Florida Senate - 2016                   (PROPOSED BILL) SPB 7012
       
       
        
       FOR CONSIDERATION By the Committee on Governmental Oversight and
       Accountability
       
       
       
       
       585-00361-16                                          20167012pb
    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 that which would have been
   68  payable to such surviving spouse had such surviving spouse lived
   69  shall 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, 2016,
   72  such payments may be extended, for the surviving child of a
   73  member in the Special Risk Class at the time he or she was
   74  killed in the line of duty on or after July 1, 2013, until the
   75  25th birthday of any child of the member if the child is
   76  unmarried and enrolled as a full-time student.
   77         3. If a member killed in the line of duty leaves no
   78  surviving spouse but is survived by a child or children under 18
   79  years of age, the benefits provided by subparagraph 1., normally
   80  payable to a surviving spouse, shall be paid for the use and
   81  benefit of such member’s child or children under 18 years of age
   82  and unmarried until the 18th birthday of the member’s youngest
   83  child. Beginning July 1, 2016, such monthly payments may be
   84  extended, for the surviving child of a member in the Special
   85  Risk Class at the time he or she was killed in the line of duty
   86  on or after July 1, 2013, until the 25th birthday of any child
   87  of the member if the child is unmarried and enrolled as a full
   88  time student.
   89         4. The surviving spouse of a member whose benefit
   90  terminated because of remarriage shall have the benefit
   91  reinstated beginning July 1, 1993, at an amount that would have
   92  been payable had the benefit not been terminated.
   93         (i)Effective July 1, 2016, and notwithstanding any
   94  provision in this chapter to the contrary, if a member in the
   95  Special Risk Class, other than a participant in the Deferred
   96  Retirement Option Program under subsection (13), is killed in
   97  the line of duty on or after July 1, 2013, the following
   98  benefits are payable in addition to the benefits provided in
   99  paragraph (d):
  100         1.The surviving spouse may receive a monthly pension equal
  101  to one-half of the monthly salary being received by the member
  102  at the time of the member’s death for the rest of the surviving
  103  spouse’s lifetime or, if the member was vested, such surviving
  104  spouse may elect to receive a benefit as provided in paragraph
  105  (b). Benefits provided by this paragraph supersede any other
  106  distribution that may have been provided by the member’s
  107  designation of beneficiary.
  108         2.If the surviving spouse dies, the monthly payments that
  109  otherwise would have been payable to such surviving spouse shall
  110  be paid for the use and benefit of the member’s child or
  111  children under 18 years of age and unmarried until the 18th
  112  birthday of the member’s youngest child. Such monthly payments
  113  may be extended until the 25th birthday of the member’s child if
  114  the child is unmarried and enrolled as a full-time student.
  115         3.If the member leaves no surviving spouse but is survived
  116  by a child or children under 18 years of age, the benefits
  117  provided by subparagraph 1., normally payable to a surviving
  118  spouse, shall be paid for the use and benefit of such member’s
  119  child or children under 18 years of age and unmarried until the
  120  18th birthday of the member’s youngest child. Such monthly
  121  payments may be extended until the 25th birthday of any of the
  122  member’s children if the child is unmarried and enrolled as a
  123  full-time student.
  124         Section 2. Subsection (2) of section 121.571, Florida
  125  Statutes, is amended to read:
  126         121.571 Contributions.—Contributions to the Florida
  127  Retirement System Investment Plan shall be made as follows:
  128         (2) CONTRIBUTION RATES GENERALLY.—Contributions to fund the
  129  retirement, and disability, and line-of-duty death benefits
  130  provided under this part must be based on the uniform
  131  contribution rates established by s. 121.71 and on the
  132  membership class or subclass of the member. Such contributions
  133  must be allocated as provided in ss. 121.72, and 121.73, and
  134  121.735.
