Senate Bill sb1446c1
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    Florida Senate - 2005                           CS for SB 1446
    By the Committee on Governmental Oversight and Productivity;
    and Senator Argenziano
    585-1745-05
  1                      A bill to be entitled
  2         An act relating to state financial matters;
  3         amending s. 121.021, F.S.; clarifying that the
  4         State Board of Administration may require that
  5         a member of the Florida Retirement System
  6         provide evidence of termination; amending s.
  7         121.091, F.S.; providing that a member of the
  8         Public Employee Optional Retirement Program may
  9         not return to employment with an employer under
10         the Florida Retirement System until after being
11         terminated for 3 calendar months; providing an
12         exception for those members who have reached
13         the normal retirement requirements of the
14         defined benefit plan; amending s. 121.4501,
15         F.S.; redefining the terms "eligible employee"
16         and "participant" for purposes of the Public
17         Employee Optional Retirement Program;
18         prescribing certain conditions on participation
19         in the program; deleting references to the
20         program's advisory committees; prescribing
21         procedures for, and certain presumptions
22         relating to, designation of beneficiaries;
23         providing for participation by terminated DROP
24         participants; amending s. 121.591, F.S.;
25         providing for cancellation of certain payment
26         instruments under the program when not
27         presented for payment; providing for payment
28         upon subsequent application and for forfeiture
29         when not claimed within a certain period;
30         providing that members of the Public Employee
31         Optional Retirement Program may not receive a
                                  1
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 1         distribution from their account until after
 2         being terminated for 3 calendar months;
 3         providing an exception; providing for
 4         designation of beneficiaries for death
 5         benefits; amending s. 215.47, F.S.; authorizing
 6         investments in asset-backed securities;
 7         providing an effective date.
 8  
 9  Be It Enacted by the Legislature of the State of Florida:
10  
11         Section 1.  Subsection (39) of section 121.021, Florida
12  Statutes, is amended to read:
13         121.021  Definitions.--The following words and phrases
14  as used in this chapter have the respective meanings set forth
15  unless a different meaning is plainly required by the context:
16         (39)(a)  "Termination" occurs, except as provided in
17  paragraph (b), when a member ceases all employment
18  relationships with employers under this system, as defined in
19  subsection (10), but in the event a member should be employed
20  by any such employer within the next calendar month,
21  termination shall be deemed not to have occurred. A leave of
22  absence shall constitute a continuation of the employment
23  relationship, except that a leave of absence without pay due
24  to disability may constitute termination for a member, if such
25  member makes application for and is approved for disability
26  retirement in accordance with s. 121.091(4). The department or
27  board may require other evidence of termination as it deems
28  necessary.
29         (b)  "Termination" for a member electing to participate
30  under the Deferred Retirement Option Program occurs when the
31  Deferred Retirement Option Program participant ceases all
                                  2
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 1  employment relationships with employers under this system in
 2  accordance with s. 121.091(13), but in the event the Deferred
 3  Retirement Option Program participant should be employed by
 4  any such employer within the next calendar month, termination
 5  will be deemed not to have occurred, except as provided in s.
 6  121.091(13)(b)4.c. A leave of absence shall constitute a
 7  continuation of the employment relationship.
 8         Section 2.  Subsection (9) of section 121.091, Florida
 9  Statutes, is amended to read:
10         121.091  Benefits payable under the system.--Benefits
11  may not be paid under this section unless the member has
12  terminated employment as provided in s. 121.021(39)(a) or
13  begun participation in the Deferred Retirement Option Program
14  as provided in subsection (13), and a proper application has
15  been filed in the manner prescribed by the department. The
16  department may cancel an application for retirement benefits
17  when the member or beneficiary fails to timely provide the
18  information and documents required by this chapter and the
19  department's rules. The department shall adopt rules
20  establishing procedures for application for retirement
21  benefits and for the cancellation of such application when the
22  required information or documents are not received.
23         (9)  EMPLOYMENT AFTER RETIREMENT; LIMITATION.--
24         (a)  Any person who is retired under this chapter,
25  except under the disability retirement provisions of
26  subsection (4), may be employed by an employer that does not
27  participate in a state-administered retirement system and may
28  receive compensation from that employment without limiting or
29  restricting in any way the retirement benefits payable to that
30  person.
31  
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 1         (b)1.  Any person who is retired under this chapter,
 2  except under the disability retirement provisions of
 3  subsection (4), may be reemployed by any private or public
 4  employer after retirement and receive retirement benefits and
 5  compensation from his or her employer without any limitations,
 6  except that a person may not receive both a salary from
 7  reemployment with any agency participating in the Florida
 8  Retirement System and retirement benefits under this chapter
 9  for a period of 12 months immediately subsequent to the date
10  of retirement. However, a DROP participant shall continue
11  employment and receive a salary during the period of
12  participation in the Deferred Retirement Option Program, as
13  provided in subsection (13).
14         2.  Any person to whom the limitation in subparagraph
15  1. applies who violates such reemployment limitation and who
16  is reemployed with any agency participating in the Florida
17  Retirement System before completion of the 12-month limitation
18  period shall give timely notice of this fact in writing to the
19  employer and to the division and shall have his or her
20  retirement benefits suspended for the balance of the 12-month
21  limitation period.  Any person employed in violation of this
22  paragraph and any employing agency which knowingly employs or
23  appoints such person without notifying the Division of
24  Retirement to suspend retirement benefits shall be jointly and
25  severally liable for reimbursement to the retirement trust
26  fund of any benefits paid during the reemployment limitation
27  period.  To avoid liability, such employing agency shall have
28  a written statement from the retiree that he or she is not
29  retired from a state-administered retirement system.  Any
30  retirement benefits received while reemployed during this
31  reemployment limitation period shall be repaid to the
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 1  retirement trust fund, and retirement benefits shall remain
 2  suspended until such repayment has been made.  Benefits
 3  suspended beyond the reemployment limitation shall apply
 4  toward repayment of benefits received in violation of the
 5  reemployment limitation.
 6         3.  A district school board may reemploy a retired
 7  member as a substitute or hourly teacher, education
 8  paraprofessional, transportation assistant, bus driver, or
 9  food service worker on a noncontractual basis after he or she
10  has been retired for 1 calendar month, in accordance with s.
