Itemized account contributions for the quarter;
  920         (d)Any posted interest credits earned on the account;
  921         (e)The amount of the account in which the member is fully
  922  vested; and
  923         (f)The amount of the account in which the member is not
  924  fully vested.
  925         (17) FEDERAL REQUIREMENTS.—
  926         (a) This section shall be construed, and the cash balance
  927  plan shall be administered, so as to comply with the Internal
  928  Revenue Code and specifically with plan qualification
  929  requirements imposed on governmental plans under 26 U.S.C. s.
  930  401(a) of the code. The state board may adopt rules reasonably
  931  necessary to establish or maintain the qualified status of the
  932  cash balance plan under the Internal Revenue Code and to
  933  implement and administer the plan in compliance with the code
  934  and as designated under this part; however, the state board may
  935  not adopt any rule that makes a substantive change to the cash
  936  balance plan as designed under this part.
  937         (b) Any provision of this chapter which is susceptible to
  938  more than one construction shall be interpreted in favor of the
  939  construction most likely to satisfy requirements imposed by s.
  940  401(a) of the Internal Revenue Code.
  941         (c) Credits payable under this section for any limitation
  942  year may not exceed the maximum amount allowable for qualified
  943  cash balance plans under applicable provisions of the Internal
  944  Revenue Code. If an employee who is enrolled in the cash balance
  945  plan participates in any other plan that is maintained by the
  946  participating employer, benefits that accrue under the cash
  947  balance plan are considered primary for any aggregate limitation
  948  applicable under s. 415 of the code.
  949         (18) CASH BALANCE PLAN ADMINISTRATION.—Section 121.4501(8)
  950  also governs the administration of the cash balance plan.
  951         (19) STATEMENT OF FIDUCIARY STANDARDS AND
  952  RESPONSIBILITIES.—Investment of cash balance plan assets shall
  953  be made for the sole interest and exclusive purpose of providing
  954  benefits to members and beneficiaries and defraying reasonable
  955  expenses of administering the plan. The plan’s assets shall be
  956  invested on behalf of the plan members with the care, skill, and
  957  diligence that a prudent person acting in a like manner would
  958  undertake. The performance of the investment duties specified in
  959  this subsection must comply with the fiduciary standards set
  960  forth in the Employee Retirement Income Security Act of 1974 at
  961  29 U.S.C. s. 1104(a)(1)(A)-(C). In case of conflict with other
  962  provisions of law authorizing investments, the investment and
  963  fiduciary standards specified in this subsection prevail.
  964         (20) ACTUARIAL STUDY.Pursuant to s. 121.031, an annual
  965  actuarial valuation and appraisal of the liability of the cash
  966  balance plan shall be conducted, and the required credits
  967  necessary to discharge any liability and maintain the plan on an
  968  actuarial reserve basis shall be provided to the Legislature by
  969  December 31 before the next legislative session. Such study
  970  shall be conducted by a qualified actuary employed or retained
  971  by the state board.
  972         (21)INVESTMENT ADVISORY COUNCIL.—The Investment Advisory
  973  Council, created pursuant to s. 215.444, shall make
  974  recommendations to the board regarding investment policy,
  975  strategy, and procedures for the cash balance plan.
  976         (22) INVESTMENT POLICY STATEMENT.—In making investments for
  977  the cash balance plan pursuant to ss. 215.44-215.53, the board
  978  may not make investments that are not in conformance with the
  979  Florida Retirement System Cash Balance Plan Investment Policy
  980  Statement (IPS) as developed by the executive director and
  981  approved by the board. The IPS must, at a minimum, include the
  982  investment objectives of the Cash Balance Plan Trust Fund, types
  983  of securities in which the board may invest, and evaluation
  984  criteria for measuring the investment performance of the fund.
  985         (a) The executive director of the board may present
  986  recommended changes to the IPS, as necessary, for the board’s
  987  approval.
  988         (b) The executive director shall first present the proposed
  989  IPS and any subsequent recommended changes to the approved IPS
  990  to the Investment Advisory Council for review. The council shall
  991  present the results of its review to the board before the
  992  board’s final approval of the IPS or changes in the IPS.
  993         Section 4. Paragraph (b) of subsection (2) of section
  994  112.363, Florida Statutes, is amended to read:
  995         112.363 Retiree health insurance subsidy.—
  996         (2) ELIGIBILITY FOR RETIREE HEALTH INSURANCE SUBSIDY.—
  997         (b) For purposes of this section, a person is deemed
  998  retired from a state-administered retirement system when he or
  999  she terminates employment with all employers participating in
 1000  the Florida Retirement System as described in s. 121.021(39)
 1001  and:
 1002         1. For a member of the investment plan established under
 1003  part II of chapter 121, the member participant meets the age or
 1004  service requirements to qualify for normal retirement as set
 1005  forth in s. 121.021(29) and meets the definition of retiree in
 1006  s. 121.4501(2).
 1007         2. For a member of the Florida Retirement System pension
 1008  plan established under part I of chapter 121, or an any employee
 1009  who maintains creditable service under both the pension plan and
 1010  the investment plan or under both the pension plan and the cash
 1011  balance plan, the member begins drawing retirement benefits from
 1012  the pension plan.
 1013         3.For a member of the cash balance plan established under
 1014  part III of chapter 121, the member meets the age or service
 1015  requirements to qualify for normal retirement as set forth in s.
 1016  121.021(29) and meets the definition of retiree in s. 121.601.
 1017         4. For a member of both the investment plan and the cash
 1018  balance plan, the member meets the definition of retiree in s.
 1019  121.601 and begins drawing benefits from the cash balance plan.
 1020         Section 5. Paragraph (h) of subsection (3) of section
 1021  121.011, Florida Statutes, is amended to read:
 1022         121.011 Florida Retirement System.—
 1023         (3) PRESERVATION OF RIGHTS.—
 1024         (h) Effective July 1, 2011, the retirement system shall
 1025  require employer and employee contributions as provided in s.
 1026  121.071 and part IV III of this chapter.
 1027         Section 6. Section 121.012, Florida Statutes, is amended to
 1028  read:
 1029         121.012 Inclusive provisions.—The provisions of part I of
 1030  this chapter apply shall be applicable to parts II, and III, and
 1031  IV to the extent such provisions are not inconsistent with, or
 1032  duplicative of, the provisions of parts II, and III, and IV.
 1033         Section 7. Subsection (3) of section 121.021, Florida
 1034  Statutes, is amended to read:
 1035         121.021 Definitions.—The following words and phrases as
 1036  used in this chapter have the respective meanings set forth
 1037  unless a different meaning is plainly required by the context:
 1038         (3) “Florida Retirement System” or “system” means the
 1039  general retirement system established by this chapter,
 1040  including, but not limited to:,
 1041         (a) The defined benefit program administered under this
 1042  part, referred to as the “Florida Retirement System Pension
 1043  Plan” or “pension plan,; and
 1044         (b) The defined contribution program administered under
 1045  part II of this chapter, referred to as the “Florida Retirement
 1046  System Investment Plan” or “investment plan.; and
 1047         (c) The cash balance program established under part III of
 1048  this chapter, referred to as the “Florida Retirement System Cash
 1049  Balance Plan” or “cash balance plan.”
 1050         Section 8. Paragraph (c) of subsection (2) of section
 1051  121.051, Florida Statutes, is amended, present subsections (3)
 1052  through (9) of that section are redesignated as subsections (4)
 1053  through (10), and a new subsection (3) is added to that section,
 1054  to read:
 1055         121.051 Participation in the system.—
 1056         (2) OPTIONAL PARTICIPATION.—
 1057         (c) Employees of public community colleges or charter
 1058  technical career centers sponsored by public community colleges,
 1059  designated in s. 1000.21(3), who are members of the Regular
 1060  Class of the Florida Retirement System and who comply with the
 1061  criteria set forth in this paragraph and s. 1012.875 may, in
 1062  lieu of participating in the Florida Retirement System, elect to
 1063  withdraw from the system altogether and participate in the State
 1064  Community College System Optional Retirement Program provided by
 1065  the employing agency under s. 1012.875.
 1066         1.a. Through June 30, 2001, the cost to the employer for
 1067  benefits under the optional retirement program equals the normal
 1068  cost portion of the employer retirement contribution which would
 1069  be required if the employee were a member of the pension plan’s
 1070  Regular Class, plus the portion of the contribution rate
 1071  required by s. 112.363(8) which would otherwise be assigned to
 1072  the Retiree Health Insurance Subsidy Trust Fund.
 1073         b. Effective July 1, 2001, through June 30, 2011, each
 1074  employer shall contribute on behalf of each member of the
 1075  optional program an amount equal to 10.43 percent of the
 1076  employee’s gross monthly compensation. The employer shall deduct
 1077  an amount for the administration of the program.
 1078         c. Effective July 1, 2011, through June 30, 2012, each
 1079  member shall contribute an amount equal to the employee
 1080  contribution required under s. 121.71(3). The employer shall
 1081  contribute on behalf of each program member an amount equal to
 1082  the difference between 10.43 percent of the employee’s gross
 1083  monthly compensation and the employee’s required contribution
 1084  based on the employee’s gross monthly compensation.
 1085         d. Effective July 1, 2012, each member shall contribute an
 1086  amount equal to the employee contribution required under s.
 1087  121.71(3). The employer shall contribute on behalf of each
 1088  program member an amount equal to the difference between 8.15
 1089  percent of the employee’s gross monthly compensation and the
 1090  employee’s required contribution based on the employee’s gross
 1091  monthly compensation.