  135         Section 3. Subsection (3) of section 121.591, Florida
  136  Statutes, is amended, present subsection (4) of that section is
  137  redesignated as subsection (5), and a new subsection (4) is
  138  added to that section, to read:
  139         121.591 Payment of benefits.—Benefits may not be paid under
  140  the Florida Retirement System Investment Plan unless the member
  141  has terminated employment as provided in s. 121.021(39)(a) or is
  142  deceased and a proper application has been filed as prescribed
  143  by the state board or the department. Benefits, including
  144  employee contributions, are not payable under the investment
  145  plan for employee hardships, unforeseeable emergencies, loans,
  146  medical expenses, educational expenses, purchase of a principal
  147  residence, payments necessary to prevent eviction or foreclosure
  148  on an employee’s principal residence, or any other reason except
  149  a requested distribution for retirement, a mandatory de minimis
  150  distribution authorized by the administrator, or a required
  151  minimum distribution provided pursuant to the Internal Revenue
  152  Code. The state board or department, as appropriate, may cancel
  153  an application for retirement benefits if the member or
  154  beneficiary fails to timely provide the information and
  155  documents required by this chapter and the rules of the state
  156  board and department. In accordance with their respective
  157  responsibilities, the state board and the department shall adopt
  158  rules establishing procedures for application for retirement
  159  benefits and for the cancellation of such application if the
  160  required information or documents are not received. The state
  161  board and the department, as appropriate, are authorized to cash
  162  out a de minimis account of a member who has been terminated
  163  from Florida Retirement System covered employment for a minimum
  164  of 6 calendar months. A de minimis account is an account
  165  containing employer and employee contributions and accumulated
  166  earnings of not more than $5,000 made under the provisions of
  167  this chapter. Such cash-out must be a complete lump-sum
  168  liquidation of the account balance, subject to the provisions of
  169  the Internal Revenue Code, or a lump-sum direct rollover
  170  distribution paid directly to the custodian of an eligible
  171  retirement plan, as defined by the Internal Revenue Code, on
  172  behalf of the member. Any nonvested accumulations and associated
  173  service credit, including amounts transferred to the suspense
  174  account of the Florida Retirement System Investment Plan Trust
  175  Fund authorized under s. 121.4501(6), shall be forfeited upon
  176  payment of any vested benefit to a member or beneficiary, except
  177  for de minimis distributions or minimum required distributions
  178  as provided under this section. If any financial instrument
  179  issued for the payment of retirement benefits under this section
  180  is not presented for payment within 180 days after the last day
  181  of the month in which it was originally issued, the third-party
  182  administrator or other duly authorized agent of the state board
  183  shall cancel the instrument and credit the amount of the
  184  instrument to the suspense account of the Florida Retirement
  185  System Investment Plan Trust Fund authorized under s.
  186  121.4501(6). Any amounts transferred to the suspense account are
  187  payable upon a proper application, not to include earnings
  188  thereon, as provided in this section, within 10 years after the
  189  last day of the month in which the instrument was originally
  190  issued, after which time such amounts and any earnings
  191  attributable to employer contributions shall be forfeited. Any
  192  forfeited amounts are assets of the trust fund and are not
  193  subject to chapter 717.
  194         (3) DEATH BENEFITS.—Under the Florida Retirement System
  195  Investment Plan:
  196         (a) Survivor benefits are payable in accordance with the
  197  following terms and conditions, except as provided in subsection
  198  (4):
  199         1. To the extent vested, benefits are payable only to a
  200  member’s beneficiary or beneficiaries as designated by the
  201  member as provided in s. 121.4501(20).
  202         2. Benefits shall be paid by the third-party administrator
  203  or designated approved providers in accordance with the law, the
  204  contracts, and any applicable state board rule or policy.
  205         3. To receive benefits, the member must be deceased.
  206         (b) Except as provided in subsection (4), in the event of a
  207  member’s death, all vested accumulations as described in s.
  208  121.4501(6), less withholding taxes remitted to the Internal
  209  Revenue Service, shall be distributed, as provided in paragraph
  210  (c) or as described in s. 121.4501(20), as if the member retired
  211  on the date of death. No other death benefits are available for
  212  survivors of members, except for benefits, or coverage for
  213  benefits, as are otherwise provided by law or separately
  214  provided by the employer, at the employer’s discretion.
  215         (c) Except as provided in subsection (4), upon receipt by
  216  the third-party administrator of a properly executed application
  217  for distribution of benefits, the total accumulated benefit is
  218  payable by the third-party administrator to the member’s
  219  surviving beneficiary or beneficiaries, as:
  220         1. A lump-sum distribution payable to the beneficiary or
  221  beneficiaries, or to the deceased member’s estate;
  222         2. An eligible rollover distribution, if permitted, on
  223  behalf of the surviving spouse of a deceased member, whereby all
  224  accrued benefits, plus interest and investment earnings, are
  225  paid from the deceased member’s account directly to the
  226  custodian of an eligible retirement plan, as described in s.