11  121.021(39). A district school board may reemploy a retired
12  member as instructional personnel, as defined in s.
13  1012.01(2)(a), on an annual contractual basis after he or she
14  has been retired for 1 calendar month, in accordance with s.
15  121.021(39). Any other retired member who is reemployed within
16  1 calendar month after retirement shall void his or her
17  application for retirement benefits. District school boards
18  reemploying such teachers, education paraprofessionals,
19  transportation assistants, bus drivers, or food service
20  workers are subject to the retirement contribution required by
21  subparagraph 7.
22         4.  A community college board of trustees may reemploy
23  a retired member as an adjunct instructor, that is, an
24  instructor who is noncontractual and part-time, or as a
25  participant in a phased retirement program within the Florida
26  Community College System, after he or she has been retired for
27  1 calendar month, in accordance with s. 121.021(39).  Any
28  retired member who is reemployed within 1 calendar month after
29  retirement shall void his or her application for retirement
30  benefits.  Boards of trustees reemploying such instructors are
31  subject to the retirement contribution required in
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 1  subparagraph 7.  A retired member may be reemployed as an
 2  adjunct instructor for no more than 780 hours during the first
 3  12 months of retirement.  Any retired member reemployed for
 4  more than 780 hours during the first 12 months of retirement
 5  shall give timely notice in writing to the employer and to the
 6  division of the date he or she will exceed the limitation.
 7  The division shall suspend his or her retirement benefits for
 8  the remainder of the first 12 months of retirement.  Any
 9  person employed in violation of this subparagraph and any
10  employing agency which knowingly employs or appoints such
11  person without notifying the Division of Retirement to suspend
12  retirement benefits shall be jointly and severally liable for
13  reimbursement to the retirement trust fund of any benefits
14  paid during the reemployment limitation period.  To avoid
15  liability, such employing agency shall have a written
16  statement from the retiree that he or she is not retired from
17  a state-administered retirement system. Any retirement
18  benefits received by a retired member while reemployed in
19  excess of 780 hours during the first 12 months of retirement
20  shall be repaid to the Retirement System Trust Fund, and
21  retirement benefits shall remain suspended until repayment is
22  made.  Benefits suspended beyond the end of the retired
23  member's first 12 months of retirement shall apply toward
24  repayment of benefits received in violation of the 780-hour
25  reemployment limitation.
26         5.  The State University System may reemploy a retired
27  member as an adjunct faculty member or as a participant in a
28  phased retirement program within the State University System
29  after the retired member has been retired for 1 calendar
30  month, in accordance with s. 121.021(39).  Any retired member
31  who is reemployed within 1 calendar month after retirement
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 1  shall void his or her application for retirement benefits.
 2  The State University System is subject to the retired
 3  contribution required in subparagraph 7., as appropriate. A
 4  retired member may be reemployed as an adjunct faculty member
 5  or a participant in a phased retirement program for no more
 6  than 780 hours during the first 12 months of his or her
 7  retirement.  Any retired member reemployed for more than 780
 8  hours during the first 12 months of retirement shall give
 9  timely notice in writing to the employer and to the division
10  of the date he or she will exceed the limitation.  The
11  division shall suspend his or her retirement benefits for the
12  remainder of the first 12 months of retirement. Any person
13  employed in violation of this subparagraph and any employing
14  agency which knowingly employs or appoints such person without
15  notifying the Division of Retirement to suspend retirement
16  benefits shall be jointly and severally liable for
17  reimbursement to the retirement trust fund of any benefits
18  paid during the reemployment limitation period.  To avoid
19  liability, such employing agency shall have a written
20  statement from the retiree that he or she is not retired from
21  a state-administered retirement system. Any retirement
22  benefits received by a retired member while reemployed in
23  excess of 780 hours during the first 12 months of retirement
24  shall be repaid to the Retirement System Trust Fund, and
25  retirement benefits shall remain suspended until repayment is
26  made.  Benefits suspended beyond the end of the retired
27  member's first 12 months of retirement shall apply toward
28  repayment of benefits received in violation of the 780-hour
29  reemployment limitation.
30         6.  The Board of Trustees of the Florida School for the
31  Deaf and the Blind may reemploy a retired member as a
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 1  substitute teacher, substitute residential instructor, or
 2  substitute nurse on a noncontractual basis after he or she has
 3  been retired for 1 calendar month, in accordance with s.
 4  121.021(39).  Any retired member who is reemployed within 1
 5  calendar month after retirement shall void his or her
 6  application for retirement benefits. The Board of Trustees of
 7  the Florida School for the Deaf and the Blind reemploying such
 8  teachers, residential instructors, or nurses is subject to the
 9  retirement contribution required by subparagraph 7.
10  Reemployment of a retired member as a substitute teacher,
11  substitute residential instructor, or substitute nurse is
12  limited to 780 hours during the first 12 months of his or her
13  retirement. Any retired member reemployed for more than 780
14  hours during the first 12 months of retirement shall give
15  timely notice in writing to the employer and to the division
16  of the date he or she will exceed the limitation. The division
17  shall suspend his or her retirement benefits for the remainder
18  of the first 12 months of retirement. Any person employed in
19  violation of this subparagraph and any employing agency which
20  knowingly employs or appoints such person without notifying
21  the Division of Retirement to suspend retirement benefits
22  shall be jointly and severally liable for reimbursement to the
23  retirement trust fund of any benefits paid during the
24  reemployment limitation period. To avoid liability, such
25  employing agency shall have a written statement from the
26  retiree that he or she is not retired from a
27  state-administered retirement system. Any retirement benefits
28  received by a retired member while reemployed in excess of 780
29  hours during the first 12 months of retirement shall be repaid
30  to the Retirement System Trust Fund, and his or her retirement
31  benefits shall remain suspended until payment is made.
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 1  Benefits suspended beyond the end of the retired member's
 2  first 12 months of retirement shall apply toward repayment of
 3  benefits received in violation of the 780-hour reemployment
 4  limitation.
 5         7.  The employment by an employer of any retiree or
 6  DROP participant of any state-administered retirement system
 7  shall have no effect on the average final compensation or
 8  years of creditable service of the retiree or DROP
 9  participant.  Prior to July 1, 1991, upon employment of any
10  person, other than an elected officer as provided in s.
