Florida Senate - 2021                                    SB 1870
       By Senator Ausley
       3-01716A-21                                           20211870__
    1                        A bill to be entitled                      
    2         An act relating to the Florida Retirement System;
    3         amending s. 121.051, F.S.; providing for compulsory
    4         membership in the Florida Retirement System for
    5         certain governing bodies established on or after a
    6         specified date; amending s. 121.091, F.S.; requiring
    7         certain benefits be paid to a beneficiary who does not
    8         qualify as a joint annuitant; providing an exception
    9         to the employment after retirement limitations for
   10         retirees who hold an elective office with a covered
   11         employer; amending s. 121.4501, F.S.; authorizing
   12         eligible employees an additional opportunity to
   13         transfer from the investment plan to the pension plan
   14         within a specified timeframe; amending s. 121.71,
   15         F.S.; authorizing pension plan members to contribute
   16         amounts in addition to the required member rate to the
   17         Florida Retirement System for a specified purpose;
   18         providing a declaration of important state interest;
   19         providing an effective date.
   21  Be It Enacted by the Legislature of the State of Florida:
   23         Section 1. Paragraph (b) of subsection (2) of section
   24  121.051, Florida Statutes, is amended to read:
   25         121.051 Participation in the system.—
   26         (2) OPTIONAL PARTICIPATION.—
   27         (b)1. Before July 1, 2021, the governing body of any
   28  municipality, metropolitan planning organization, or special
   29  district in the state may elect to participate in the Florida
   30  Retirement System upon proper application to the administrator
   31  and may cover all of its units as approved by the Secretary of
   32  Health and Human Services and the administrator. The department
   33  shall adopt rules establishing procedures for the submission of
   34  documents necessary for such application. Before being approved
   35  for participation in the system, the governing body of a
   36  municipality, metropolitan planning organization, or special
   37  district that has a local retirement system must submit to the
   38  administrator a certified financial statement showing the
   39  condition of the local retirement system within 3 months before
   40  the proposed effective date of membership in the Florida
   41  Retirement System. The statement must be certified by a
   42  recognized accounting firm that is independent of the local
   43  retirement system. All required documents necessary for
   44  extending Florida Retirement System coverage must be received by
   45  the department for consideration at least 15 days before the
   46  proposed effective date of coverage. If the municipality,
   47  metropolitan planning organization, or special district does not
   48  comply with this requirement, the department may require that
   49  the effective date of coverage be changed.
   50         a.2. A municipality, metropolitan planning organization, or
   51  special district that has an existing retirement system covering
   52  the employees in the units that are to be brought under the
   53  Florida Retirement System may participate only after holding a
   54  referendum in which all employees in the affected units have the
   55  right to participate. Only those employees electing coverage
   56  under the Florida Retirement System by affirmative vote in the
   57  referendum are eligible for coverage under this chapter, and
   58  those not participating or electing not to be covered by the
   59  Florida Retirement System shall remain in their present systems
   60  and are not eligible for coverage under this chapter. After the
   61  referendum is held, all future employees are compulsory members
   62  of the Florida Retirement System.
   63         b.3. At the time of joining the Florida Retirement System,
   64  the governing body of a municipality, metropolitan planning
   65  organization, or special district complying with subparagraph 1.
   66  may elect to provide, or not provide, benefits based on past
   67  service of officers and employees as described in s. 121.081(1).
   68  However, if such employer elects to provide past service
   69  benefits, such benefits must be provided for all officers and
   70  employees of its covered group.
   71         c.4. Once this election is made and approved it may not be
   72  revoked, except under sub-subparagraphs d. and e. pursuant to
   73  subparagraphs 5. and 6., and all present officers and employees
   74  electing coverage and all future officers and employees are
   75  compulsory members of the Florida Retirement System.
   76         d.5. Subject to sub-subparagraph e. subparagraph 6., the
   77  governing body of a hospital licensed under chapter 395 which is
   78  governed by the governing body of a special district as defined
   79  in s. 189.012 or by the board of trustees of a public health
   80  trust created under s. 154.07, hereinafter referred to as
   81  “hospital district,” and which participates in the Florida
   82  Retirement System, may elect to cease participation in the
   83  system with regard to future employees in accordance with the
   84  following:
   85         (I)a. No more than 30 days and at least 7 days before
   86  adopting a resolution to partially withdraw from the system and
   87  establish an alternative retirement plan for future employees, a
   88  public hearing must be held on the proposed withdrawal and
   89  proposed alternative plan.