  227  402(c)(8)(B) of the Internal Revenue Code, on behalf of the
  228  surviving spouse; or
  229         3. A partial lump-sum payment whereby a portion of the
  230  accrued benefit is paid to the deceased member’s surviving
  231  spouse or other designated beneficiaries, less withholding taxes
  232  remitted to the Internal Revenue Service, and the remaining
  233  amount is transferred directly to the custodian of an eligible
  234  retirement plan, if permitted, as described in s. 402(c)(8)(B)
  235  of the Internal Revenue Code, on behalf of the surviving spouse.
  236  The proportions must be specified by the member or the surviving
  237  beneficiary.
  238  
  239  This paragraph does not abrogate other applicable provisions of
  240  state or federal law providing for payment of death benefits.
  241         (4)DEATH BENEFITS FOR SPECIAL RISK CLASS MEMBERS.—Benefits
  242  are provided under this subsection to the spouse and child or
  243  children of members in the Special Risk Class when such members
  244  are killed in the line of duty and are payable in lieu of the
  245  benefits that would otherwise be payable under subsection (1) or
  246  subsection (3). Benefits provided by this subsection supersede
  247  any other distribution that may have been provided by the
  248  member’s designation of beneficiary. Such benefits must be
  249  funded from employer contributions made under s. 121.571,
  250  transferred employee contributions and funds accumulated
  251  pursuant to paragraph (a), and interest and earnings thereon.
  252         (a)Transfer of funds.—To qualify to receive monthly
  253  benefits under this subsection:
  254         1.All moneys accumulated in the member’s account,
  255  including vested and nonvested accumulations as described in s.
  256  121.4501(6), must be transferred from such individual accounts
  257  to the division for deposit in the survivor benefit account of
  258  the Florida Retirement System Trust Fund. Moneys in the survivor
  259  benefit account must be accounted for separately. Earnings must
  260  be credited on an annual basis for amounts held in the survivor
  261  benefit account of the Florida Retirement System Trust Fund
  262  based on actual earnings of the trust fund.
  263         2.If the member has retained retirement credit earned
  264  under the pension plan as provided in s. 121.4501(3), a sum
  265  representing the actuarial present value of such credit within
  266  the Florida Retirement System Trust Fund shall be transferred by
  267  the division from the pension plan to the survivor benefit
  268  retirement program as implemented under this subsection and
  269  shall be deposited in the survivor benefit account of the trust
  270  fund.
  271         (b)Survivor retirement; entitlement.—An investment plan
  272  member who is in the Special Risk Class at the time the member
  273  is killed in the line of duty on or after July 1, 2013,
  274  regardless of length of creditable service, may have survivor
  275  benefits paid as provided in s. 121.091(7)(d) and (i) to:
  276         1.The surviving spouse for the spouse’s lifetime; or
  277         2.If there is no surviving spouse or the surviving spouse
  278  dies, the member’s child or children under 18 years of age and
  279  unmarried until the 18th birthday of the member’s youngest
  280  child. Such payments may be extended until the 25th birthday of
  281  any child of the member if the child is unmarried and enrolled
  282  as a full-time student as provided in s. 121.091(7)(d) and (i).
  283         (c)Survivor benefit retirement effective date.—The
  284  effective retirement date for the surviving spouse or eligible
  285  child of a Special Risk Class member who is killed in the line
  286  of duty is:
  287         1.The first day of the month following the member’s death
  288  if the member dies on or after July 1, 2016.
  289         2.July 1, 2016, for a member of the Special Risk Class
  290  when killed in the line of duty on or after July 1, 2013, but
  291  before July 1, 2016, if the application is received before July
  292  1, 2016; or the first day of the month following the receipt of
  293  such application.
  294  
  295  If the investment plan account balance has already been paid out
  296  to the surviving spouse or the eligible unmarried dependent
  297  child or children, the benefit payable shall be actuarially
  298  reduced by the amount of the payout.
  299         (d)Line-of-duty death benefit.
  300         1. The following individuals are eligible to receive a
  301  retirement benefit under s. 121.091(7)(d) and (i) if the
  302  member’s account balance is surrendered and an application is
  303  received and approved:
  304         a. The surviving spouse.