 1092         e. The employer shall contribute an additional amount to
 1093  the Florida Retirement System Trust Fund equal to the unfunded
 1094  actuarial accrued liability portion of the Regular Class
 1095  contribution rate.
 1096         2. The decision to participate in the optional retirement
 1097  program is irrevocable as long as the employee holds a position
 1098  eligible for participation, except as provided in subparagraph
 1099  3. Any service creditable under the Florida Retirement System is
 1100  retained after the member withdraws from the system; however,
 1101  additional service credit in the system may not be earned while
 1102  a member of the optional retirement program.
 1103         3. Effective July 1, 2003, through June 30, 2015, an
 1104  employee who has elected to participate in the optional
 1105  retirement program shall have one opportunity, at the employee’s
 1106  discretion, to transfer from the optional retirement program to
 1107  the pension plan under this part of the Florida Retirement
 1108  System or to the investment plan established under part II of
 1109  this chapter, subject to the terms of the applicable optional
 1110  retirement program contracts. Except as provided in subsection
 1111  (3), an employee participating in the optional retirement
 1112  program on or after July 1, 2015, is not eligible to transfer to
 1113  the Florida Retirement System.
 1114         a. If the employee chooses to move to the investment plan,
 1115  any contributions, interest, and earnings creditable to the
 1116  employee under the optional retirement program are retained by
 1117  the employee in the optional retirement program, and the
 1118  applicable provisions of s. 121.4501(4) govern the election.
 1119         b. If the employee chooses to move to the pension plan of
 1120  the Florida Retirement System, the employee shall receive
 1121  service credit equal to his or her years of service under the
 1122  optional retirement program.
 1123         (I) The cost for such credit is the amount representing the
 1124  present value of the employee’s accumulated benefit obligation
 1125  for the affected period of service. The cost shall be calculated
 1126  as if the benefit commencement occurs on the first date the
 1127  employee becomes eligible for unreduced benefits, using the
 1128  discount rate and other relevant actuarial assumptions that were
 1129  used to value the Florida Retirement System Pension Plan
 1130  liabilities in the most recent actuarial valuation. The
 1131  calculation must include any service already maintained under
 1132  the pension plan in addition to the years under the optional
 1133  retirement program. The present value of any service already
 1134  maintained must be applied as a credit to total cost resulting
 1135  from the calculation. The division must ensure that the transfer
 1136  sum is prepared using a formula and methodology certified by an
 1137  enrolled actuary.
 1138         (II) The employee shall must transfer from his or her
 1139  optional retirement program account and from other employee
 1140  moneys as necessary, a sum representing the present value of the
 1141  employee’s accumulated benefit obligation immediately following
 1142  the time of such movement, determined assuming that attained
 1143  service equals the sum of service in the pension plan and
 1144  service in the optional retirement program.
 1145         4. Participation in the optional retirement program is
 1146  limited to employees who satisfy the following eligibility
 1147  criteria:
 1148         a. The employee is otherwise eligible for membership or
 1149  renewed membership in the Regular Class of the Florida
 1150  Retirement System, as provided in s. 121.021(11) and (12) or s.
 1151  121.122.
 1152         b. The employee is employed in a full-time position
 1153  classified in the Accounting Manual for Florida’s Public
 1154  Community Colleges as:
 1155         (I) Instructional; or
 1156         (II) Executive Management, Instructional Management, or
 1157  Institutional Management and the community college determines
 1158  that recruiting to fill a vacancy in the position is to be
 1159  conducted in the national or regional market, and the duties and
 1160  responsibilities of the position include the formulation,
 1161  interpretation, or implementation of policies, or the
 1162  performance of functions that are unique or specialized within
 1163  higher education and that frequently support the mission of the
 1164  community college.
 1165         c. The employee is employed in a position not included in
 1166  the Senior Management Service Class of the Florida Retirement
 1167  System as described in s. 121.055.
 1168         5. Members of the program are subject to the same
 1169  reemployment limitations, renewed membership provisions, and
 1170  forfeiture provisions applicable to regular members of the
 1171  Florida Retirement System under ss. 121.091(9), 121.122, and
 1172  121.091(5), respectively. A member who receives a program
 1173  distribution funded by employer and required employee
 1174  contributions is deemed to be retired from a state-administered
 1175  retirement system if the member is subsequently employed with an
 1176  employer that participates in the Florida Retirement System.
 1177         6. Eligible community college employees are compulsory
 1178  members of the Florida Retirement System until, pursuant to s.
 1179  1012.875, a written election to withdraw from the system and
 1180  participate in the optional retirement program is filed with the
 1181  program administrator and received by the division.
 1182         a. A community college employee whose program eligibility
 1183  results from initial employment shall be enrolled in the
 1184  optional retirement program retroactive to the first day of
 1185  eligible employment. The employer and employee retirement
 1186  contributions paid through the month of the employee plan change
 1187  shall be transferred to the community college to the employee’s
 1188  optional program account, and, effective the first day of the
 1189  next month, the employer shall pay the applicable contributions
 1190  based upon subparagraph 1.
 1191         b. A community college employee whose program eligibility
 1192  is due to the subsequent designation of the employee’s position
 1193  as one of those specified in subparagraph 4., or due to the
 1194  employee’s appointment, promotion, transfer, or reclassification
 1195  to a position specified in subparagraph 4., must be enrolled in
 1196  the program on the first day of the first full calendar month
 1197  that such change in status becomes effective. The employer and
 1198  employee retirement contributions paid from the effective date
 1199  through the month of the employee plan change must be
 1200  transferred to the community college to the employee’s optional
 1201  program account, and, effective the first day of the next month,
 1202  the employer shall pay the applicable contributions based upon
 1203  subparagraph 1.
 1204         7. Effective July 1, 2003, through December 31, 2008, any
 1205  member of the optional retirement program who has service credit
 1206  in the pension plan of the Florida Retirement System for the
 1207  period between his or her first eligibility to transfer from the
 1208  pension plan to the optional retirement program and the actual
 1209  date of transfer may, during employment, transfer to the
 1210  optional retirement program a sum representing the present value
 1211  of the accumulated benefit obligation under the defined benefit
 1212  retirement program for the period of service credit. Upon
 1213  transfer, all service credit previously earned under the pension
 1214  plan during this period is nullified for purposes of entitlement
 1215  to a future benefit under the pension plan.
 1216         (3) OPTIONAL PLAN MEMBERSHIP IN FLORIDA RETIREMENT SYSTEM.—
 1217         (a) Effective July 1, 2015, all eligible employees, except
 1218  those eligible to withdraw from the Florida Retirement System
 1219  under s. 121.052(3)(d) or s. 121.055(1)(b)2. or those eligible
 1220  for optional retirement programs under s. 121.051(1)(a), s.
 1221  121.051(2)(c), or s. 121.35, who initially enrolled on or after
 1222  July 1, 2015, are not eligible to enroll in the pension plan.
 1223         (b) Employees eligible to withdraw from the Florida
 1224  Retirement System under s. 121.052(3)(d) or s. 121.055(1)(b)2.
 1225  may withdraw from the system or participate in the investment
 1226  plan or the cash balance plan as provided under those sections.
 1227  Employees eligible for optional retirement programs under s.
 1228  121.051(2)(c) or s. 121.35 may participate in the optional
 1229  retirement program, the investment plan, or the cash balance
 1230  plan as provided under those sections. Eligible employees
 1231  required to participate in the optional retirement program under
 1232  s. 121.35 pursuant to s. 121.051(1)(a) must elect to participate
 1233  in the investment plan or the cash balance plan if employed in a
 1234  position not eligible for the optional retirement program.
 1235         Section 9. Paragraph (c) of subsection (3) of section
 1236  121.052, Florida Statutes, is amended to read:
 1237         121.052 Membership class of elected officers.—
 1238         (3) PARTICIPATION AND WITHDRAWAL, GENERALLY.—Effective July
 1239  1, 1990, participation in the Elected Officers’ Class shall be
 1240  compulsory for elected officers listed in paragraphs (2)(a)-(d)
 1241  and (f) assuming office on or after said date, unless the
 1242  elected officer elects membership in another class or withdraws
 1243  from the Florida Retirement System as provided in paragraphs
 1244  (3)(a)-(d):
 1245         (c) Before July 1, 2015, an any elected officer may, within
 1246  6 months after assuming office, or within 6 months after this
 1247  act becomes a law for serving elected officers, elect membership
 1248  in the Senior Management Service Class as provided in s. 121.055
 1249  in lieu of membership in the Elected Officers’ Class. Any Such
 1250  election does not affect made by a county elected officer shall
 1251  have no effect upon the statutory limit on the number of
 1252  nonelective full-time positions that may be designated by a
 1253  local agency employer for inclusion in the Senior Management
 1254  Service Class under s. 121.055(1)(b)1.
 1255         Section 10. Paragraph (f) of subsection (1) and paragraph
 1256  (c) of subsection (6) of section 121.055, Florida Statutes, are
 1257  amended to read:
 1258         121.055 Senior Management Service Class.—There is hereby
 1259  established a separate class of membership within the Florida
 1260  Retirement System to be known as the “Senior Management Service
 1261  Class,” which shall become effective February 1, 1987.
 1262         (1)
 1263         (f) Effective July 1, 1997, through June 30, 2015:
 1264         1. Except as provided in subparagraphs subparagraph 3. and
 1265  4., an elected state officer eligible for membership in the
 1266  Elected Officers’ Class under s. 121.052(2)(a), (b), or (c) who
 1267  elects membership in the Senior Management Service Class under
 1268  s. 121.052(3)(c) may, within 6 months after assuming office or
 1269  within 6 months after this act becomes a law for serving elected
 1270  state officers, elect to participate in the Senior Management
 1271  Service Optional Annuity Program, as provided in subsection (6),
 1272  in lieu of membership in the Senior Management Service Class.
