Florida Senate - 2015                             CS for SB 7082
       
       
        
       By the Committees on Appropriations; and Governmental Oversight
       and Accountability
       
       
       
       
       576-04273-15                                          20157082c1
    1                        A bill to be entitled                      
    2         An act relating to death benefits under the Florida
    3         Retirement System; amending s. 121.091, F.S.;
    4         authorizing payment of death benefits to the surviving
    5         spouse or children of a Special Risk Class member
    6         killed in the line of duty under specified
    7         circumstances; specifying eligibility; amending s.
    8         121.571, F.S.; conforming provisions to changes made
    9         by the act; amending s. 121.591, F.S.; authorizing
   10         payment of death benefits to the surviving spouse or
   11         surviving children of a Special Risk Class member in
   12         the investment plan; establishing qualifications and
   13         eligibility requirements in order to receive such
   14         benefits; prescribing the method of calculating the
   15         benefit; specifying circumstances under which benefit
   16         payments are terminated; creating s. 121.5912, F.S.;
   17         providing legislative intent; requiring the State
   18         Board of Administration or the Division of Retirement
   19         to take certain action upon receipt of notification of
   20         disqualification from the Internal Revenue Service;
   21         authorizing the state board and the Department of
   22         Management Services to adopt rules; creating s.
   23         121.735, F.S.; providing for allocations for death
   24         benefits authorized by the act; amending ss. 121.71,
   25         121.74, and 121.75, F.S.; conforming cross-references
   26         to changes made by the act; requiring the State Board
   27         of Administration to transfer moneys to fund survivor
   28         benefit payments under specified circumstances;
   29         adjusting employer contribution rates in order to fund
   30         changes made by the act; providing a directive to the
   31         Division of Law Revision and Information; declaring
   32         that the act fulfills an important state interest;
   33         providing an appropriation; providing an effective
   34         date.
   35          
   36  Be It Enacted by the Legislature of the State of Florida:
   37  
   38         Section 1. Paragraph (d) of subsection (7) of section
   39  121.091, Florida Statutes, is amended, and paragraph (i) is
   40  added to that subsection, to read:
   41         121.091 Benefits payable under the system.—Benefits may not
   42  be paid under this section unless the member has terminated
   43  employment as provided in s. 121.021(39)(a) or begun
   44  participation in the Deferred Retirement Option Program as
   45  provided in subsection (13), and a proper application has been
   46  filed in the manner prescribed by the department. The department
   47  may cancel an application for retirement benefits when the
   48  member or beneficiary fails to timely provide the information
   49  and documents required by this chapter and the department’s
   50  rules. The department shall adopt rules establishing procedures
   51  for application for retirement benefits and for the cancellation
   52  of such application when the required information or documents
   53  are not received.
   54         (7) DEATH BENEFITS.—
   55         (d) Notwithstanding any other provision in this chapter to
   56  the contrary, with the exception of the Deferred Retirement
   57  Option Program, as provided in subsection (13):
   58         1. The surviving spouse of any member killed in the line of
   59  duty may receive a monthly pension equal to one-half of the
   60  monthly salary being received by the member at the time of death
   61  for the rest of the surviving spouse’s lifetime or, if the
   62  member was vested, such surviving spouse may elect to receive a
   63  benefit as provided in paragraph (b). Benefits provided by this
   64  paragraph shall supersede any other distribution that may have
   65  been provided by the member’s designation of beneficiary.
   66         2. If the surviving spouse of a member killed in the line
   67  of duty dies, the monthly payments which would have been payable
   68  to such surviving spouse had such surviving spouse lived shall
   69  be paid for the use and benefit of such member’s child or
   70  children under 18 years of age and unmarried until the 18th
   71  birthday of the member’s youngest child. Beginning July 1, 2015,
   72  such monthly payments may be extended for a child of a member in
   73  the Special Risk Class when killed on or after July 1, 2013,
   74  until the 25th birthday of such child if the child is unmarried
   75  and enrolled as a full-time student.