   90         (II)b. From 7 to 15 days before such hearing, notice of
   91  intent to withdraw, specifying the time and place of the
   92  hearing, must be provided in writing to employees of the
   93  hospital district proposing partial withdrawal and must be
   94  published in a newspaper of general circulation in the area
   95  affected, as provided by ss. 50.011-50.031. Proof of publication
   96  must be submitted to the Department of Management Services.
   97         (III)c. The governing body of a hospital district seeking
   98  to partially withdraw from the system must, before such hearing,
   99  have an actuarial report prepared and certified by an enrolled
  100  actuary, as defined in s. 112.625, illustrating the cost to the
  101  hospital district of providing, through the retirement plan that
  102  the hospital district is to adopt, benefits for new employees
  103  comparable to those provided under the system.
  104         (IV)d. Upon meeting all applicable requirements of this
  105  sub-subparagraph subparagraph, and subject to sub-subparagraph
  106  e. subparagraph 6., partial withdrawal from the system and
  107  adoption of the alternative retirement plan may be accomplished
  108  by resolution duly adopted by the hospital district board. The
  109  hospital district board must provide written notice of such
  110  withdrawal to the division by mailing a copy of the resolution
  111  to the division, postmarked by December 15, 1995. The withdrawal
  112  shall take effect January 1, 1996.
  113         e.6. Following the adoption of a resolution under sub-sub
  114  subparagraph d.(IV) sub-subparagraph 5.d., all employees of the
  115  withdrawing hospital district who were members of the system
  116  before January 1, 1996, shall remain as members of the system
  117  for as long as they are employees of the hospital district, and
  118  all rights, duties, and obligations between the hospital
  119  district, the system, and the employees remain in full force and
  120  effect. Any employee who is hired or appointed on or after
  121  January 1, 1996, may not participate in the system, and the
  122  withdrawing hospital district has no obligation to the system
  123  with respect to such employees.
  124         2.a.On or after July 1, 2021, the governing body of any
  125  newly created municipality, metropolitan planning organization,
  126  or special district in the state must participate in the Florida
  127  Retirement System.
  128         b.At the time of joining the Florida Retirement System,
  129  the governing body of a municipality, metropolitan planning
  130  organization, or special district may elect to provide, or not
  131  provide, benefits based on past service of officers and
  132  employees as described in s. 121.081(1). However, if such
  133  employer elects to provide past service benefits, such benefits
  134  must be provided for all officers and employees of its covered
  135  group.
  136         Section 2. Paragraph (b) of subsection (7) of section
  137  121.091, Florida Statutes, is amended, and paragraph (g) is
  138  added to subsection (9) of that section, to read:
  139         121.091 Benefits payable under the system.—Benefits may not
  140  be paid under this section unless the member has terminated
  141  employment as provided in s. 121.021(39)(a) or begun
  142  participation in the Deferred Retirement Option Program as
  143  provided in subsection (13), and a proper application has been
  144  filed in the manner prescribed by the department. The department
  145  may cancel an application for retirement benefits when the
  146  member or beneficiary fails to timely provide the information
  147  and documents required by this chapter and the department’s
  148  rules. The department shall adopt rules establishing procedures
  149  for application for retirement benefits and for the cancellation
  150  of such application when the required information or documents
  151  are not received.
  152         (7) DEATH BENEFITS.—
  153         (b) If the employment of an active member who may or may
  154  not have applied for retirement is terminated by reason of his
  155  or her death subsequent to becoming vested and before prior to
  156  his or her effective date of retirement, if established, it is
  157  shall be assumed that the member retired as of the date of death
  158  in accordance with subsection (1) if eligible for normal
  159  retirement benefits, subsection (2) if eligible for benefits
  160  payable for dual normal retirement, or subsection (3) if
  161  eligible for early retirement benefits. Benefits payable to the
  162  designated beneficiary shall be as follows:
  163         1. For a beneficiary who qualifies as a joint annuitant,
  164  the optional form of payment provided in accordance with
  165  subparagraph (6)(a)3. shall be paid for the joint annuitant’s
  166  lifetime.