11  121.053, who has been retired under any state-administered
12  retirement program, the employer shall pay retirement
13  contributions in an amount equal to the unfunded actuarial
14  liability portion of the employer contribution which would be
15  required for regular members of the Florida Retirement System.
16  Effective July 1, 1991, contributions shall be made as
17  provided in s. 121.122 for retirees with renewed membership or
18  subsection (13) with respect to DROP participants.
19         8.  Any person who has previously retired and who is
20  holding an elective public office or an appointment to an
21  elective public office eligible for the Elected Officers'
22  Class on or after July 1, 1990, shall be enrolled in the
23  Florida Retirement System as provided in s. 121.053(1)(b) or,
24  if holding an elective public office that does not qualify for
25  the Elected Officers' Class on or after July 1, 1991, shall be
26  enrolled in the Florida Retirement System as provided in s.
27  121.122, and shall continue to receive retirement benefits as
28  well as compensation for the elected officer's service for as
29  long as he or she remains in elective office. However, any
30  retired member who served in an elective office prior to July
31  1, 1990, suspended his or her retirement benefit, and had his
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 1  or her Florida Retirement System membership reinstated shall,
 2  upon retirement from such office, have his or her retirement
 3  benefit recalculated to include the additional service and
 4  compensation earned.
 5         9.  Any person who is holding an elective public office
 6  which is covered by the Florida Retirement System and who is
 7  concurrently employed in nonelected covered employment may
 8  elect to retire while continuing employment in the elective
 9  public office, provided that he or she shall be required to
10  terminate his or her nonelected covered employment.  Any
11  person who exercises this election shall receive his or her
12  retirement benefits in addition to the compensation of the
13  elective office without regard to the time limitations
14  otherwise provided in this subsection.  No person who seeks to
15  exercise the provisions of this subparagraph, as the same
16  existed prior to May 3, 1984, shall be deemed to be retired
17  under those provisions, unless such person is eligible to
18  retire under the provisions of this subparagraph, as amended
19  by chapter 84-11, Laws of Florida.
20         10.  The limitations of this paragraph apply to
21  reemployment in any capacity with an "employer" as defined in
22  s. 121.021(10), irrespective of the category of funds from
23  which the person is compensated.
24         11.  An employing agency may reemploy a retired member
25  as a firefighter or paramedic after the retired member has
26  been retired for 1 calendar month, in accordance with s.
27  121.021(39). Any retired member who is reemployed within 1
28  calendar month after retirement shall void his or her
29  application for retirement benefits. The employing agency
30  reemploying such firefighter or paramedic is subject to the
31  retired contribution required in subparagraph 8. Reemployment
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 1  of a retired firefighter or paramedic is limited to no more
 2  than 780 hours during the first 12 months of his or her
 3  retirement. Any retired member reemployed for more than 780
 4  hours during the first 12 months of retirement shall give
 5  timely notice in writing to the employer and to the division
 6  of the date he or she will exceed the limitation. The division
 7  shall suspend his or her retirement benefits for the remainder
 8  of the first 12 months of retirement. Any person employed in
 9  violation of this subparagraph and any employing agency which
10  knowingly employs or appoints such person without notifying
11  the Division of Retirement to suspend retirement benefits
12  shall be jointly and severally liable for reimbursement to the
13  Retirement System Trust Fund of any benefits paid during the
14  reemployment limitation period. To avoid liability, such
15  employing agency shall have a written statement from the
16  retiree that he or she is not retired from a
17  state-administered retirement system. Any retirement benefits
18  received by a retired member while reemployed in excess of 780
19  hours during the first 12 months of retirement shall be repaid
20  to the Retirement System Trust Fund, and retirement benefits
21  shall remain suspended until repayment is made. Benefits
22  suspended beyond the end of the retired member's first 12
23  months of retirement shall apply toward repayment of benefits
24  received in violation of the 780-hour reemployment limitation.
25         (c)  The provisions of this subsection apply to
26  retirees, as defined in s. 121.4501(2)(j), of the Public
27  Employee Optional Retirement Program created in part II,
28  subject to the following conditions:
29         1.  Such retirees may not be reemployed with an
30  employer participating in the Florida Retirement System as
31  provided in paragraph (b) until such person has been retired
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 1  for 3 calendar months, unless the participant has reached the
 2  normal retirement requirements of the defined benefit plan as
 3  provided in s. 121.021(29).
 4         2.  Such retiree employed in violation of this
 5  subsection and any employing agency that knowingly employs or
 6  appoints such person shall be jointly and severally liable for
 7  reimbursement of any benefits paid to the retirement trust
 8  fund from which the benefits were paid, including the
 9  Retirement System Trust Fund and the Public Employee Optional
10  Retirement Program Trust Fund, as appropriate. To avoid
11  liability, such employing agency must have a written statement
12  from the retiree that he or she is not retired from a
13  state-administered retirement system.
14         Section 3.  Paragraphs (f) and (h) of subsection (2),
15  paragraph (e) of subsection (4), paragraph (c) of subsection
16  (8), and subsection (12) of section 121.4501, Florida
17  Statutes, are amended, and subsections (20) and (21) are added
18  to that section, to read:
19         121.4501  Public Employee Optional Retirement
20  Program.--
21         (2)  DEFINITIONS.--As used in this part, the term:
22         (f)  "Eligible employee" means an officer or employee,
23  as defined in s. 121.021(11), who:
24         1.  Is a member of, or is eligible for membership in,
25  the Florida Retirement System, including any renewed member of
26  the Florida Retirement System;
27         2.  Participates in, or is eligible to participate in,
28  the Senior Management Service Optional Annuity Program as
29  established under s. 121.055(6) or the State Community College
30  Optional Retirement Program as established under s.
31  121.051(2)(c); or
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 1         3.  Is eligible to participate in, but does not
 2  participate in, the State University System Optional
 3  Retirement Program established under s. 121.35.
 4  
 5  The term does not include any member participating in the
 6  Deferred Retirement Option Program established under s.
 7  121.091(13) or any employee participating in an optional
 8  retirement program established under s. 121.051(2)(c) or s.