   76         3. If a member killed in the line of duty leaves no
   77  surviving spouse but is survived by a child or children under 18
   78  years of age, the benefits provided by subparagraph 1., normally
   79  payable to a surviving spouse, shall be paid for the use and
   80  benefit of such member’s child or children under 18 years of age
   81  and unmarried until the 18th birthday of the member’s youngest
   82  child. Beginning July 1, 2015, such monthly payments may be
   83  extended for a child of a member in the Special Risk Class when
   84  killed on or after July 1, 2013, until the 25th birthday of such
   85  child if the child is unmarried and enrolled as a full-time
   86  student.
   87         4. The surviving spouse of a member whose benefit
   88  terminated because of remarriage shall have the benefit
   89  reinstated beginning July 1, 1993, at an amount that would have
   90  been payable had the benefit not been terminated.
   91         (i)Notwithstanding any other provision in this chapter to
   92  the contrary, with the exception of the Deferred Retirement
   93  Option Program, as provided in subsection (13), for a member in
   94  the Special Risk Class when killed in the line of duty on or
   95  after July 1, 2013, the following benefits are payable in
   96  addition to the benefits provided in paragraph (d) beginning on
   97  or after July 1, 2015:
   98         1.The surviving spouse may receive a monthly pension equal
   99  to one-half of the monthly salary being received by the member
  100  at the time of death for the rest of the surviving spouse’s
  101  lifetime or, if the member was vested, such surviving spouse may
  102  elect to receive a benefit as provided in paragraph (b).
  103  Benefits provided by this paragraph shall supersede any other
  104  distribution that may have been provided by the member’s
  105  designation of beneficiary.
  106         2.If the surviving spouse dies, the monthly payments which
  107  would have been payable to such surviving spouse had such
  108  surviving spouse lived shall be paid for the use and benefit of
  109  such member’s child or children under 18 years of age and
  110  unmarried until the 18th birthday of the member’s youngest
  111  child. Such monthly payments may be extended beyond this period
  112  until the 25th birthday of the member’s child if the child is
  113  unmarried and enrolled as a full-time student.
  114         3.If the member leaves no surviving spouse but is survived
  115  by a child or children under 18 years of age, the benefits
  116  provided by subparagraph 1., normally payable to a surviving
  117  spouse, shall be paid for the use and benefit of such member’s
  118  child or children under 18 years of age and unmarried until the
  119  18th birthday of the member’s youngest child. Such monthly
  120  payments may be extended beyond this period until the 25th
  121  birthday of the member’s child if the child is unmarried and
  122  enrolled as a full-time student.
  123         Section 2. Subsection (2) of section 121.571, Florida
  124  Statutes, is amended to read:
  125         121.571 Contributions.—Contributions to the Florida
  126  Retirement System Investment Plan shall be made as follows:
  127         (2) CONTRIBUTION RATES GENERALLY.—Contributions to fund the
  128  retirement, and disability, and line-of-duty death benefits
  129  provided under this part must be based on the uniform
  130  contribution rates established by s. 121.71 and on the
  131  membership class or subclass of the member. Such contributions
  132  must be allocated as provided in ss. 121.72, and 121.73, and
  133  121.735.
  134         Section 3. Subsection (3) of section 121.591, Florida
  135  Statutes, is amended, present subsection (4) of that section is
  136  redesignated as subsection (5), and a new subsection (4) is
  137  added to that section, to read:
  138         121.591 Payment of benefits.—Benefits may not be paid under
  139  the Florida Retirement System Investment Plan unless the member
  140  has terminated employment as provided in s. 121.021(39)(a) or is
  141  deceased and a proper application has been filed as prescribed
  142  by the state board or the department. Benefits, including
  143  employee contributions, are not payable under the investment
  144  plan for employee hardships, unforeseeable emergencies, loans,
  145  medical expenses, educational expenses, purchase of a principal
  146  residence, payments necessary to prevent eviction or foreclosure
  147  on an employee’s principal residence, or any other reason except
  148  a requested distribution for retirement, a mandatory de minimis
  149  distribution authorized by the administrator, or a required
  150  minimum distribution provided pursuant to the Internal Revenue
  151  Code. The state board or department, as appropriate, may cancel
  152  an application for retirement benefits if the member or
  153  beneficiary fails to timely provide the information and
  154  documents required by this chapter and the rules of the state
  155  board and department. In accordance with their respective
  156  responsibilities, the state board and the department shall adopt