  167         2. For a beneficiary who does not qualify as a joint
  168  annuitant, any benefits payable shall be paid as provided in the
  169  option selected by the member; or if the member has not selected
  170  an option, benefits shall be paid in the optional form of
  171  payment provided in subparagraph (6)(a)1 no continuing monthly
  172  benefit shall be paid and the beneficiary shall be entitled only
  173  to the return of the member’s personal contributions. If there
  174  is no monetary interest in the member’s retirement account for
  175  which such beneficiary is eligible, the beneficiary shall be the
  176  next named beneficiary or, if no other beneficiary is named, the
  177  beneficiary shall be the next eligible beneficiary according to
  178  subsection (8).
  180         (g)Any person whose retirement is effective on or after
  181  July 1, 2021, or whose participation in the Deferred Retirement
  182  Option Program terminates on or after July 1, 2021, who is
  183  retired under this chapter, except under the disability
  184  retirement provisions of subsection (4) or as provided in s.
  185  121.053, may hold an elective public office that is covered by
  186  the Florida Retirement System. Such person shall receive his or
  187  her retirement benefits in addition to the compensation of the
  188  elective office without regards to the time limitations
  189  otherwise provided in this subsection.
  190         Section 3. Paragraph (f) of subsection (4) of section
  191  121.4501, Florida Statutes, is amended to read:
  192         121.4501 Florida Retirement System Investment Plan.—
  194         (f) After the period during which an eligible employee had
  195  the choice to elect the pension plan or the investment plan, or
  196  the month following the receipt of the eligible employee’s plan
  197  election, if sooner, the employee shall have one opportunity, at
  198  the employee’s discretion, to choose to move from the pension
  199  plan to the investment plan or from the investment plan to the
  200  pension plan. Beginning July 1, 2021, a 90-day election period
  201  shall be provided to permit each eligible employee who elected
  202  between June 1, 2002, and June 30, 2011, to move from the
  203  pension plan to the investment plan one opportunity to elect, at
  204  the employee’s discretion, to move from the investment plan back
  205  to the pension plan. Eligible employees may elect to move
  206  between plans only if they are earning service credit in an
  207  employer-employee relationship consistent with s.
  208  121.021(17)(b), excluding leaves of absence without pay.
  209  Effective July 1, 2005, such elections are effective on the
  210  first day of the month following the receipt of the election by
  211  the third-party administrator and are not subject to the
  212  requirements regarding an employer-employee relationship or
  213  receipt of contributions for the eligible employee in the
  214  effective month, except when the election is received by the
  215  third-party administrator. This paragraph is contingent upon
  216  approval by the Internal Revenue Service.
  217         1. If the employee chooses to move to the investment plan,
  218  the provisions of subsection (3) govern the transfer.
  219         2. If the employee chooses to move to the pension plan, the
  220  employee must transfer from his or her investment plan account,
  221  and from other employee moneys as necessary, a sum representing
  222  the present value of that employee’s accumulated benefit
  223  obligation immediately following the time of such movement,
  224  determined assuming that attained service equals the sum of
  225  service in the pension plan and service in the investment plan.
  226  Benefit commencement occurs on the first date the employee is
  227  eligible for unreduced benefits, using the discount rate and
  228  other relevant actuarial assumptions that were used to value the
  229  pension plan liabilities in the most recent actuarial valuation.
  230  For any employee who, at the time of the second election,
  231  already maintains an accrued benefit amount in the pension plan,
  232  the then-present value of the accrued benefit is deemed part of
  233  the required transfer amount. The division must ensure that the
  234  transfer sum is prepared using a formula and methodology
  235  certified by an enrolled actuary. A refund of any employee
  236  contributions or additional member payments made which exceed
  237  the employee contributions that would have accrued had the
  238  member remained in the pension plan and not transferred to the
  239  investment plan is not permitted.
  240         3. Notwithstanding subparagraph 2., an employee who chooses
  241  to move to the pension plan and who became eligible to
  242  participate in the investment plan by reason of employment in a
  243  regularly established position with a state employer after June
  244  1, 2002; a district school board employer after September 1,
  245  2002; or a local employer after December 1, 2002, must transfer
  246  from his or her investment plan account, and from other employee
  247  moneys as necessary, a sum representing the employee’s actuarial
  248  accrued liability. A refund of any employee contributions or
  249  additional member payments made which exceed the employee
  250  contributions that would have accrued had the member remained in
  251  the pension plan and not transferred to the investment plan is
  252  not permitted.