 9  121.35.
10         (h)  "Participant" means an eligible employee who
11  elects to participate in the Public Employee Optional
12  Retirement Program and enrolls in such optional program as
13  provided in subsection (4) or a terminated Deferred Retirement
14  Option Program participant as described in subsection (21).
15         (4)  PARTICIPATION; ENROLLMENT.--
16         (e)  After the period during which an eligible employee
17  had the choice to elect the defined benefit program or the
18  Public Employee Optional Retirement Program, or the month
19  following the receipt of the eligible employee's plan election
20  selection effective date, if sooner, the employee shall have
21  one opportunity, at the employee's discretion, to choose to
22  move from the defined benefit program to the Public Employee
23  Optional Retirement Program or from the Public Employee
24  Optional Retirement Program to the defined benefit program.
25  Eligible employees may elect to move between Florida
26  Retirement System programs only if they are earning service
27  credit in an employer-employee relationship consistent with
28  the requirements under s. 121.021(17)(b), excluding leaves of
29  absence without pay. Effective July 1, 2005, such elections
30  shall be effective on the first day of the month following the
31  receipt of the election by the third-party administrator and
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 1  are not subject to the requirements regarding an
 2  employer-employee relationship or receipt of contributions for
 3  the eligible employee in the effective month, except that the
 4  employee must meet the conditions of the previous sentence
 5  when the election is received by the third-party
 6  administrator. This paragraph shall be contingent upon
 7  approval from the Internal Revenue Service for including the
 8  choice described herein within the programs offered by the
 9  Florida Retirement System.
10         1.  If the employee chooses to move to the Public
11  Employee Optional Retirement Program, the applicable
12  provisions of this section shall govern the transfer.
13         2.  If the employee chooses to move to the defined
14  benefit program, the employee must transfer from his or her
15  Public Employee Optional Retirement Program account and from
16  other employee moneys as necessary, a sum representing the
17  present value of that employee's accumulated benefit
18  obligation immediately following the time of such movement,
19  determined assuming that attained service equals the sum of
20  service in the defined benefit program and service in the
21  Public Employee Optional Retirement Program. Benefit
22  commencement occurs on the first date the employee would
23  become eligible for unreduced benefits, using the discount
24  rate and other relevant actuarial assumptions that were used
25  to value the Florida Retirement System defined benefit plan
26  liabilities in the most recent actuarial valuation. For any
27  employee who, at the time of the second election, already
28  maintains an accrued benefit amount in the defined benefit
29  plan, the then-present value of such accrued benefit shall be
30  deemed part of the required transfer amount described in this
31  subparagraph. The division shall ensure that the transfer sum
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 1  is prepared using a formula and methodology certified by an
 2  enrolled actuary.
 3         3.  Notwithstanding subparagraph 2., an employee who
 4  chooses to move to the defined benefit program and who became
 5  eligible to participate in the Public Employee Optional
 6  Retirement Program by reason of employment in a regularly
 7  established position with a state employer after June 1, 2002;
 8  a district school board employer after September 1, 2002; or a
 9  local employer after December 1, 2002, must transfer from his
10  or her Public Employee Optional Retirement Program account
11  and, from other employee moneys as necessary, a sum
12  representing that employee's actuarial accrued liability.
13         4.  Employees' ability to transfer from the Florida
14  Retirement System defined benefit program to the Public
15  Employee Optional Retirement Program pursuant to paragraphs
16  (a) through (d), and the ability for current employees to have
17  an option to later transfer back into the defined benefit
18  program under subparagraph 2., shall be deemed a significant
19  system amendment. Pursuant to s. 121.031(4), any such
20  resulting unfunded liability arising from actual original
21  transfers from the defined benefit program to the optional
22  program shall be amortized within 30 plan years as a separate
23  unfunded actuarial base independent of the reserve
24  stabilization mechanism defined in s. 121.031(3)(f). For the
25  first 25 years, no direct amortization payment shall be
26  calculated for this base. During this 25-year period, such
27  separate base shall be used to offset the impact of employees
28  exercising their second program election under this paragraph.
29  It is the legislative intent that the actuarial funded status
30  of the Florida Retirement System defined benefit plan is
31  neither beneficially nor adversely impacted by such second
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 1  program elections in any significant manner, after due
 2  recognition of the separate unfunded actuarial base. Following
 3  this initial 25-year period, any remaining balance of the
 4  original separate base shall be amortized over the remaining 5
 5  years of the required 30-year amortization period.
 6         (8)  ADMINISTRATION OF PROGRAM.--
 7         (c)1.  In evaluating and selecting a third-party
 8  administrator, the board shall establish criteria under which
 9  it shall consider the relative capabilities and qualifications
10  of each proposed administrator. In developing such criteria,
11  the board shall consider:
12         a.  The administrator's demonstrated experience in
13  providing administrative services to public or private sector
14  retirement systems.
15         b.  The administrator's demonstrated experience in
16  providing daily valued recordkeeping to defined contribution
17  plans.
18         c.  The administrator's ability and willingness to
19  coordinate its activities with the Florida Retirement System
20  employers, the board, and the division, and to supply to such
21  employers, the board, and the division the information and
22  data they require, including, but not limited to, monthly
23  management reports, quarterly participant reports, and ad hoc
24  reports requested by the department or board.
25         d.  The cost-effectiveness and levels of the
26  administrative services provided.
27         e.  The administrator's ability to interact with the
28  participants, the employers, the board, the division, and the
29  providers; the means by which participants may access account
30  information, direct investment of contributions, make changes
31  to their accounts, transfer moneys between available
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 1  investment vehicles, and transfer moneys between investment
 2  products; and any fees that apply to such activities.
 3         f.  Any other factor deemed necessary by the Trustees
 4  of the State Board of Administration.
 5         g.  The recommendations of the Public Employee Optional
 6  Retirement Program Advisory Committee established in
 7  subsection (12).
 8         2.  In evaluating and selecting an educational
 9  provider, the board shall establish criteria under which it
10  shall consider the relative capabilities and qualifications of
11  each proposed educational provider. In developing such
12  criteria, the board shall consider:
13         a.  Demonstrated experience in providing educational
14  services to public or private sector retirement systems.