 1273         2. Except as provided in subparagraphs subparagraph 3. and
 1274  4., an elected officer of a local agency employer eligible for
 1275  membership in the Elected Officers’ Class under s. 121.052(2)(d)
 1276  who elects membership in the Senior Management Service Class
 1277  under s. 121.052(3)(c) may, within 6 months after assuming
 1278  office, or within 6 months after this act becomes a law for
 1279  serving elected officers of a local agency employer, elect to
 1280  withdraw from the Florida Retirement System, as provided in
 1281  subparagraph (b)2., in lieu of membership in the Senior
 1282  Management Service Class.
 1283         3. A retiree of a state-administered retirement system who
 1284  is initially reemployed in a regularly established position on
 1285  or after July 1, 2010, as an elected official eligible for the
 1286  Elected Officers’ Class may not be enrolled in renewed
 1287  membership in the Senior Management Service Class or in the
 1288  Senior Management Service Optional Annuity Program as provided
 1289  in subsection (6), and may not withdraw from the Florida
 1290  Retirement System as a renewed member as provided in
 1291  subparagraph (b)2., as applicable, in lieu of membership in the
 1292  Senior Management Service Class.
 1293         4. On or after July 1, 2015, an elected officer eligible
 1294  for membership in the Elected Officers’ Class may not be
 1295  enrolled in the Senior Management Service Class or in the Senior
 1296  Management Service Optional Annuity Program except as provided
 1297  in subsection (6).
 1298         (6)
 1299         (c) Participation.—
 1300         1. An eligible employee who is employed on or before
 1301  February 1, 1987, may elect to participate in the optional
 1302  annuity program in lieu of participating in the Senior
 1303  Management Service Class. Such election must be made in writing
 1304  and filed with the department and the personnel officer of the
 1305  employer on or before May 1, 1987. An eligible employee who is
 1306  employed on or before February 1, 1987, and who fails to make an
 1307  election to participate in the optional annuity program by May
 1308  1, 1987, shall be deemed to have elected membership in the
 1309  Senior Management Service Class.
 1310         2. Except as provided in subparagraph 6., an employee who
 1311  becomes eligible to participate in the optional annuity program
 1312  by reason of initial employment commencing after February 1,
 1313  1987, may, within 90 days after the date of commencing
 1314  employment, elect to participate in the optional annuity
 1315  program. Such election must be made in writing and filed with
 1316  the personnel officer of the employer. An eligible employee who
 1317  does not within 90 days after commencing employment elect to
 1318  participate in the optional annuity program shall be deemed to
 1319  have elected membership in the Senior Management Service Class.
 1320         3. A person who is appointed to a position in the Senior
 1321  Management Service Class and who is a member of an existing
 1322  retirement system or the Special Risk or Special Risk
 1323  Administrative Support Classes of the Florida Retirement System
 1324  may elect to remain in such system or class in lieu of
 1325  participating in the Senior Management Service Class or optional
 1326  annuity program. Such election must be made in writing and filed
 1327  with the department and the personnel officer of the employer
 1328  within 90 days after such appointment. An eligible employee who
 1329  fails to make an election to participate in the existing system,
 1330  the Special Risk Class of the Florida Retirement System, the
 1331  Special Risk Administrative Support Class of the Florida
 1332  Retirement System, or the optional annuity program shall be
 1333  deemed to have elected membership in the Senior Management
 1334  Service Class.
 1335         4. Except as provided in subparagraph 5., an employee’s
 1336  election to participate in the optional annuity program is
 1337  irrevocable if the employee continues to be employed in an
 1338  eligible position and continues to meet the eligibility
 1339  requirements set forth in this paragraph.
 1340         5. Effective from July 1, 2002, through September 30, 2002,
 1341  an active employee in a regularly established position who has
 1342  elected to participate in the Senior Management Service Optional
 1343  Annuity Program has one opportunity to choose to move from the
 1344  Senior Management Service Optional Annuity Program to the
 1345  Florida Retirement System Pension Plan.
 1346         a. The election must be made in writing and must be filed
 1347  with the department and the personnel officer of the employer
 1348  before October 1, 2002, or, in the case of an active employee
 1349  who is on a leave of absence on July 1, 2002, within 90 days
 1350  after the conclusion of the leave of absence. This election is
 1351  irrevocable.
 1352         b. The employee shall receive service credit under the
 1353  pension plan equal to his or her years of service under the
 1354  Senior Management Service Optional Annuity Program. The cost for
 1355  such credit is the amount representing the present value of that
 1356  employee’s accumulated benefit obligation for the affected
 1357  period of service.
 1358         c. The employee must transfer the total accumulated
 1359  employer contributions and earnings on deposit in his or her
 1360  Senior Management Service Optional Annuity Program account. If
 1361  the transferred amount is not sufficient to pay the amount due,
 1362  the employee must pay a sum representing the remainder of the
 1363  amount due. The employee may not retain any employer
 1364  contributions or earnings from the Senior Management Service
 1365  Optional Annuity Program account.
 1366         6. A retiree of a state-administered retirement system who
 1367  is initially reemployed on or after July 1, 2010, may not renew
 1368  membership in the Senior Management Service Optional Annuity
 1369  Program.
 1370         7. Effective July 1, 2015, the Senior Management Service
 1371  Optional Annuity Program is closed to new members. Members
 1372  enrolled in the program before July 1, 2015, may retain their
 1373  membership in the program.
 1374         Section 11. Paragraph (d) of subsection (9) of section
 1375  121.091, Florida Statutes, is amended to read:
 1376         121.091 Benefits payable under the system.—Benefits may not
 1377  be paid under this section unless the member has terminated
 1378  employment as provided in s. 121.021(39)(a) or begun
 1379  participation in the Deferred Retirement Option Program as
 1380  provided in subsection (13), and a proper application has been
 1381  filed in the manner prescribed by the department. The department
 1382  may cancel an application for retirement benefits when the
 1383  member or beneficiary fails to timely provide the information
 1384  and documents required by this chapter and the department’s
 1385  rules. The department shall adopt rules establishing procedures
 1386  for application for retirement benefits and for the cancellation
 1387  of such application when the required information or documents
 1388  are not received.
 1389         (9) EMPLOYMENT AFTER RETIREMENT; LIMITATION.—
 1390         (d) This subsection applies to a retiree retirees, as
 1391  defined in s. 121.4501(2), of the Florida Retirement System
 1392  Investment Plan and s. 121.601 of the Florida Retirement System
 1393  Cash Balance Plan, subject to the following conditions:
 1394         1. A retiree may not be reemployed with an employer
 1395  participating in the Florida Retirement System until such person
 1396  has been retired for 6 calendar months.
 1397         2. A retiree employed in violation of this subsection and
 1398  an employer that employs or appoints such person are jointly and
 1399  severally liable for reimbursement of any benefits paid to the
 1400  retirement trust fund from which the benefits were paid. The
 1401  employer must have a written statement from the retiree that he
 1402  or she is not retired from a state-administered retirement
 1403  system.
 1404         Section 12. Section 121.151, Florida Statutes, is amended
 1405  to read:
 1406         121.151 Investments.—The Board of Administration, created
 1407  by authority of the State Constitution, shall invest and
 1408  reinvest available funds of the System Trust Fund and the
 1409  Florida Retirement System Cash Balance Plan Trust Fund in
 1410  accordance with the provisions of ss. 215.44-215.53.
 1411         Section 13. Paragraph (c) of subsection (3) of section
 1412  121.35, Florida Statutes, is amended to read:
 1413         121.35 Optional retirement program for the State University
 1414  System.—
 1415         (3) ELECTION OF OPTIONAL PROGRAM.—
 1416         (c) An Any employee who becomes eligible to participate in
 1417  the optional retirement program on or after January 1, 1993,
 1418  shall be a compulsory participant of the program unless such
 1419  employee elects membership in the Florida Retirement System.
 1420  Such election must shall be made in writing and filed with the
 1421  personnel officer of the employer. An Any eligible employee who
 1422  fails to make such election within the prescribed time period
 1423  shall be deemed to have elected to participate in the optional
 1424  retirement program.
 1425         1. An Any employee whose optional retirement program
 1426  eligibility results from initial employment before July 1, 2015,
 1427  shall be enrolled in the program at the commencement of
 1428  employment. If, within 90 days after commencement of employment,
 1429  the employee elects membership in the Florida Retirement System,
 1430  such membership is shall be effective retroactive to the date of
 1431  commencement of employment as provided in s. 121.4501(4).
 1432         2. An employee whose optional retirement program
 1433  eligibility results from initial employment on or after July 1,
 1434  2015, shall be enrolled in the program at the commencement of
 1435  employment. If, within 90 days after commencement of employment,
 1436  the employee elects membership in the Florida Retirement System,
 1437  such membership is effective retroactive to the date of
 1438  commencing employment as provided in s. 121.602(3).
 1439         3.2.An Any employee whose optional retirement program
 1440  eligibility results from a change in status due to the
 1441  subsequent designation of the employee’s position as one of
 1442  those specified in paragraph (2)(a) or due to the employee’s
 1443  appointment, promotion, transfer, or reclassification to a
 1444  position specified in paragraph (2)(a) shall be enrolled in the
 1445  optional retirement program upon such change in status and shall
 1446  be notified by the employer of such action. If, within 90 days
 1447  after the date of such notification, the employee elects to
 1448  retain membership in the Florida Retirement System, such
 1449  continuation of membership is shall be retroactive to the date
 1450  of the change in status.