  253         4. An employee’s ability to transfer from the pension plan
  254  to the investment plan under pursuant to paragraphs (a) and (b),
  255  and the ability of a current employee to have an option to later
  256  transfer back into the pension plan under subparagraph 2., is
  257  considered shall be deemed a significant system amendment. Under
  258  Pursuant to s. 121.031(4), any resulting unfunded liability
  259  arising from actual original transfers from the pension plan to
  260  the investment plan must be amortized within 30 plan years as a
  261  separate unfunded actuarial base independent of the reserve
  262  stabilization mechanism defined in s. 121.031(3)(f). For the
  263  first 25 years, a direct amortization payment may not be
  264  calculated for this base. During this 25-year period, the
  265  separate base shall be used to offset the impact of employees
  266  exercising their second program election under this paragraph.
  267  The actuarial funded status of the pension plan will not be
  268  affected by such second program elections in any significant
  269  manner, after due recognition of the separate unfunded actuarial
  270  base. Following the initial 25-year period, any remaining
  271  balance of the original separate base shall be amortized over
  272  the remaining 5 years of the required 30-year amortization
  273  period.
  274         5. If the employee chooses to transfer from the investment
  275  plan to the pension plan and retains an excess account balance
  276  in the investment plan after satisfying the buy-in requirements
  277  under this paragraph, the excess may not be distributed until
  278  the member retires from the pension plan. The excess account
  279  balance may be rolled over to the pension plan and used to
  280  purchase service credit or upgrade creditable service in the
  281  pension plan.
  282         Section 4. Subsection (2) of section 121.71, Florida
  283  Statutes, is amended to read:
  284         121.71 Uniform rates; process; calculations; levy.—
  285         (2)(a) Based on the uniform rates set forth in subsections
  286  (3), (4), and (5), employees and employers shall make monthly
  287  contributions to the Division of Retirement as required in s.
  288  121.061(1), which shall initially deposit the funds into the
  289  Florida Retirement System Contributions Clearing Trust Fund. A
  290  change in a contribution rate is effective the first day of the
  291  month for which a full month’s employer and employee
  292  contribution may be made on or after the beginning date of the
  293  change. Beginning July 1, 2011, each employee shall contribute
  294  the contributions required in subsection (3). The employer shall
  295  deduct the contribution from the employee’s monthly salary, and
  296  the contribution shall be submitted to the division. These
  297  contributions shall be reported as employer-paid employee
  298  contributions, and credited to the account of the employee. The
  299  contributions shall be deducted from the employee’s salary
  300  before the computation of applicable federal taxes and treated
  301  as employer contributions under 26 U.S.C. s. 414(h)(2). The
  302  employer specifies that the contributions, although designated
  303  as employee contributions, are being paid by the employer in
  304  lieu of contributions by the employee. The employee does not
  305  have the option of choosing to receive the contributed amounts
  306  directly instead of having them paid by the employer to the
  307  plan. Such contributions are mandatory, and each employee is
  308  considered to have consented to payroll deductions. Payment of
  309  an employee’s salary or wages, less the contribution, is a full
  310  and complete discharge and satisfaction of all claims and
  311  demands for the service rendered by employees during the period
  312  covered by the payment, except their claims to the benefits to
  313  which they may be entitled under this chapter.
  314         (b)Effective July 1, 2021, employees in the pension plan
  315  may contribute an amount in addition to the required retirement
  316  contribution rate provided in subsection (3). Any amount
  317  contributed in excess of the rate under subsection (3) must be
  318  segregated from the employees’ required retirement contribution
  319  and used to purchase additional retirement service credit in the
  320  membership class in which the member belongs. Additional service
  321  purchased under this paragraph must be added to the credible
  322  service of the member and used to vest for retirement
  323  eligibility, and must be used in the calculation of benefits.
  324         Section 5. The Legislature finds that a proper and
  325  legitimate state purpose is served when employees and retirees
  326  of the state and its political subdivisions, and the dependents,
  327  survivors, and beneficiaries of such employees and retirees, are
  328  extended the basic protections afforded by governmental
  329  retirement systems. These persons must be provided benefits that
  330  are fair and adequate and that are managed, administered, and
  331  funded in an actuarially sound manner, as required by s. 14,
  332  Article X of the State Constitution and part VII of chapter 112,
  333  Florida Statutes. Therefore, the Legislature determines and
  334  declares that this act fulfills an important state interest.
  335         Section 6. This act shall take effect July 1, 2021.