  157  rules establishing procedures for application for retirement
  158  benefits and for the cancellation of such application if the
  159  required information or documents are not received. The state
  160  board and the department, as appropriate, are authorized to cash
  161  out a de minimis account of a member who has been terminated
  162  from Florida Retirement System covered employment for a minimum
  163  of 6 calendar months. A de minimis account is an account
  164  containing employer and employee contributions and accumulated
  165  earnings of not more than $5,000 made under the provisions of
  166  this chapter. Such cash-out must be a complete lump-sum
  167  liquidation of the account balance, subject to the provisions of
  168  the Internal Revenue Code, or a lump-sum direct rollover
  169  distribution paid directly to the custodian of an eligible
  170  retirement plan, as defined by the Internal Revenue Code, on
  171  behalf of the member. Any nonvested accumulations and associated
  172  service credit, including amounts transferred to the suspense
  173  account of the Florida Retirement System Investment Plan Trust
  174  Fund authorized under s. 121.4501(6), shall be forfeited upon
  175  payment of any vested benefit to a member or beneficiary, except
  176  for de minimis distributions or minimum required distributions
  177  as provided under this section. If any financial instrument
  178  issued for the payment of retirement benefits under this section
  179  is not presented for payment within 180 days after the last day
  180  of the month in which it was originally issued, the third-party
  181  administrator or other duly authorized agent of the state board
  182  shall cancel the instrument and credit the amount of the
  183  instrument to the suspense account of the Florida Retirement
  184  System Investment Plan Trust Fund authorized under s.
  185  121.4501(6). Any amounts transferred to the suspense account are
  186  payable upon a proper application, not to include earnings
  187  thereon, as provided in this section, within 10 years after the
  188  last day of the month in which the instrument was originally
  189  issued, after which time such amounts and any earnings
  190  attributable to employer contributions shall be forfeited. Any
  191  forfeited amounts are assets of the trust fund and are not
  192  subject to chapter 717.
  193         (3) DEATH BENEFITS.—Under the Florida Retirement System
  194  Investment Plan:
  195         (a) Survivor benefits are payable in accordance with the
  196  following terms and conditions, except as provided in subsection
  197  (4):
  198         1. To the extent vested, benefits are payable only to a
  199  member’s beneficiary or beneficiaries as designated by the
  200  member as provided in s. 121.4501(20).
  201         2. Benefits shall be paid by the third-party administrator
  202  or designated approved providers in accordance with the law, the
  203  contracts, and any applicable state board rule or policy.
  204         3. To receive benefits, the member must be deceased.
  205         (b) Except as provided in subsection (4), in the event of a
  206  member’s death, all vested accumulations as described in s.
  207  121.4501(6), less withholding taxes remitted to the Internal
  208  Revenue Service, shall be distributed, as provided in paragraph
  209  (c) or as described in s. 121.4501(20), as if the member retired
  210  on the date of death. No other death benefits are available for
  211  survivors of members, except for benefits, or coverage for
  212  benefits, as are otherwise provided by law or separately
  213  provided by the employer, at the employer’s discretion.
  214         (c) Except as provided in subsection (4), upon receipt by
  215  the third-party administrator of a properly executed application
  216  for distribution of benefits, the total accumulated benefit is
  217  payable by the third-party administrator to the member’s
  218  surviving beneficiary or beneficiaries, as:
  219         1. A lump-sum distribution payable to the beneficiary or
  220  beneficiaries, or to the deceased member’s estate;
  221         2. An eligible rollover distribution, if permitted, on
  222  behalf of the surviving spouse of a deceased member, whereby all
  223  accrued benefits, plus interest and investment earnings, are
  224  paid from the deceased member’s account directly to the
  225  custodian of an eligible retirement plan, as described in s.
  226  402(c)(8)(B) of the Internal Revenue Code, on behalf of the
  227  surviving spouse; or
  228         3. A partial lump-sum payment whereby a portion of the
  229  accrued benefit is paid to the deceased member’s surviving
  230  spouse or other designated beneficiaries, less withholding taxes
  231  remitted to the Internal Revenue Service, and the remaining
  232  amount is transferred directly to the custodian of an eligible
  233  retirement plan, if permitted, as described in s. 402(c)(8)(B)
  234  of the Internal Revenue Code, on behalf of the surviving spouse.
  235  The proportions must be specified by the member or the surviving
  236  beneficiary.