 1451         4.3. Notwithstanding subparagraphs 1., 2., and 3. the
 1452  provisions of this paragraph, effective July 1, 1997, an any
 1453  employee who is eligible to participate in the Optional
 1454  Retirement Program and who fails to execute a contract with one
 1455  of the approved companies and to notify the department in
 1456  writing as provided in subsection (4) within 90 days after the
 1457  date of eligibility shall be deemed to have elected membership
 1458  in the Florida Retirement System, except as provided in s.
 1459  121.051(1)(a). This provision shall also applies apply to an any
 1460  employee who terminates employment in an eligible position
 1461  before executing the required investment annuity contract and
 1462  notifying the department. Such membership is shall be
 1463  retroactive to the date of eligibility, and all appropriate
 1464  contributions shall be transferred to the Florida Retirement
 1465  System Trust Fund and the Health Insurance Subsidy Trust Fund.
 1466         Section 14. Subsection (4), paragraph (a) of subsection
 1467  (5), paragraphs (c), (g), and (h) of subsection (10), and
 1468  paragraph (a) of subsection (15) of section 121.4501, Florida
 1469  Statutes, are amended to read:
 1470         121.4501 Florida Retirement System Investment Plan.—
 1471         (4) PARTICIPATION; ENROLLMENT.—
 1472         (a)1. Effective June 1, 2002, through February 28, 2003, a
 1473  90-day election period was provided to each eligible employee
 1474  participating in the Florida Retirement System, preceded by a
 1475  90-day education period, allowing each eligible employee to
 1476  elect membership in the investment plan; an employee who failed
 1477  to elect the investment plan during the election period remained
 1478  in the pension plan. An eligible employee who was employed in a
 1479  regularly established position during the election period was
 1480  granted the option to make one subsequent election, as provided
 1481  in paragraph (e). With respect to an eligible employee who did
 1482  not participate in the initial election period or who is
 1483  employed initially in a regularly established position after the
 1484  close of the initial election period but before July 1, 2015, on
 1485  June 1, 2002, by a state employer:
 1486         a. Any such employee may elect to participate in the
 1487  investment plan in lieu of retaining his or her membership in
 1488  the pension plan. The election must be made in writing or by
 1489  electronic means and must be filed with the third-party
 1490  administrator by August 31, 2002, or, in the case of an active
 1491  employee who is on a leave of absence on April 1, 2002, by the
 1492  last business day of the 5th month following the month the leave
 1493  of absence concludes. This election is irrevocable, except as
 1494  provided in paragraph (g). Upon making such election, the
 1495  employee shall be enrolled as a member of the investment plan,
 1496  the employee’s membership in the Florida Retirement System is
 1497  governed by the provisions of this part, and the employee’s
 1498  membership in the pension plan terminates. The employee’s
 1499  enrollment in the investment plan is effective the first day of
 1500  the month for which a full month’s employer contribution is made
 1501  to the investment plan.
 1502         b. Any such employee who fails to elect to participate in
 1503  the investment plan within the prescribed time period is deemed
 1504  to have elected to retain membership in the pension plan, and
 1505  the employee’s option to elect to participate in the investment
 1506  plan is forfeited.
 1507         2. With respect to employees who become eligible to
 1508  participate in the investment plan by reason of employment in a
 1509  regularly established position with a state employer commencing
 1510  after April 1, 2002:
 1511         a. Any such employee shall, by default, be enrolled in the
 1512  pension plan at the commencement of employment, and may, by the
 1513  last business day of the 5th month following the employee’s
 1514  month of hire, elect to participate in the investment plan. The
 1515  employee’s election must be made in writing or by electronic
 1516  means and must be filed with the third-party administrator. The
 1517  election to participate in the investment plan is irrevocable,
 1518  except as provided in paragraph (e) (g).
 1519         a.b. If the employee files such election within the
 1520  prescribed time period, enrollment in the investment plan is
 1521  effective on the first day of employment. The retirement
 1522  contributions paid through the month of the employee plan change
 1523  shall be transferred to the investment program, and, effective
 1524  the first day of the next month, the employer and employee must
 1525  pay the applicable contributions based on the employee
 1526  membership class in the program.
 1527         b.c. An employee who fails to elect to participate in the
 1528  investment plan within the prescribed time period is deemed to
 1529  have elected to retain membership in the pension plan, and the
 1530  employee’s option to elect to participate in the investment plan
 1531  is forfeited.
 1532         2.3. With respect to employees who become eligible to
 1533  participate in the investment plan pursuant to s.
 1534  121.051(2)(c)3. or s. 121.35(3)(i), the employee may elect to
 1535  participate in the investment plan in lieu of retaining his or
 1536  her membership in the State Community College System Optional
 1537  Retirement Program or the State University System Optional
 1538  Retirement Program. The election must be made in writing or by
 1539  electronic means and must be filed with the third-party
 1540  administrator. This election is irrevocable, except as provided
 1541  in paragraph (g). Upon making such election, the employee shall
 1542  be enrolled as a member in the investment plan, the employee’s
 1543  membership in the Florida Retirement System is governed by the
 1544  provisions of this part, and the employee’s participation in the
 1545  State Community College System Optional Retirement Program or
 1546  the State University System Optional Retirement Program
 1547  terminates. The employee’s enrollment in the investment plan is
 1548  effective on the first day of the month for which a full month’s
 1549  employer and employee contribution is made to the investment
 1550  plan.
 1551         4. For purposes of this paragraph, “state employer” means
 1552  any agency, board, branch, commission, community college,
 1553  department, institution, institution of higher education, or
 1554  water management district of the state, which participates in
 1555  the Florida Retirement System for the benefit of certain
 1556  employees.
 1557         (b)1. With respect to an eligible employee who is employed
 1558  in a regularly established position on September 1, 2002, by a
 1559  district school board employer:
 1560         a. Any such employee may elect to participate in the
 1561  investment plan in lieu of retaining his or her membership in
 1562  the pension plan. The election must be made in writing or by
 1563  electronic means and must be filed with the third-party
 1564  administrator by November 30, or, in the case of an active
 1565  employee who is on a leave of absence on July 1, 2002, by the
 1566  last business day of the 5th month following the month the leave
 1567  of absence concludes. This election is irrevocable, except as
 1568  provided in paragraph (g). Upon making such election, the
 1569  employee shall be enrolled as a member of the investment plan,
 1570  the employee’s membership in the Florida Retirement System is
 1571  governed by the provisions of this part, and the employee’s
 1572  membership in the pension plan terminates. The employee’s
 1573  enrollment in the investment plan is effective the first day of
 1574  the month for which a full month’s employer contribution is made
 1575  to the investment program.
 1576         b. Any such employee who fails to elect to participate in
 1577  the investment plan within the prescribed time period is deemed
 1578  to have elected to retain membership in the pension plan, and
 1579  the employee’s option to elect to participate in the investment
 1580  plan is forfeited.
 1581         2. With respect to employees who become eligible to
 1582  participate in the investment plan by reason of employment in a
 1583  regularly established position with a district school board
 1584  employer commencing after July 1, 2002:
 1585         a. Any such employee shall, by default, be enrolled in the
 1586  pension plan at the commencement of employment, and may, by the
 1587  last business day of the 5th month following the employee’s
 1588  month of hire, elect to participate in the investment plan. The
 1589  employee’s election must be made in writing or by electronic
 1590  means and must be filed with the third-party administrator. The
 1591  election to participate in the investment plan is irrevocable,
 1592  except as provided in paragraph (g).
 1593         b. If the employee files such election within the
 1594  prescribed time period, enrollment in the investment plan is
 1595  effective on the first day of employment. The employer
 1596  retirement contributions paid through the month of the employee
 1597  plan change shall be transferred to the investment plan, and,
 1598  effective the first day of the next month, the employer shall
 1599  pay the applicable contributions based on the employee
 1600  membership class in the investment plan.
 1601         c. Any such employee who fails to elect to participate in
 1602  the investment plan within the prescribed time period is deemed
 1603  to have elected to retain membership in the pension plan, and
 1604  the employee’s option to elect to participate in the investment
 1605  plan is forfeited.
 1606         3. For purposes of this paragraph, “district school board
 1607  employer” means any district school board that participates in
 1608  the Florida Retirement System for the benefit of certain
 1609  employees, or a charter school or charter technical career
 1610  center that participates in the Florida Retirement System as
 1611  provided in s. 121.051(2)(d).
 1612         (c)1. With respect to an eligible employee who is employed
 1613  in a regularly established position on December 1, 2002, by a
 1614  local employer:
 1615         a. Any such employee may elect to participate in the
 1616  investment plan in lieu of retaining his or her membership in
 1617  the pension plan. The election must be made in writing or by
 1618  electronic means and must be filed with the third-party
 1619  administrator by February 28, 2003, or, in the case of an active
 1620  employee who is on a leave of absence on October 1, 2002, by the
 1621  last business day of the 5th month following the month the leave
 1622  of absence concludes. This election is irrevocable, except as
 1623  provided in paragraph (g). Upon making such election, the
 1624  employee shall be enrolled as a participant of the investment
 1625  plan, the employee’s membership in the Florida Retirement System
 1626  is governed by the provisions of this part, and the employee’s
 1627  membership in the pension plan terminates. The employee’s
 1628  enrollment in the investment plan is effective the first day of
 1629  the month for which a full month’s employer contribution is made
 1630  to the investment plan.
 1631         b. Any such employee who fails to elect to participate in
 1632  the investment plan within the prescribed time period is deemed
 1633  to have elected to retain membership in the pension plan, and
 1634  the employee’s option to elect to participate in the investment
 1635  plan is forfeited.