15         b.  Ability and willingness to coordinate its
16  activities with the Florida Retirement System employers, the
17  board, and the division, and to supply to such employers, the
18  board, and the division the information and data they require,
19  including, but not limited to, reports on educational
20  contacts.
21         c.  The cost-effectiveness and levels of the
22  educational services provided.
23         d.  Ability to provide educational services via
24  different media, including, but not limited to, the Internet,
25  personal contact, seminars, brochures, and newsletters.
26         e.  Any other factor deemed necessary by the Trustees
27  of the State Board of Administration.
28         f.  The recommendations of the Public Employee Optional
29  Retirement Program Advisory Committee established in
30  subsection (12).
31  
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 1         3.  The establishment of the criteria shall be solely
 2  within the discretion of the board.
 3         (12)  ADVISORY COUNCIL COMMITTEES TO PROVIDE ADVICE AND
 4  ASSISTANCE.--The Investment Advisory Council shall assist the
 5  board in implementing and administering the Public Employee
 6  Optional Retirement Program. The Investment Advisory Council,
 7  created pursuant to s. 215.444, shall review the board's
 8  initial recommendations regarding the criteria to be used in
 9  selecting and evaluating approved providers and investment
10  products. The council may provide comments on the
11  recommendations to the board within 45 days after receiving
12  the initial recommendations. The board shall make the final
13  determination as to whether any investment provider or
14  product, any contractor, or any and all contract provisions
15  shall be approved for the program.
16         (20)  DESIGNATION OF BENEFICIARIES.--
17         (a)  Each participant may, on a form provided for that
18  purpose, signed and filed with the third-party administrator,
19  designate a choice of one or more persons, named sequentially
20  or jointly, as his or her beneficiary who shall receive the
21  benefits, if any, which may be payable pursuant to this
22  chapter in the event of the participant's death. If no
23  beneficiary is named in this manner, or if no beneficiary
24  designated by the participant survives the participant, the
25  beneficiary shall be the spouse of the deceased, if living. If
26  the participant's spouse is not alive at his or her death, the
27  beneficiary shall be the living children of the participant.
28  If no children survive, the beneficiary shall be the
29  participant's father or mother, if living; otherwise, the
30  beneficiary shall be the participant's estate. The beneficiary
31  most recently designated by a participant on a form or letter
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 1  filed with the third-party administrator shall be the
 2  beneficiary entitled to any benefits payable at the time of
 3  the participant's death. Notwithstanding any other provision
 4  in this subsection to the contrary, for a participant who dies
 5  prior to his or her effective date of retirement, the spouse
 6  at the time of death shall be the participant's beneficiary
 7  unless such participant designates a different beneficiary as
 8  provided in this subsection subsequent to the participant's
 9  most recent marriage.
10         (b)  If a participant designates a primary beneficiary
11  other than the participant's spouse, the participant's spouse
12  must sign the beneficiary designation form to acknowledge the
13  designation. This requirement does not apply to the
14  designation of one or more contingent beneficiaries to receive
15  benefits remaining upon the death of the primary beneficiary
16  or beneficiaries.
17         (c)  Notwithstanding the participant's designation of
18  benefits to be paid through a trust to a beneficiary that is a
19  natural person, and notwithstanding the provisions of the
20  trust, benefits shall be paid directly to the beneficiary if
21  such person is no longer a minor or incapacitated as defined
22  in s. 744.102(11) and (12).
23         (21)  PARTICIPATION BY TERMINATED DEFERRED RETIREMENT
24  OPTION PROGRAM PARTICIPANTS.--Notwithstanding any provision of
25  law to the contrary, participants in the Deferred Retirement
26  Option Program offered under part I may, after conclusion of
27  their participation in the program, elect to roll over or
28  authorize a direct trustee-to-trustee transfer to an account
29  under the Public Employee Optional Retirement Program of their
30  Deferred Retirement Option Program proceeds distributed as
31  provided under s. 121.091(13)(c)5. The transaction must
                                  19
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 1  constitute an "eligible rollover distribution" within the
 2  meaning of s. 402(c)(4) of the Internal Revenue Code.
 3         (a)  The Public Employee Optional Retirement Program
 4  may accept such amounts for deposit into participant accounts
 5  as provided in paragraph (5)(c).
 6         (b)  The affected participant shall direct the
 7  investment of his or her investment account; however, unless
 8  he or she becomes a renewed member of the Florida Retirement
 9  System under s. 121.122 and elects to participate in the
10  Public Employee Optional Retirement Program, employer
11  contributions may not be made to the participant's account as
12  provided under paragraph (5)(a).
13         (c)  The state board or the department is not
14  responsible for locating those persons who may be eligible to
15  participate in the Public Employee Optional Retirement Program
16  under this subsection.
17         Section 4.  Section 121.591, Florida Statutes, is
18  amended to read:
19         121.591  Benefits payable under the Public Employee
20  Optional Retirement Program of the Florida Retirement
21  System.--Benefits may not be paid under this section unless
22  the member has terminated employment as provided in s.
23  121.021(39)(a) or is deceased and a proper application has
24  been filed in the manner prescribed by the state board or the
25  department. The state board or department, as appropriate, may
26  cancel an application for retirement benefits when the member
27  or beneficiary fails to timely provide the information and
28  documents required by this chapter and the rules of the state
29  board and department. In accordance with their respective
30  responsibilities as provided herein, the State Board of
31  Administration and the Department of Management Services shall
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 1  adopt rules establishing procedures for application for
 2  retirement benefits and for the cancellation of such
 3  application when the required information or documents are not
 4  received. The State Board of Administration and the Department
 5  of Management Services, as appropriate, are authorized to cash
 6  out a de minimis account of a participant who has been
 7  terminated from Florida Retirement System covered employment
 8  for a minimum of 6 calendar months. A de minimis account is an
 9  account containing employer contributions and accumulated
10  earnings of not more than $5,000 made under the provisions of
11  this chapter. Such cash-out must either be a complete lump-sum
12  liquidation of the account balance, subject to the provisions
13  of the Internal Revenue Code, or a lump-sum direct rollover
14  distribution paid directly to the custodian of an eligible
15  retirement plan, as defined by the Internal Revenue Code, on
16  behalf of the participant. If any financial instrument issued
17  for the payment of retirement benefits under this section is
18  not presented for payment within 180 days after the last day
19  of the month in which it was originally issued, the
20  third-party administrator or other duly authorized agent of
21  the State Board of Administration shall cancel the instrument
22  and credit the amount of the instrument to the suspense
23  account of the Public Employee Optional Retirement Program
24  Trust Fund authorized under s. 121.4501(6). Any such amounts
25  transferred to the suspense account are payable upon a proper
26  application, not to include earnings thereon, as provided in
27  this section, within 5 years after the last day of the month
28  in which the instrument was originally issued, after which
29  time such amounts and any earnings thereon shall be forfeited.