  237  
  238  This paragraph does not abrogate other applicable provisions of
  239  state or federal law providing for payment of death benefits.
  240         (4)DEATH BENEFITS FOR SPECIAL RISK CLASS MEMBERS.—Benefits
  241  are provided under this subsection to the spouse and child or
  242  children of members in the Special Risk Class when killed in the
  243  line of duty and are payable in lieu of the benefits that would
  244  otherwise be payable under the provisions of subsection (1) or
  245  subsection (3). Benefits provided by this subsection shall
  246  supersede any other distribution that may have been provided by
  247  the member’s designation of beneficiary. Such benefits must be
  248  funded from employer contributions made under s. 121.571,
  249  transferred employee contributions and funds accumulated
  250  pursuant to paragraph (a), and interest and earnings thereon.
  251         (a)Transfer of funds.—To qualify to receive monthly
  252  benefits under this subsection:
  253         1.All moneys accumulated in the member’s account,
  254  including vested and nonvested accumulations as described in s.
  255  121.4501(6), must be transferred from such individual accounts
  256  to the division for deposit in the survivor benefit account of
  257  the Florida Retirement System Trust Fund. Moneys in the survivor
  258  benefit account must be accounted for separately. Earnings must
  259  be credited on an annual basis for amounts held in the survivor
  260  benefit account of the Florida Retirement System Trust Fund
  261  based on actual earnings of the trust fund.
  262         2.If the member has retained retirement credit earned
  263  under the pension plan as provided in s. 121.4501(3), a sum
  264  representing the actuarial present value of such credit within
  265  the Florida Retirement System Trust Fund shall be transferred by
  266  the division from the pension plan to the survivor benefit
  267  retirement program as implemented under this subsection and
  268  shall be deposited in the survivor benefit account of the trust
  269  fund.
  270         (b)Survivor retirement; entitlement.—An investment plan
  271  member who is in the Special Risk Class at the time the member
  272  is killed in the line of duty on or after July 1, 2013,
  273  regardless of length of creditable service, may have survivor
  274  benefits paid as provided in s. 121.091(7)(d) and (i) to:
  275         1.The surviving spouse for the spouse’s lifetime; or
  276         2.If there is no surviving spouse or the surviving spouse
  277  dies, the member’s child or children under 18 years of age and
  278  unmarried until the 18th birthday of the member’s youngest
  279  child. Such payments may be extended until the 25th birthday of
  280  the member’s child if the child is unmarried and enrolled as a
  281  full-time student as provided in s. 121.091(7)(d) and (i).
  282         (c)Survivor benefit retirement effective date.—The
  283  effective retirement date for the surviving spouse or eligible
  284  child of a Special Risk Class member who is killed in the line
  285  of duty shall be:
  286         1.The first of the month following the member’s death if
  287  the member dies on or after July 1, 2015.
  288         2.July 1, 2015, for a member of the Special Risk Class
  289  when killed in the line of duty on or after July 1, 2013, but
  290  before July 1, 2015, if the application is received before July
  291  1, 2015; or the first of the month following the receipt of the
  292  application.
  293  
  294  If the investment plan account balance has already been paid out
  295  to the surviving spouse or the eligible unmarried dependent
  296  child or children, the benefit payable shall be actuarially
  297  reduced by the amount of the payout.
  298         (d)Line-of-duty death benefit.—The surviving spouse, or if
  299  no surviving spouse or the surviving spouse dies, the member’s
  300  child or children under 18 years of age and unmarried until the
  301  18th birthday of the member’s youngest child, or until the 25th
  302  birthday of the member’s child if the child is unmarried and
  303  enrolled as a full-time student, is eligible to receive a
  304  retirement benefit under s. 121.091(7)(d) and (i) if the
  305  member’s account balance is surrendered and an application is
  306  received and approved. Such surviving spouse or such child or
  307  children shall receive a monthly survivor benefit that begins
  308  accruing on the first day of the month of survivor benefit
  309  retirement, as approved by the division, and is payable on the
  310  last day of that month and each month thereafter during the
  311  surviving spouse’s lifetime or on behalf of the unmarried
  312  children until the 18th birthday of the youngest child, or until
  313  the 25th birthday of any of the member’s children enrolled as
  314  full-time students. All survivor benefits must be paid out of
  315  the survivor benefit account of the Florida Retirement System
  316  Trust Fund established under this subsection.
  317  
  318  If the investment plan account balance has already been paid out
  319  to the surviving spouse or the eligible unmarried dependent
  320  child or children, the benefit payable shall be actuarially
  321  reduced by the amount of the payout.