 1636         2. With respect to employees who become eligible to
 1637  participate in the investment plan by reason of employment in a
 1638  regularly established position with a local employer commencing
 1639  after October 1, 2002:
 1640         a. Any such employee shall, by default, be enrolled in the
 1641  pension plan at the commencement of employment, and may, by the
 1642  last business day of the 5th month following the employee’s
 1643  month of hire, elect to participate in the investment plan. The
 1644  employee’s election must be made in writing or by electronic
 1645  means and must be filed with the third-party administrator. The
 1646  election to participate in the investment plan is irrevocable,
 1647  except as provided in paragraph (g).
 1648         b. If the employee files such election within the
 1649  prescribed time period, enrollment in the investment plan is
 1650  effective on the first day of employment. The employer
 1651  retirement contributions paid through the month of the employee
 1652  plan change shall be transferred to the investment plan, and,
 1653  effective the first day of the next month, the employer shall
 1654  pay the applicable contributions based on the employee
 1655  membership class in the investment plan.
 1656         c. Any such employee who fails to elect to participate in
 1657  the investment plan within the prescribed time period is deemed
 1658  to have elected to retain membership in the pension plan, and
 1659  the employee’s option to elect to participate in the investment
 1660  plan is forfeited.
 1661         3. For purposes of this paragraph, “local employer” means
 1662  any employer not included in paragraph (a) or paragraph (b).
 1663         (b)(d) Contributions available for self-direction by a
 1664  member who has not selected one or more specific investment
 1665  products shall be allocated as prescribed by the state board.
 1666  The third-party administrator shall notify the member at least
 1667  quarterly that the member should take an affirmative action to
 1668  make an asset allocation among the investment products.
 1669         (c)(e) On or after July 1, 2011, a member of the pension
 1670  plan who obtains a refund of employee contributions retains his
 1671  or her prior plan choice upon return to employment in a
 1672  regularly established position with a participating employer.
 1673         (d)(f) A member of the investment plan who takes a
 1674  distribution of any contributions from his or her investment
 1675  plan account is considered a retiree. A retiree who is initially
 1676  reemployed in a regularly established position on or after July
 1677  1, 2010, is not eligible to be enrolled in renewed membership.
 1678         (e)(g) After the period during which an eligible employee,
 1679  who initially enrolled before July 1, 2015, had the choice to
 1680  elect the pension plan or the investment plan, or the month
 1681  following the receipt of the eligible employee’s plan election,
 1682  if sooner, the employee shall have one opportunity, at the
 1683  employee’s discretion, to choose to move from the pension plan
 1684  to the investment plan or from the investment plan to the
 1685  pension plan. Eligible employees may elect to move between plans
 1686  only if they are earning service credit in an employer-employee
 1687  relationship consistent with s. 121.021(17)(b), excluding leaves
 1688  of absence without pay. Effective July 1, 2005, such elections
 1689  are effective on the first day of the month following the
 1690  receipt of the election by the third-party administrator and are
 1691  not subject to the requirements regarding an employer-employee
 1692  relationship or receipt of contributions for the eligible
 1693  employee in the effective month, except when the election is
 1694  received by the third-party administrator. This paragraph is
 1695  contingent upon approval by the Internal Revenue Service.
 1696         1. If the employee chooses to move to the investment plan,
 1697  the provisions of subsection (3) govern the transfer.
 1698         2. If the employee chooses to move to the pension plan, the
 1699  employee must transfer from his or her investment plan account,
 1700  and from other employee moneys as necessary, a sum representing
 1701  the present value of that employee’s accumulated benefit
 1702  obligation immediately following the time of such movement,
 1703  determined assuming that attained service equals the sum of
 1704  service in the pension plan and service in the investment plan.
 1705  Benefit commencement occurs on the first date the employee is
 1706  eligible for unreduced benefits, using the discount rate and
 1707  other relevant actuarial assumptions that were used to value the
 1708  pension plan liabilities in the most recent actuarial valuation.
 1709  For an any employee who, at the time of the second election,
 1710  already maintains an accrued benefit amount in the pension plan,
 1711  the then-present value of the accrued benefit is deemed part of
 1712  the required transfer amount. The division must ensure that the
 1713  transfer sum is prepared using a formula and methodology
 1714  certified by an enrolled actuary. A refund of any employee
 1715  contributions or additional member payments made which exceed
 1716  the employee contributions that would have accrued had the
 1717  member remained in the pension plan and not transferred to the
 1718  investment plan is not permitted.
 1719         3. Notwithstanding subparagraph 2., an employee who chooses
 1720  to move to the pension plan and who became eligible to
 1721  participate in the investment plan by reason of employment in a
 1722  regularly established position with a state employer after June
 1723  1, 2002; a district school board employer after September 1,
 1724  2002; or a local employer after December 1, 2002, must transfer
 1725  from his or her investment plan account, and from other employee
 1726  moneys as necessary, a sum representing the employee’s actuarial
 1727  accrued liability. A refund of any employee contributions or
 1728  additional member participant payments made which exceed the
 1729  employee contributions that would have accrued had the member
 1730  remained in the pension plan and not transferred to the
 1731  investment plan is not permitted.
 1732         4. An employee’s ability to transfer from the pension plan
 1733  to the investment plan pursuant to paragraph (a) and this
 1734  paragraph paragraphs (a)-(d), and the ability of a current
 1735  employee to have an option to later transfer back into the
 1736  pension plan under subparagraph 2., shall be deemed a
 1737  significant system amendment. Pursuant to s. 121.031(4), any
 1738  resulting unfunded liability arising from actual original
 1739  transfers from the pension plan to the investment plan must be
 1740  amortized within 30 plan years as a separate unfunded actuarial
 1741  base independent of the reserve stabilization mechanism defined
 1742  in s. 121.031(3)(f). For the first 25 years, a direct
 1743  amortization payment may not be calculated for this base. During
 1744  this 25-year period, the separate base shall be used to offset
 1745  the impact of employees exercising their second program election
 1746  under this paragraph. The actuarial funded status of the pension
 1747  plan is will not be affected by such second program elections in
 1748  any significant manner, after due recognition of the separate
 1749  unfunded actuarial base. Following the initial 25-year period,
 1750  any remaining balance of the original separate base shall be
 1751  amortized over the remaining 5 years of the required 30-year
 1752  amortization period.
 1753         5. If the employee chooses to transfer from the investment
 1754  plan to the pension plan and retains an excess account balance
 1755  in the investment plan after satisfying the buy-in requirements
 1756  under this paragraph, the excess may not be distributed until
 1757  the member retires from the pension plan. The excess account
 1758  balance may be rolled over to the pension plan and used to
 1759  purchase service credit or upgrade creditable service in the
 1760  pension plan.
 1761         (f) An employee initially enrolled before July 1, 2015,
 1762  shall have one opportunity in his or her working career, at the
 1763  employee’s discretion, to transfer from the pension plan to the
 1764  cash balance plan or from the investment plan to the cash
 1765  balance plan as provided in s. 121.602(2). An eligible employee
 1766  may elect to transfer between plans only if he or she is earning
 1767  service credit in an employer-employee relationship consistent
 1768  with s. 121.021(17)(b), excluding leaves of absence without pay.
 1769  Such elections are effective on the first day of the month
 1770  following the receipt of the election by the third-party
 1771  administrator and are not subject to the requirements regarding
 1772  an employer-employee relationship or receipt of contributions
 1773  for the eligible employee in the effective month, except when
 1774  the election is received by the administrator. This one-time
 1775  career transfer is irrevocable, and no other transfer is
 1776  allowed. If the employee chooses to transfer from the investment
 1777  plan or from the pension plan to the cash balance plan, s.
 1778  121.602(2) governs the transfer.
 1779         (g) Except as otherwise provided in s. 121.602(3)(a) and
 1780  (e), an employee initially enrolled on or after July 1, 2015, is
 1781  not eligible to enroll in the pension plan.
 1782         (5) CONTRIBUTIONS.—
 1783         (a) The employee and employer shall make the required
 1784  contributions to the investment plan based on a percentage of
 1785  the employee’s gross monthly compensation, as provided in part
 1786  IV III of this chapter.
 1787         (10) EDUCATION COMPONENT.—
 1788         (c) The state board, in coordination with the department,
 1789  shall provide for an initial and ongoing transfer education
 1790  component to provide system members with information necessary
 1791  to make informed plan choice decisions. The transfer education
 1792  component must include, but is not limited to, information on:
 1793         1. The amount of money available to a member for
 1794  transferring to the investment plan or the cash balance plan to
 1795  transfer to the defined contribution program.
 1796         2. The features of and differences between the pension
 1797  plan, the investment plan, and the cash balance plan and the
 1798  defined contribution program, both generally and specifically,
 1799  as those differences may affect the member.
 1800         3. The expected benefit available if the member were to
 1801  retire under each of the retirement plans programs, based on
 1802  appropriate alternative sets of assumptions.
 1803         4. The rate of return from investments in the investment
 1804  plan defined contribution program and the period of time over
 1805  which such rate of return must be achieved to equal or exceed
 1806  the expected monthly benefit payable to the member under the
 1807  pension plan or the benefit payable to the member under the cash
 1808  balance plan.
 1809         5. The historical rates of return for the investment
 1810  alternatives available in the investment plan defined
 1811  contribution programs.
 1812         6. The benefits and historical rates of return on
 1813  investments available in a typical deferred compensation plan or
 1814  a typical plan under s. 403(b) of the Internal Revenue Code for
 1815  which the employee may be eligible.
 1816         7. The program choices available to employees of the State
 1817  University System and the comparative benefits of each available
 1818  program, if applicable.
 1819         8. Payout options available in each of the retirement plans
 1820  programs.