30  Any such forfeited amounts are assets of the Public Employee
31  
                                  21
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 1  Optional Retirement Program Trust Fund and are not subject to
 2  the provisions of chapter 717.
 3         (1)  NORMAL BENEFITS.--Under the Public Employee
 4  Optional Retirement Program:
 5         (a)  Benefits in the form of vested accumulations as
 6  described in s. 121.4501(6) shall be payable under this
 7  subsection in accordance with the following terms and
 8  conditions:
 9         1.  To the extent vested, benefits shall be payable
10  only to a participant.
11         2.  Benefits shall be paid by the third-party
12  administrator or designated approved providers in accordance
13  with the law, the contracts, and any applicable board rule or
14  policy.
15         3.  To receive benefits under this subsection, the
16  participant must be terminated from all employment with all
17  Florida Retirement System employers, as provided in s.
18  121.021(39).
19         4.  Benefit payments may not be made until the
20  participant has been terminated for 3 calendar months, except
21  that the board may authorize by rule for the distribution of
22  up to 10 percent of the participant's account after being
23  terminated for 1 calendar month if a participant has reached
24  the normal retirement requirements of the defined benefit
25  plan, as provided in s. 121.021(29).
26         (b)  If a participant elects to receive his or her
27  benefits upon termination of employment, the participant must
28  submit a written application or an equivalent form to the
29  third-party administrator indicating his or her preferred
30  distribution date and selecting an authorized method of
31  distribution as provided in paragraph (c). The participant may
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 1  defer receipt of benefits until he or she chooses to make such
 2  application, subject to federal requirements.
 3         (c)  Upon receipt by the third-party administrator of a
 4  properly executed application for distribution of benefits,
 5  the total accumulated benefit shall be payable to the
 6  participant, as:
 7         1.  A lump-sum distribution to the participant;
 8         2.  A lump-sum direct rollover distribution whereby all
 9  accrued benefits, plus interest and investment earnings, are
10  paid from the participant's account directly to the custodian
11  of an eligible retirement plan, as defined in s. 402(c)(8)(B)
12  of the Internal Revenue Code, on behalf of the participant; or
13         3.  Periodic distributions, as authorized by the state
14  board.
15         (2)  DISABILITY RETIREMENT BENEFITS.--Benefits provided
16  under this subsection are payable in lieu of the benefits
17  which would otherwise be payable under the provisions of
18  subsection (1). Such benefits shall be funded entirely from
19  employer contributions made under s. 121.571, transferred
20  participant funds accumulated pursuant to paragraph (a), and
21  interest and earnings thereon. Pursuant thereto:
22         (a)  Transfer of funds.--To qualify to receive monthly
23  disability benefits under this subsection:
24         1.  All moneys accumulated in the participant's Public
25  Employee Optional Retirement Program accounts, including
26  vested and nonvested accumulations as described in s.
27  121.4501(6), shall be transferred from such individual
28  accounts to the Division of Retirement for deposit in the
29  disability account of the Florida Retirement System Trust
30  Fund. Such moneys shall be separately accounted for. Earnings
31  shall be credited on an annual basis for amounts held in the
                                  23
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 1  disability accounts of the Florida Retirement System Trust
 2  Fund based on actual earnings of the Florida Retirement System
 3  Trust Fund.
 4         2.  If the participant has retained retirement credit
 5  he or she had earned under the defined benefit program of the
 6  Florida Retirement System as provided in s. 121.4501(3)(b), a
 7  sum representing the actuarial present value of such credit
 8  within the Florida Retirement System Trust Fund shall be
 9  reassigned by the Division of Retirement from the defined
10  benefit program to the disability program as implemented under
11  this subsection and shall be deposited in the disability
12  account of the Florida Retirement System Trust Fund. Such
13  moneys shall be separately accounted for.
14         (b)  Disability retirement; entitlement.--
15         1.  A participant of the Public Employee Optional
16  Retirement Program who becomes totally and permanently
17  disabled, as defined in s. 121.091(4)(b), after completing 8
18  years of creditable service, or a participant who becomes
19  totally and permanently disabled in the line of duty
20  regardless of his or her length of service, shall be entitled
21  to a monthly disability benefit as provided herein.
22         2.  In order for service to apply toward the 8 years of
23  service required to vest for regular disability benefits, or
24  toward the creditable service used in calculating a
25  service-based benefit as provided for under paragraph (g), the
26  service must be creditable service as described below:
27         a.  The participant's period of service under the
28  Public Employee Optional Retirement Program will be considered
29  creditable service, except as provided in subparagraph d.
30         b.  If the participant has elected to retain credit for
31  his or her service under the defined benefit program of the
                                  24
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 1  Florida Retirement System as provided under s. 121.4501(3)(b),
 2  all such service will be considered creditable service.
 3         c.  If the participant has elected to transfer to his
 4  or her participant accounts a sum representing the present
 5  value of his or her retirement credit under the defined
 6  benefit program as provided under s. 121.4501(3)(c), the
 7  period of service under the defined benefit program
 8  represented in the present value amounts transferred will be
 9  considered creditable service for purposes of vesting for
10  disability benefits, except as provided in subparagraph d.
11         d.  Whenever a participant has terminated employment
12  and has taken distribution of his or her funds as provided in
13  subsection (1), all creditable service represented by such
14  distributed funds is forfeited for purposes of this
15  subsection.
16         (c)  Disability retirement effective date.--The
17  effective retirement date for a participant who applies and is
18  approved for disability retirement shall be established as
19  provided under s. 121.091(4)(a)2. and 3.