  322         (e)Computation of survivor benefit retirement benefit.—The
  323  amount of each monthly payment must be calculated as provided
  324  under s. 121.091(7)(d) and (i).
  325         (f)Death of the surviving spouse or children.
  326         1.Upon the death of a surviving spouse, the monthly
  327  benefits shall be paid through the last day of the month of
  328  death and shall terminate or be paid on behalf of the unmarried
  329  child or children until the 18th birthday of the youngest child,
  330  or the 25th birthday of any of the member’s unmarried children
  331  enrolled as full-time students.
  332         2.If the surviving spouse dies and the benefit is being
  333  paid on behalf of the unmarried children under 18 years of age
  334  until the youngest, unmarried child reaches his or her 18th
  335  birthday, or the 25th birthday of any of the member’s unmarried
  336  children enrolled as full-time students, benefits shall be paid
  337  through the last day of the month until the later of the month
  338  the youngest, unmarried child reaches his or her 18th birthday,
  339  the month of the 25th birthday of any of the member’s unmarried
  340  children enrolled as full-time students, or the month of the
  341  death of the youngest child.
  342         Section 4. Section 121.5912, Florida Statutes, is created
  343  to read:
  344         121.5912 Survivor benefit retirement program; qualified
  345  status; rulemaking authority.—It is the intent of the
  346  Legislature that the survivor benefit retirement program for
  347  Special Risk Class members of the Florida Retirement System
  348  investment plan meet all applicable requirements for a qualified
  349  plan. If the state board or the division receives notification
  350  from the Internal Revenue Service that this program or any
  351  portion of this program will cause the retirement system, or any
  352  portion thereof, to be disqualified for tax purposes under the
  353  Internal Revenue Code, the portion that will cause the
  354  disqualification does not apply. Upon such notice, the state
  355  board or the division shall notify the presiding officers of the
  356  Legislature. The state board and the department may adopt any
  357  rules necessary to maintain the qualified status of the survivor
  358  benefit retirement program.
  359         Section 5. Section 121.735, Florida Statutes, is created to
  360  read:
  361         121.735 Allocations for member line-of-duty death benefits;
  362  percentage amounts.—
  363         (1) The allocations established in subsection (3) shall be
  364  used to provide line-of-duty death benefit coverage for Special
  365  Risk Class members in the investment plan and shall be
  366  transferred monthly by the Division of Retirement from the
  367  Florida Retirement System Contributions Clearing Trust Fund to
  368  the survivor benefit account of the Florida Retirement System
  369  Trust Fund.
  370         (2) The allocations are stated as a percentage of each
  371  investment plan member’s gross compensation for the calendar
  372  month. A change in a contribution percentage is effective the
  373  first day of the month for which retirement contributions may be
  374  made on or after the beginning date of the change. Contribution
  375  percentages may be modified by general law.
  376         (3)Effective July 1, 2015, allocations from the Florida
  377  Retirement System Contributions Clearing Trust Fund to provide
  378  line-of-duty death benefits for Special Risk Class members in
  379  the investment plan, and to offset the costs of administering
  380  said coverage, are as follows:
  381  
  382  
  383  Membership Class                 Percentage of Gross Compensation 
  384  
  385  Special Risk Class               0.82%                            
  386  
  387         Section 6. Subsection (1) of section 121.71, Florida
  388  Statutes, is amended to read:
  389         121.71 Uniform rates; process; calculations; levy.—
  390         (1) In conducting the system actuarial study required under
  391  s. 121.031, the actuary shall follow all requirements specified
  392  to determine, by Florida Retirement System employee membership
  393  class, the dollar contribution amounts necessary for the next
  394  fiscal year for the pension plan. In addition, the actuary shall
  395  determine, by Florida Retirement System membership class, based
  396  on an estimate for the next fiscal year of the gross
  397  compensation of employees participating in the investment plan,
  398  the dollar contribution amounts necessary to make the
  399  allocations required under ss. 121.72, and 121.73, and 121.735.