 1821         (g) Funding for education of new employees may reflect
 1822  administrative costs to the investment plan and the cash balance
 1823  pension plan.
 1824         (h) Pursuant to subsection (8), all Florida Retirement
 1825  System employers have an obligation to regularly communicate the
 1826  existence of the two Florida Retirement System plans and the
 1827  plan choice in the natural course of administering their
 1828  personnel functions, using the educational materials supplied by
 1829  the state board and the Department of Management Services.
 1830         (15) STATEMENT OF FIDUCIARY STANDARDS AND
 1831  RESPONSIBILITIES.—
 1832         (a) Investment of defined contribution plan assets shall be
 1833  made for the sole interest and exclusive purpose of providing
 1834  benefits to members and beneficiaries and defraying reasonable
 1835  expenses of administering the plan. The plan’s program’s assets
 1836  shall be invested on behalf of the program members with the
 1837  care, skill, and diligence that a prudent person acting in a
 1838  like manner would undertake. The performance of the investment
 1839  duties set forth in this paragraph must shall comply with the
 1840  fiduciary standards set forth in the Employee Retirement Income
 1841  Security Act of 1974 at 29 U.S.C. s. 1104(a)(1)(A)-(C). In case
 1842  of conflict with other provisions of law authorizing
 1843  investments, the investment and fiduciary standards set forth in
 1844  this subsection shall prevail.
 1845         Section 15. Section 121.70, Florida Statutes, is amended to
 1846  read:
 1847         121.70 Legislative purpose and intent.—
 1848         (1) This part provides for a uniform system for funding
 1849  benefits provided under the Florida Retirement System Pension
 1850  Plan established under part I of this chapter, (referred to in
 1851  this part as the pension plan) and under the Florida Retirement
 1852  System Investment Plan established under part II of this
 1853  chapter, and under the Florida Retirement System Cash Balance
 1854  Plan established under part III of this chapter (referred to in
 1855  this part as the investment plan). The Legislature recognizes
 1856  and declares that the Florida Retirement System is a single
 1857  retirement system, consisting of three two retirement plans and
 1858  other nonintegrated programs. Employees and employers
 1859  participating in the Florida Retirement System collectively
 1860  shall make shall be responsible for making contributions to
 1861  support the benefits provided under the three both plans. The
 1862  employees and employers shall make contributions based upon a
 1863  uniform or blended contribution rate system rates determined as
 1864  a percentage of the employee’s gross monthly compensation for
 1865  the employee’s class or subclass of Florida Retirement System
 1866  membership, irrespective of the retirement plan in which the
 1867  individual employee is enrolled. This shall be known as a
 1868  uniform or blended contribution rate system.
 1869         (2) In establishing a uniform contribution rate system, it
 1870  is the intent of the Legislature to:
 1871         (a) Provide greater stability and certainty in financial
 1872  planning and budgeting for Florida Retirement System employers
 1873  by eliminating the fiscal instability that would be caused by
 1874  multiple dual rates coupled with employee-selected plan
 1875  participation;
 1876         (b) Provide greater fiscal equity and uniformity for system
 1877  employers by effectively distributing the financial burden and
 1878  benefit of short-term system deficits and surpluses,
 1879  respectively, in proportion to total system payroll; and
 1880         (c) Allow employees to make their retirement plan selection
 1881  decisions free of circumstances that may cause employers to
 1882  favor one plan choice over another.
 1883         Section 16. Subsections (1), (3), (4), and (5) of section
 1884  121.71, Florida Statutes, are amended to read:
 1885         121.71 Uniform rates; process; calculations; levy.—
 1886         (1) In conducting the system actuarial study required under
 1887  s. 121.031, the actuary shall follow all specified requirements
 1888  specified to determine, by Florida Retirement System employee
 1889  membership class, the dollar contribution amounts necessary for
 1890  the next fiscal year for the pension plan and the cash balance
 1891  plan as determined by independent valuations of each plan. In
 1892  addition, The actuary shall also determine, by Florida
 1893  Retirement System membership class, based on an estimate for the
 1894  next fiscal year of the gross compensation of employees
 1895  participating in the investment plan, the dollar contribution
 1896  amounts necessary to make the allocations required under ss.
 1897  121.72 and 121.73. For each employee membership class and
 1898  subclass, the actuarial study must establish a uniform rate
 1899  necessary to fund the benefit obligations under the both Florida
 1900  Retirement System retirement plans by dividing the sum of total
 1901  dollars required by the estimated gross compensation of members
 1902  in the both plans.
 1903         (3) Required employee retirement contribution rates for
 1904  each membership class and subclass of the Florida Retirement
 1905  System for the both retirement plans are as follows:
 1906  
 1907  Membership Class            Percentage ofGrossCompensation,EffectiveJuly 1, 2011
 1908  
 1909  Regular Class                                3.00%                 
 1910  Special Risk Class                           3.00%                 
 1911  Special Risk Administrative Support Class                 3.00%                 
 1912  Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders                 3.00%                 
 1913  Elected Officers’ Class— Justices, Judges                 3.00%                 
 1914  Elected Officers’ Class— County Elected Officers                 3.00%                 
 1915  Senior Management Service Class                 3.00%                 
 1916  DROP                                         0.00%                 
 1917         (4) Required employer retirement contribution rates for
 1918  each membership class and subclass of the Florida Retirement
 1919  System for both retirement plans are as follows:
 1920  
 1921  Membership Class            Percentage ofGrossCompensation,EffectiveJuly 1, 2013
 1922  
 1923  Regular Class                                3.53%                 
 1924  Special Risk Class                          11.00%                 
 1925  Special Risk Administrative Support Class                 4.17%                 
 1926  Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders                 6.52%                 
 1927  Elected Officers’ Class— Justices, Judges                10.05%                 
 1928  Elected Officers’ Class— County Elected Officers                 8.44%                 
 1929  Senior Management Class                      4.81%                 
 1930  DROP                                         4.63%                 
 1931         (5) In order to address unfunded actuarial liabilities of
 1932  the system, the required employer retirement contribution rates
 1933  for each membership class and subclass of the Florida Retirement
 1934  System for both retirement plans are as follows:
 1935  
 1936  Membership Class            Percentage ofGrossCompensation,EffectiveJuly 1, 2013
 1937  
 1938  Regular Class                                2.19%                 
 1939  Special Risk Class                           6.83%                 
 1940  Special Risk Administrative Support Class                30.56%                 
 1941  Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders                24.85%                 
 1942  Elected Officers’ Class— Justices, Judges                17.00%                 
 1943  Elected Officers’ Class— County Elected Officers                23.36%                 
 1944  Senior Management Service Class                12.27%                 
 1945  DROP                                         7.01%                 
 1946         Section 17. Section 121.721, Florida Statutes, is created
 1947  to read:
 1948         121.721 Credits to cash balance plan member accounts and
 1949  interest on accounts; percentage amounts.—
 1950         (1)The service credits established in this section shall
 1951  be used to fund retirement benefits under the cash balance plan
 1952  and shall be transferred monthly by the Division of Retirement
 1953  from the Florida Retirement System Contributions Clearing Trust
 1954  Fund to the Cash Balance Plan Trust Fund and credited to each
 1955  participating member’s account based on the membership class of
 1956  the member.
 1957         (2)The service credits are stated as a percentage of each
 1958  cash balance plan member’s gross compensation for the calendar
 1959  month. A change in a contribution percentage is effective the
 1960  1st day of the month for which retirement contributions may be
 1961  made on or after the beginning date of the change. Credit
 1962  percentages may be modified by general law.
 1963         (3)Employer and member credits as provided under s.
 1964  121.602(5) and (6) shall be accounted for separately.
 1965         (4) Credit allocations from the Florida Retirement System
 1966  Contributions Clearing Account Trust Fund to the cash balance
 1967  plan member annuity savings account for each member of the cash
 1968  balance plan are as follows:
 1969  
 1970  Membership Class            Percentageof GrossCompensation,EffectiveJuly 1, 2015
 1971  
 1972  Regular Class                                3.00%                 
 1973  Special Risk Class                           3.00%                 
 1974  Special Risk Administrative Support Class                 3.00%                 
 1975  Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers,State Attorneys, Public Defenders                 3.00%                 
 1976  Elected Officers’ Class— Justices, Judges                 3.00%                 
 1977  Elected Officers’ Class— County Elected Officers                 3.00%                 
 1978  Senior Management Service Class                 3.00%                 
 1979         (5)Service credit allocations from the Florida Retirement
 1980  System Contributions Clearing Account Trust Fund to the cash
 1981  balance plan employer retirement annuity account for each member
 1982  of the cash balance plan are as follows:
 1983  Membership Class             Percentageof GrossCompensation,EffectiveJuly 1, 2015
 1984  
 1985  Regular Class                                3.05%                 
 1986  Special Risk Class                           9.30%                 
 1987  Special Risk Administrative Support Class                3.05%                 
 1988  Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers,State Attorneys, Public Defenders                5.58%                 
 1989  Elected Officers’ Class— Justices, Judges                9.11%                 
 1990  Elected Officers’ Class— County Elected Officers                7.55%                 
 1991  Senior Management Service Class                4.28%                 
 1992         (6)(a) Beginning July 1, 2015, each member of the cash
 1993  balance plan may be credited with interest credits on the
 1994  balance of the member’s accounts.
 1995         (b) Effective July 1, 2015, the guaranteed interest credits
 1996  payable on the balance of each member’s retirement annuity
 1997  account and annuity savings account accrues at an effective
 1998  annual rate of 2 percent, compounded monthly and credited
 1999  monthly based on the prior month’s accumulated ending balances.