20         (d)  Total and permanent disability.--A participant
21  shall be considered totally and permanently disabled if, in
22  the opinion of the division, he or she is prevented, by reason
23  of a medically determinable physical or mental impairment,
24  from rendering useful and efficient service as an officer or
25  employee.
26         (e)  Proof of disability.--The division, before
27  approving payment of any disability retirement benefit, shall
28  require proof that the participant is totally and permanently
29  disabled in the same manner as provided for members of the
30  defined benefit program of the Florida Retirement System under
31  s. 121.091(4)(c).
                                  25
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 1         (f)  Disability retirement benefit.--Upon the
 2  disability retirement of a participant under this subsection,
 3  the participant shall receive a monthly benefit that shall
 4  begin to accrue on the first day of the month of disability
 5  retirement, as approved by the division, and shall be payable
 6  on the last day of that month and each month thereafter during
 7  his or her lifetime and continued disability. All disability
 8  benefits payable to such member shall be paid out of the
 9  disability account of the Florida Retirement System Trust Fund
10  established under this subsection.
11         (g)  Computation of disability retirement benefit.--The
12  amount of each monthly payment shall be calculated in the same
13  manner as provided for members of the defined benefit program
14  of the Florida Retirement System under s. 121.091(4)(f). For
15  such purpose, creditable service under both the defined
16  benefit program and the Public Employee Optional Retirement
17  Program of the Florida Retirement System shall be applicable
18  as provided under paragraph (b).
19         (h)  Reapplication.--A participant whose initial
20  application for disability retirement has been denied may
21  reapply for disability benefits in the same manner, and under
22  the same conditions, as provided for members of the defined
23  benefit program of the Florida Retirement System under s.
24  121.091(4)(g).
25         (i)  Membership.--Upon approval of an application for
26  disability benefits under this subsection, the applicant shall
27  be transferred to the defined benefit program of the Florida
28  Retirement System, effective upon his or her disability
29  retirement effective date.
30         (j)  Option to cancel.--Any participant whose
31  application for disability benefits is approved may cancel his
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 1  or her application for disability benefits, provided that the
 2  cancellation request is received by the division before a
 3  disability retirement warrant has been deposited, cashed, or
 4  received by direct deposit. Upon such cancellation:
 5         1.  The participant's transfer to the defined benefit
 6  program under paragraph (i) shall be nullified;
 7         2.  The participant shall be retroactively reinstated
 8  in the Public Employee Optional Retirement Program without
 9  hiatus;
10         3.  All funds transferred to the Florida Retirement
11  System Trust Fund under paragraph (a) shall be returned to the
12  participant accounts from which such funds were drawn; and
13         4.  The participant may elect to receive the benefit
14  payable under the provisions of subsection (1) in lieu of
15  disability benefits as provided under this subsection.
16         (k)  Recovery from disability.--
17         1.  The division may require periodic reexaminations at
18  the expense of the disability program account of the Florida
19  Retirement System Trust Fund. Except as otherwise provided in
20  subparagraph 2., the requirements, procedures, and
21  restrictions relating to the conduct and review of such
22  reexaminations, discontinuation or termination of benefits,
23  reentry into employment, disability retirement after reentry
24  into covered employment, and all other matters relating to
25  recovery from disability shall be the same as are set forth
26  under s. 121.091(4)(h).
27         2.  Upon recovery from disability, any recipient of
28  disability retirement benefits under this subsection shall be
29  a compulsory member of the Public Employee Optional Retirement
30  Program of the Florida Retirement System. The net difference
31  between the recipient's original account balance transferred
                                  27
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 1  to the Florida Retirement System Trust Fund, including
 2  earnings, under paragraph (a) and total disability benefits
 3  paid to such recipient, if any, shall be determined as
 4  provided in sub-subparagraph a.
 5         a.  An amount equal to the total benefits paid shall be
 6  subtracted from that portion of the transferred account
 7  balance consisting of vested accumulations as described under
 8  s. 121.4501(6), if any, and an amount equal to the remainder
 9  of benefit amounts paid, if any, shall then be subtracted from
10  any remaining portion consisting of nonvested accumulations as
11  described under s. 121.4501(6).
12         b.  Amounts subtracted under sub-subparagraph a. shall
13  be retained within the disability account of the Florida
14  Retirement System Trust Fund. Any remaining account balance
15  shall be transferred to the third-party administrator for
16  disposition as provided under sub-subparagraph c. or
17  sub-subparagraph d., as appropriate.
18         c.  If the recipient returns to covered employment,
19  transferred amounts shall be deposited in individual accounts
20  under the Public Employee Optional Retirement Program, as
21  directed by the participant. Vested and nonvested amounts
22  shall be separately accounted for as provided in s.
23  121.4501(6).
24         d.  If the recipient fails to return to covered
25  employment upon recovery from disability:
26         (I)  Any remaining vested amount shall be deposited in
27  individual accounts under the Public Employee Optional
28  Retirement Program, as directed by the participant, and shall
29  be payable as provided in subsection (1).
30  
31  
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 1         (II)  Any remaining nonvested amount shall be held in a
 2  suspense account and shall be forfeitable after 5 years as
 3  provided in s. 121.4501(6).
 4         3.  If present value was reassigned from the defined
 5  benefit program to the disability program of the Florida
 6  Retirement System as provided under subparagraph (a)2., the
 7  full present value amount shall be returned to the defined
 8  benefit account within the Florida Retirement System Trust
 9  Fund and the affected individual's associated retirement
10  credit under the defined benefit program shall be reinstated
11  in full. Any benefit based upon such credit shall be
12  calculated as provided in s. 121.091(4)(h)1.
13         (l)  Nonadmissible causes of disability.--A participant
14  shall not be entitled to receive a disability retirement
15  benefit if the disability results from any injury or disease
16  sustained or inflicted as described in s. 121.091(4)(i).
17         (m)  Disability retirement of justice or judge by order
18  of Supreme Court.--
19         1.  If a participant is a justice of the Supreme Court,
20  judge of a district court of appeal, circuit judge, or judge
21  of a county court who has served for 6 years or more as an
22  elected constitutional judicial officer, including service as
23  a judicial officer in any court abolished pursuant to Art. V
24  of the State Constitution, and who is retired for disability
25  by order of the Supreme Court upon recommendation of the
26  Judicial Qualifications Commission pursuant to the provisions
27  of Art. V of the State Constitution, the participant's Option
28  1 monthly disability benefit amount as provided in s.