  400  For each employee membership class and subclass, the actuarial
  401  study must establish a uniform rate necessary to fund the
  402  benefit obligations under both Florida Retirement System
  403  retirement plans by dividing the sum of total dollars required
  404  by the estimated gross compensation of members in both plans.
  405         Section 7. Section 121.74, Florida Statutes, is amended to
  406  read:
  407         121.74 Administrative and educational expenses.—In addition
  408  to contributions required to fund member accounts under s. ss.
  409  121.71 and 121.73, effective July 1, 2010, through June 30,
  410  2014, employers participating in the Florida Retirement System
  411  shall contribute an employer assessment amount equal to 0.03
  412  percent of the payroll reported for each class or subclass of
  413  Florida Retirement System membership. Effective July 1, 2014,
  414  the employer assessment is 0.04 percent of the payroll reported
  415  for each class or subclass of membership. The amount assessed
  416  shall be transferred by the division of Retirement from the
  417  Florida Retirement System Contributions Clearing Trust Fund to
  418  the State Board of Administration’s Administrative Trust Fund to
  419  offset the costs of administering the investment plan and the
  420  costs of providing educational services to members of the
  421  Florida Retirement System. Approval of the trustees is required
  422  before the expenditure of these funds. Payments for third-party
  423  administrative or educational expenses shall be made only
  424  pursuant to the terms of the approved contracts for such
  425  services.
  426         Section 8. Section 121.75, Florida Statutes, is amended to
  427  read:
  428         121.75 Allocation for pension plan.—After making the
  429  transfers required pursuant to ss. 121.71, 121.72, 121.73,
  430  121.735, and 121.74, the monthly balance of funds in the Florida
  431  Retirement System Contributions Clearing Trust Fund shall be
  432  transferred to the Florida Retirement System Trust Fund to pay
  433  the costs of providing pension plan benefits and plan
  434  administrative costs under the pension plan.
  435         Section 9. For the 2015-2016 fiscal year only, upon
  436  notification by the Department of Management Services that
  437  sufficient funds are not available to make survivor benefit
  438  payments authorized by this act, the State Board of
  439  Administration shall transfer, to the extent necessary, moneys
  440  in the Administrative Trust Fund to the survivor benefits
  441  account in the Florida Retirement System Trust Fund to ensure
  442  the timely payment of survivor benefits.
  443         Section 10. (1) In order to fund the benefit changes
  444  provided in this act, the required employer contribution rates
  445  for members of the Florida Retirement System established in s.
  446  121.71(4), Florida Statutes, must be adjusted as follows:
  447         (a) The Special Risk Class must be increased by 0.45
  448  percentage point; and
  449         (b) The Deferred Retirement Option Program must be
  450  increased by 0.06 percentage point.
  451         (2) In order to fund the benefit changes provided in this
  452  act, the required employer contribution rate for the unfunded
  453  actuarial liability of the Florida Retirement System established
  454  in s. 121.71(5), Florida Statutes, for the Special Risk Class is
  455  increased by 0.13 percentage point.
  456         (3) The adjustments provided in subsections (1) and (2)
  457  shall be in addition to all other changes to such contribution
  458  rates which may be enacted into law to take effect on July 1,
  459  2015. The Division of Law Revision and Information is directed
  460  to adjust accordingly the contribution rates provided in s.
  461  121.71, Florida Statutes.
  462         Section 11. The Legislature finds that a proper and
  463  legitimate state purpose is served when employees and retirees
  464  of the state and of its political subdivisions, and the
  465  dependents, survivors, and beneficiaries of such employees and
  466  retirees, are extended the basic protections afforded by
  467  governmental retirement systems that provide fair and adequate
  468  benefits that are managed, administered, and funded in an
  469  actuarially sound manner, as required by s. 14, Article X of the
  470  State Constitution and part VII of chapter 112, Florida
  471  Statutes. Therefore, the Legislature determines and declares
  472  that this act fulfills an important state interest.
  473         Section 12. For the 2015-2016 fiscal year, the recurring
  474  sums of $5,445,537 from the General Revenue Fund and $1,062,991
  475  from trust funds are appropriated to Administered Funds in order
  476  to fund the increased employer contribution rates to be paid
  477  under this act by state agencies, state universities, state
  478  colleges, and school districts.
  479         Section 13. This act shall take effect July 1, 2015.