  305         b. If there is no surviving spouse or the surviving spouse
  306  dies, the member’s child or children under 18 years of age and
  307  unmarried until the 18th birthday of the member’s youngest
  308  child, or until the 25th birthday of the member’s child if the
  309  child is unmarried and enrolled as a full-time student.
  310         2. Such surviving spouse or such child or children shall
  311  receive a monthly survivor benefit that begins accruing on the
  312  first day of the month of survivor benefit retirement, as
  313  approved by the division, and is payable on the last day of that
  314  month and each month thereafter during the surviving spouse’s
  315  lifetime or on behalf of the unmarried children of the member
  316  until the 18th birthday of the youngest child, or until the 25th
  317  birthday of any of the member’s unmarried children who are
  318  enrolled as full-time students. Survivor benefits must be paid
  319  out of the survivor benefit account of the Florida Retirement
  320  System Trust Fund established under this subsection.
  321  
  322  If the investment plan account balance has already been paid out
  323  to the surviving spouse or the eligible unmarried dependent
  324  child or children, the benefit payable shall be actuarially
  325  reduced by the amount of the payout.
  326         (e)Computation of survivor benefit retirement benefit.—The
  327  amount of each monthly payment must be calculated as provided
  328  under s. 121.091(7)(d) and (i).
  329         (f)Death of the surviving spouse or children.
  330         1.Upon the death of a surviving spouse, the monthly
  331  benefits shall be paid through the last day of the month of
  332  death and shall terminate or be paid on behalf of the unmarried
  333  child or children until the 18th birthday of the youngest child,
  334  or the 25th birthday of any of the member’s unmarried children
  335  who are enrolled as full-time students.
  336         2.If the surviving spouse dies and the benefits are being
  337  paid on behalf of the member’s unmarried children as provided in
  338  subparagraph 1., benefits shall be paid through the last day of
  339  the month until the later of the month the youngest child
  340  reaches his or her 18th birthday, the month of the 25th birthday
  341  of any of the member’s unmarried children enrolled as full-time
  342  students, or the month of the death of the youngest child.
  343         Section 4. Section 121.5912, Florida Statutes, is created
  344  to read:
  345         121.5912 Survivor benefit retirement program; qualified
  346  status; rulemaking authority.—It is the intent of the
  347  Legislature that the survivor benefit retirement program for
  348  Special Risk Class members of the Florida Retirement System
  349  investment plan meet all applicable requirements for a qualified
  350  plan. If the state board or the division receives notification
  351  from the Internal Revenue Service that this program or any
  352  portion of this program will cause the retirement system, or any
  353  portion thereof, to be disqualified for tax purposes under the
  354  Internal Revenue Code, the portion that will cause the
  355  disqualification does not apply. Upon such notice, the state
  356  board or the division shall notify the presiding officers of the
  357  Legislature. The state board and the department may adopt any
  358  rules necessary to maintain the qualified status of the survivor
  359  benefit retirement program.
  360         Section 5. Section 121.735, Florida Statutes, is created to
  361  read:
  362         121.735 Allocations for member line-of-duty death benefits;
  363  percentage amounts.—
  364         (1) The allocations established in subsection (3) shall be
  365  used to provide line-of-duty death benefit coverage for Special
  366  Risk Class members in the investment plan and shall be
  367  transferred monthly by the division from the Florida Retirement
  368  System Contributions Clearing Trust Fund to the survivor benefit
  369  account of the Florida Retirement System Trust Fund.
  370         (2)Such allocations are stated as a percentage of each
  371  investment plan member’s gross compensation for the calendar
  372  month. Any 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, 2016, 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.
  409  121.71 ss. 121.71 and 121.73, effective July 1, 2010, through
  410  June 30, 2014, employers participating in the Florida Retirement
  411  System shall contribute an employer assessment amount equal to
  412  0.03 percent of the payroll reported for each class or subclass
  413  of 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 2016-2017 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, are adjusted as follows:
  447         (a) The Special Risk Class is increased by 0.45 percentage
  448  point; and
  449         (b) The Deferred Retirement Option Program is increased by
  450  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) are
  457  in addition to any other changes to such contribution rates
  458  which may be enacted into law to take effect on July 1, 2016.
  459  The Division of Law Revision and Information is directed to
  460  adjust accordingly the contribution rates provided in s. 121.71,
  461  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 2016-2017 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, 2016.