29  121.091(6)(a)1. shall be two-thirds of his or her monthly
30  compensation as of the participant's disability retirement
31  date.  Such a participant may alternatively elect to receive
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 1  an actuarially adjusted disability retirement benefit under
 2  any other option as provided in s. 121.091(6)(a), or to
 3  receive the normal benefit payable under the Public Employee
 4  Optional Retirement Program as set forth in subsection (1).
 5         2.  If any justice or judge who is a participant of the
 6  Public Employee Optional Retirement Program of the Florida
 7  Retirement System is retired for disability by order of the
 8  Supreme Court upon recommendation of the Judicial
 9  Qualifications Commission pursuant to the provisions of Art. V
10  of the State Constitution and elects to receive a monthly
11  disability benefit under the provisions of this paragraph:
12         a.  Any present value amount that was transferred to
13  his or her program account and all employer contributions made
14  to such account on his or her behalf, plus interest and
15  earnings thereon, shall be transferred to and deposited in the
16  disability account of the Florida Retirement System Trust
17  Fund; and
18         b.  The monthly benefits payable under this paragraph
19  for any affected justice or judge retired from the Florida
20  Retirement System pursuant to Art. V of the State Constitution
21  shall be paid from the disability account of the Florida
22  Retirement System Trust Fund.
23         (n)  Death of retiree or beneficiary.--Upon the death
24  of a disabled retiree or beneficiary thereof who is receiving
25  monthly benefits under this subsection, the monthly benefits
26  shall be paid through the last day of the month of death and
27  shall terminate, or be adjusted, if applicable, as of that
28  date in accordance with the optional form of benefit selected
29  at the time of retirement. The Department of Management
30  Services may adopt rules necessary to administer this
31  paragraph.
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 1         (3)  DEATH BENEFITS.--Under the Public Employee
 2  Optional Retirement Program:
 3         (a)  Survivor benefits shall be payable in accordance
 4  with the following terms and conditions:
 5         1.  To the extent vested, benefits shall be payable
 6  only to a participant's beneficiary or beneficiaries as
 7  designated by the participant as provided in s. 121.4501(20).
 8  If a participant designates a primary beneficiary other than
 9  the participant's spouse, the participant's spouse shall be
10  notified of the designation. This requirement shall not apply
11  to the designation of one or more contingent beneficiaries to
12  receive any benefits remaining upon the death of the primary
13  beneficiary or beneficiaries.
14         2.  Benefits shall be paid by the third-party
15  administrator or designated approved providers in accordance
16  with the law, the contracts, and any applicable board rule or
17  policy.
18         3.  To receive benefits under this subsection, the
19  participant must be deceased.
20         (b)  In the event of a participant's death, all vested
21  accumulations as described in s. 121.4501(6), less withholding
22  taxes remitted to the Internal Revenue Service, shall be
23  distributed, as provided in paragraph (c) or as described in
24  s. 121.4501(20), to the participant's designated beneficiary
25  or beneficiaries, or to the participant's estate, as if the
26  participant retired on the date of death. No other death
27  benefits shall be available for survivors of participants
28  under the Public Employee Optional Retirement Program, except
29  for such benefits, or coverage for such benefits, as are
30  otherwise provided by law or are separately afforded by the
31  employer, at the employer's discretion.
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 1         (c)  Upon receipt by the third-party administrator of a
 2  properly executed application for distribution of benefits,
 3  the total accumulated benefit shall be payable by the
 4  third-party administrator to the participant's surviving
 5  beneficiary or beneficiaries, as:
 6         1.  A lump-sum distribution payable to the beneficiary
 7  or beneficiaries, or to the deceased participant's estate;
 8         2.  An eligible rollover distribution on behalf of the
 9  surviving spouse of a deceased participant, whereby all
10  accrued benefits, plus interest and investment earnings, are
11  paid from the deceased participant's account directly to the
12  custodian of an eligible retirement plan, as described in s.
13  402(c)(8)(B) of the Internal Revenue Code, on behalf of the
14  surviving spouse; or
15         3.  A partial lump-sum payment whereby a portion of the
16  accrued benefit is paid to the deceased participant's
17  surviving spouse or other designated beneficiaries, less
18  withholding taxes remitted to the Internal Revenue Service,
19  and the remaining amount is transferred directly to the
20  custodian of an eligible retirement plan, as described in s.
21  402(c)(8)(B) of the Internal Revenue Code, on behalf of the
22  surviving spouse. The proportions must be specified by the
23  participant or the surviving beneficiary.
24  
25  This paragraph does not abrogate other applicable provisions
26  of state or federal law providing for payment of death
27  benefits.
28         (4)  LIMITATION ON LEGAL PROCESS.--The benefits payable
29  to any person under the Public Employee Optional Retirement
30  Program, and any contributions accumulated under such program,
31  are not subject to assignment, execution, attachment, or any
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 1  legal process, except for qualified domestic relations orders
 2  by a court of competent jurisdiction, income deduction orders
 3  as provided in s. 61.1301, and federal income tax levies.
 4         Section 5.  Paragraph (k) is added to subsection (2) of
 5  section 215.47, Florida Statutes, to read:
 6         215.47  Investments; authorized securities; loan of
 7  securities.--Subject to the limitations and conditions of the
 8  State Constitution or of the trust agreement relating to a
 9  trust fund, moneys available for investments under ss.
10  215.44-215.53 may be invested as follows:
11         (2)  With no more than 25 percent of any fund in:
12         (k)  Asset-backed securities not otherwise authorized
13  by this section.
14         Section 6.  This act shall take effect July 1, 2005.
15  
16          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
17                         Senate Bill 1446
18                                 
19  The Committee Substitute provides additional conditions
    affecting the reemployment of retirees who have transferred to
20  the Investment Plan to effect compliance with the Internal
    Revenue Code's prohibitions against in-service pension
21  distributions.
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CODING: Words stricken are deletions; words underlined are additions.