 2000  Such interest credits must be posted to member accounts by the
 2001  15th business day of the following month.
 2002         (c) Effective July 1, 2015, additional interest credits
 2003  shall be credited as follows:
 2004         1. If the annual rate of return on investments of the cash
 2005  balance plan assets for the prior plan year did not exceed 2
 2006  percent, no additional interest credits shall be allowed.
 2007         2. If the annual rate of return on investments of the cash
 2008  balance plan assets for the prior plan year was greater than 2
 2009  percent, additional interest credits are payable on each
 2010  member’s retirement annuity account and annuity savings account
 2011  equal to 75 percent of the difference between the annual rate of
 2012  return and 2 percent.
 2013         3. All additional interest credits payable under this
 2014  paragraph shall be allocated on the 15th business day of
 2015  November following the close of the plan year based on the
 2016  member’s account balances as of the preceding June 30.
 2017         (d) To be eligible for an interest credit, the member must
 2018  have an account balance at the time the interest credit is
 2019  posted to the account. Interest credits may not be awarded to a
 2020  member who has taken a full distribution of the member’s
 2021  accounts or who has annuitized the member’s accumulated total
 2022  account balance before interest credits are posted.
 2023         (e) Notwithstanding paragraphs (b) and (c), interest
 2024  credits may not be granted on the member’s nonvested account
 2025  balances following the end of the second plan year after the
 2026  member has terminated without meeting the vesting requirements
 2027  of the cash balance plan.
 2028         Section 18. Section 121.73, Florida Statutes, is amended to
 2029  read:
 2030         121.73 Allocations for member disability coverage and
 2031  coverage for members killed in the line of duty; percentage
 2032  amounts.—
 2033         (1) The allocations established in:
 2034         (a) Subsection (3) shall be used to provide disability
 2035  coverage for members in the investment plan and shall be
 2036  transferred monthly by the Division of Retirement from the
 2037  Florida Retirement System Contributions Clearing Trust Fund to
 2038  the disability account of the Florida Retirement System Trust
 2039  Fund.
 2040         (b) Subsection (4) shall be used to provide disability
 2041  coverage for members in the cash balance plan and transferred
 2042  monthly by the Division of Retirement from the Florida
 2043  Retirement System Contributions Clearing Trust Fund to the
 2044  disability account of the Florida Retirement System Cash Balance
 2045  Plan Trust Fund.
 2046         (2) The allocations contained in this section are stated as
 2047  a percentage of each investment plan or cash balance plan
 2048  member’s gross compensation for the calendar month. A change in
 2049  a contribution percentage is effective the 1st first day of the
 2050  month for which retirement contributions may be made on or after
 2051  the beginning date of the change. Contribution percentages may
 2052  be modified by general law.
 2053         (3) Effective July 1, 2002, allocations from the Florida
 2054  Retirement System Contributions Clearing Trust Fund to provide
 2055  disability coverage for members in the investment plan, and to
 2056  offset the costs of administering such said coverage, are as
 2057  follows:
 2058  
 2059  Membership Class                  Percentage of Gross Compensation 
 2060  
 2061  Regular Class                                  0.25%               
 2062  Special Risk Class                             1.33%               
 2063  Special Risk Administrative Support Class              0.45%               
 2064  Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders              0.41%               
 2065  Elected Officers’ Class— Justices, Judges              0.73%               
 2066  Elected Officers’ Class— County Elected Officers              0.41%               
 2067  Senior Management Service Class                0.26%               
 2068         (4) Allocations from the Florida Retirement System
 2069  Contributions Clearing Trust Fund to provide disability coverage
 2070  for members in the cash balance plan and to offset costs of
 2071  administering such coverage, are as follows:
 2072  
 2073  Membership Class                 Percentage of GrossCompensationEffective July 1, 2015
 2074  
 2075  Regular Class                                  0.26%               
 2076  Special Risk Class                             0.95%               
 2077  Special Risk Administrative Support Class              0.26%               
 2078  Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders              0.24%               
 2079  Elected Officers’ Class— Justices, Judges              0.47%               
 2080  Elected Officers’ Class— County Elected Officers              0.27%               
 2081  Senior Management Service Class                0.21%               
 2082         (5) The allocations established in this subsection shall be
 2083  transferred monthly by the Division of Retirement from the
 2084  Florida Retirement System Contributions Clearing Trust Fund to
 2085  the in-line-of-duty death account of the Florida Retirement
 2086  System Cash Balance Plan Trust Fund and shall be used to provide
 2087  coverage for members of the cash balance plan killed in the line
 2088  of duty. The allocations are as follows:
 2089  
 2090  Membership Class                 Percentage of GrossCompensationEffective July 1, 2015
 2091  
 2092  Regular Class                                  0.09%               
 2093  Special Risk Class                             0.25%               
 2094  Special Risk Administrative Support Class              0.09%               
 2095  Elected Officers’ Class— Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders              0.14%               
 2096  Elected Officers’ Class— Justices, Judges              0.18%               
 2097  Elected Officers’ Class— County Elected Officers              0.16%               
 2098  Senior Management Service Class                0.11%               
 2099  
 2100         Section 19. Section 121.74, Florida Statutes, is amended to
 2101  read:
 2102         121.74 Administrative and educational expenses.—In addition
 2103  to contributions required to fund member accounts under ss.
 2104  121.71 and 121.73, effective July 1, 2010, through June 30,
 2105  2014, employers participating in the Florida Retirement System
 2106  shall contribute an employer assessment amount equal to 0.03
 2107  percent of the payroll reported for each class or subclass of
 2108  Florida Retirement System membership. Effective July 1, 2014,
 2109  the employer assessment is the contribution rate shall be 0.04
 2110  percent of the payroll reported for each class or subclass of
 2111  membership. The amount assessed contributed shall be transferred
 2112  by the Division of Retirement from the Florida Retirement System
 2113  Contributions Clearing Trust Fund to the State Board of
 2114  Administration’s Administrative Trust Fund to offset the costs
 2115  of administering the investment plan and the cash balance plan
 2116  and the costs of providing educational services to members of
 2117  the Florida Retirement System. Approval of the trustees is
 2118  required before the expenditure of these funds. Payments for
 2119  third-party administrative or educational expenses shall be made
 2120  only pursuant to the terms of the approved contracts for such
 2121  services.
 2122         Section 20. Section 121.76, Florida Statutes, is amended to
 2123  read:
 2124         121.76 Contributions for social security and for retiree
 2125  health insurance subsidy.—Contributions required under this part
 2126  shall be made or deducted, as may be appropriate, for each pay
 2127  period and are in addition to employer and member contributions
 2128  required for social security and the Retiree Health Insurance
 2129  Subsidy Trust Fund as provided under parts I and II of this
 2130  chapter.
 2131         Section 21. Subsection (3) of section 121.78, Florida
 2132  Statutes, is amended to read:
 2133         121.78 Payment and distribution of contributions.—
 2134         (3)(a) Employee and employer contributions and accompanying
 2135  payroll data received after the 5th working day of the month are
 2136  considered late. The division employer shall assess the employer
 2137  be assessed by the division of Retirement a penalty of 1 percent
 2138  of the contributions due for each calendar month or part thereof
 2139  that the contributions or accompanying payroll data are late.
 2140  Proceeds from the 1 percent assessment against contributions
 2141  made on behalf of members of the pension plan shall must be
 2142  deposited in the Florida Retirement System Trust Fund, and
 2143  proceeds from the 1 percent assessment against contributions
 2144  made on behalf of members of the investment plan shall be
 2145  transferred to the third-party administrator for deposit into
 2146  member accounts, as provided in paragraph (c). Proceeds from the
 2147  assessment made on behalf of members of the cash balance plan
 2148  shall be credited to the Florida Retirement System Cash Balance
 2149  Plan Trust Fund.
 2150         (b) Retirement contributions paid for a prior period shall
 2151  be charged a delinquent fee of 1 percent for each calendar month
 2152  or part thereof that the contributions should have been paid.
 2153  This includes prior period contributions due to incorrect wages
 2154  and contributions from an earlier report or wages and
 2155  contributions that should have been reported but were not. The
 2156  delinquent assessments may not be waived. Proceeds from the
 2157  delinquent fee made on behalf of members of the pension plan
 2158  shall be deposited into the Florida Retirement System Trust
 2159  Fund. Proceeds from the delinquent fee made on behalf of members
 2160  of the investment plan shall be transferred to the third-party
 2161  administrator for deposit into member accounts. Proceeds from
 2162  the delinquent fee made on behalf of members of the cash balance
 2163  plan shall be deposited into the Florida Retirement System Cash
 2164  Balance Plan Trust Fund to be credited to the annuity savings
 2165  account and retirement savings accounts of the members.
 2166         (c) If employee contributions or contributions made by an
 2167  employer on behalf of members of the investment plan or
 2168  accompanying payroll data are not received within the calendar
 2169  month they are due, including, but not limited to, contribution
 2170  adjustments as a result of employer errors or corrections, and
 2171  if that delinquency results in market losses to members, the
 2172  employer shall reimburse each member’s account for market losses
 2173  resulting from the late contributions. If a member has
 2174  terminated employment and taken a distribution, the member is
 2175  responsible for returning any excess contributions erroneously
 2176  provided by employers, adjusted for any investment gain or loss
 2177  incurred during the period such excess contributions were in the
 2178  member’s account. The state board or its designated agent shall
 2179  communicate to terminated members any obligation to repay such
 2180  excess contribution amounts. However, the state board, its
 2181  designated agents, the Florida Retirement System Investment Plan
 2182  Trust Fund, the department, or the Florida Retirement System
 2183  Trust Fund may not incur any loss or gain as a result of an
 2184  employer’s correction of such excess contributions. The third
 2185  party administrator, hired by the state board pursuant to s.
 2186  121.4501(8), shall calculate the market losses for each affected
 2187  member. If contributions made on behalf of members of the
 2188  investment plan or accompanying payroll data are not received
 2189  within the calendar month due, the employer shall also pay the
 2190  cost of the third-party administrator’s calculation and
 2191  reconciliation adjustments resulting from the late
 2192  contributions. The third-party administrator shall notify the
 2193  employer of the results of the calculations and the total amount
 2194  due from the employer for such losses and the costs of
 2195  calculation and reconciliation. The employer shall remit to the
 2196  division of Retirement the amount due within 30 working days
 2197  after the date of the penalty notice sent by the division. The
 2198  division shall transfer that amount to the third-party
 2199  administrator, which shall deposit proceeds from the 1 percent
 2200  assessment and from individual market losses into member
 2201  accounts, as appropriate. The state board may adopt rules to
 2202  administer the provisions regarding late contributions, late
 2203  submission of payroll data, the process for reimbursing member
 2204  accounts for resultant market losses, and the penalties charged
 2205  to the employers.
 2206         (d) If a cash balance plan member has terminated employment
 2207  and taken a benefit payment, the member is responsible for
 2208  returning any excess contributions erroneously provided by
 2209  employers. The state board or its designated agent shall
 2210  communicate to terminated members their obligation to repay
 2211  excess contribution amounts. However, the state board, its
 2212  designated agents, the Florida Retirement System Cash Balance
 2213  Plan Trust Fund, or the department may not incur any loss as a
 2214  result of an employer’s correction of the excess contributions.
 2215         (e)(d) If employee contributions reported by an employer on
 2216  behalf of members are reduced as a result of employer errors or
 2217  corrections, and the member has terminated employment and taken
 2218  a refund, or distribution, or benefit payment, the employer
 2219  shall be billed and is responsible for recovering from the
 2220  member any excess contributions erroneously provided by the
 2221  employer.
 2222         (f)(e)Assessments Delinquency fees specified in paragraph
 2223  (a) may be waived by the division, with regard to pension plan
 2224  contributions, and by the state board, with regard to investment
 2225  plan or cash balance plan contributions, only if, in the opinion
 2226  of the division or the board, as appropriate, exceptional
 2227  circumstances beyond the employer’s control prevented remittance
 2228  by the prescribed due date notwithstanding the employer’s good
 2229  faith efforts to effect delivery. Such a waiver of delinquency
 2230  may be granted an employer only once each plan year.
 2231         (g)(f) If the employer submits excess employer or employee
 2232  contributions, the employer shall receive a credit to be applied
 2233  against future contributions owed. The employer is responsible
 2234  for reimbursing the member for any excess contributions
 2235  submitted if a any return of such an erroneous excess pretax
 2236  contribution by the program is made within 1 year after making
 2237  erroneous contributions or such other period allowed under
 2238  applicable Internal Revenue guidance.
 2239         (h)(g) If contributions made by an employer on behalf of
 2240  members in the investment plan are delayed in posting to member
 2241  accounts due to acts of God beyond the control of the division
 2242  of Retirement, the state board, or the third-party
 2243  administrator, as applicable, market losses resulting from the
 2244  late contributions are not payable to the members.
 2245         Section 22. Subsection (10) of section 216.136, Florida
 2246  Statutes, is amended to read:
 2247         216.136 Consensus estimating conferences; duties and
 2248  principals.—
 2249         (10) FLORIDA RETIREMENT SYSTEM ACTUARIAL ASSUMPTION
 2250  CONFERENCE.—The Florida Retirement System Actuarial Assumption
 2251  Conference shall develop official information with respect to
 2252  the economic and noneconomic assumptions and funding methods of
 2253  the Florida Retirement System necessary to perform the system
 2254  actuarial studies study undertaken pursuant to ss. s. 121.031(3)
 2255  and 121.602(20). Such information must shall include: an
 2256  analysis of the actuarial assumptions and actuarial methods used
 2257  in the studies study and a determination of whether changes to
 2258  the assumptions or methods need to be made due to experience
 2259  changes or revised future forecasts.
 2260         Section 23. Section 238.072, Florida Statutes, is amended
 2261  to read:
 2262         238.072 Special service provisions for extension
 2263  personnel.—All state and county cooperative extension personnel
 2264  holding appointments by the United States Department of
 2265  Agriculture for extension work in agriculture and home economics
 2266  in this state who are joint representatives of the University of
 2267  Florida and the United States Department of Agriculture, as
 2268  provided in s. 121.051(8) s. 121.051(7), who are members of the
 2269  Teachers’ Retirement System, chapter 238, and who are prohibited
 2270  from transferring to and participating in the Florida Retirement
 2271  System, chapter 121, may retire with full benefits upon
 2272  completion of 30 years of creditable service and shall be
 2273  considered to have attained normal retirement age under this
 2274  chapter, any law to the contrary notwithstanding. In order to
 2275  comply with the provisions of s. 14, Art. X of the State
 2276  Constitution, any liability accruing to the Florida Retirement
 2277  System Trust Fund as a result of the provisions of this section
 2278  shall be paid on an annual basis from the General Revenue Fund.
 2279         Section 24. Subsection (11) of section 413.051, Florida
 2280  Statutes, is amended to read:
 2281         413.051 Eligible blind persons; operation of vending
 2282  stands.—
 2283         (11) Effective July 1, 1996, blind licensees who remain
 2284  members of the Florida Retirement System pursuant to s.
 2285  121.051(7)(b)1. must s. 121.051(6)(b)1. shall pay any
 2286  unappropriated retirement costs from their net profits or from
 2287  program income. Within 30 days after the effective date of this
 2288  act, Each blind licensee who is eligible to maintain membership
 2289  in the Florida Retirement System under s. 121.051(7)(b)1. s.
 2290  121.051(6)(b)1., but who elects to withdraw from the system as
 2291  provided in s. 121.051(7)(b)3. s. 121.051(6)(b)3., must, on or
 2292  before July 31, 1996, notify the Division of Blind Services and
 2293  the Department of Management Services in writing of his or her
 2294  election to withdraw. Failure to timely notify the divisions
 2295  shall be deemed a decision to remain a compulsory member of the
 2296  Florida Retirement System. However, if, at any time after July
 2297  1, 1996, sufficient funds are not paid by a blind licensee to
 2298  cover the required contribution to the Florida Retirement
 2299  System, that blind licensee shall become ineligible to
 2300  participate in the Florida Retirement System on the last day of
 2301  the first month for which no contribution is made or the amount
 2302  contributed is insufficient to cover the required contribution.
 2303  For any blind licensee who becomes ineligible to participate in
 2304  the Florida Retirement System as described in this subsection,
 2305  no creditable service shall be earned under the Florida
 2306  Retirement System for any period following the month that
 2307  retirement contributions ceased to be reported. However, any
 2308  such person may participate in the Florida Retirement System in
 2309  the future if employed by a participating employer in a covered
 2310  position.
 2311         Section 25. The Legislature finds that a proper and
 2312  legitimate state purpose is served when employees and retirees
 2313  of the state and its political subdivisions, and the dependents,
 2314  survivors, and beneficiaries of such employees and retirees, are
 2315  extended the basic protections afforded by governmental
 2316  retirement systems. These persons must be provided benefits that
 2317  are fair and adequate and that are managed, administered, and
 2318  funded in an actuarially sound manner, as required by s. 14,
 2319  Article X of the State Constitution and part VII of chapter 112,
 2320  Florida Statutes. Therefore, the Legislature determines and
 2321  declares that this act fulfills an important state interest.
 2322         Section 26. (1) Effective July 1, 2015, in order to fund
 2323  the benefit changes provided in this act, the required employer
 2324  contribution rates for the unfunded actuarial liability of the
 2325  Florida Retirement System established in s. 121.75(5), Florida
 2326  Statutes, shall be adjusted as follows:
 2327         (a) Elected Officers’ Class.—Rates for Legislators, the
 2328  Governor, the Lieutenant Governor, Cabinet Officers, State
 2329  Attorneys, and Public Defenders shall be increased by _.__
 2330  percentage points.
 2331         (b)Elected Officers’ Class.Rates for County Elected
 2332  Officers shall be increased by _.__ percentage points.
 2333         (c)Senior Management Service Class.—Rates for the Senior
 2334  Management Service Class shall be increased by __.__ percentage
 2335  points.
 2336         (2)The adjustments provided in subsection (1) are in
 2337  addition to all other changes to such contribution rates which
 2338  may be enacted into law to take effect on July 1, 2013, and July
 2339  1, 2015. The Division of Law Revision and Information is
 2340  requested to adjust accordingly the contribution rates provided
 2341  in s. 121.71, Florida Statutes.
 2342         Section 27. (1) The State Board of Administration shall
 2343  request a determination letter as soon as practicable from the
 2344  Internal Revenue Service as to whether this act or any portion
 2345  of this act will cause the Florida Retirement System to be
 2346  disqualified for tax purposes under the Internal Revenue Code.
 2347  If the Internal Revenue Service refuses to act upon such
 2348  request, a legal opinion from a qualified tax attorney or firm
 2349  may be substituted for the determination letter.
 2350         (2) If the board receives notification from the Internal
 2351  Revenue Service that this act or any portion of this act will
 2352  cause the Florida Retirement System to be disqualified, the
 2353  portion that will cause the disqualification does not apply.
 2354  Upon such notice, the board shall notify the presiding officers
 2355  of the Legislature.
 2356         Section 28. This act shall take effect July 1, 2015.