Florida Senate - 2013                        COMMITTEE AMENDMENT
       Bill No. CS for SB 1392
       
       
       
       
       
       
                                Barcode 939074                          
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                 Comm: UNFAV           .                                
                  03/28/2013           .                                
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       The Committee on Appropriations (Sobel) recommended the
       following:
       
    1         Senate Amendment to Amendment (726700) (with title
    2  amendment)
    3  
    4         Delete lines 432 - 1162
    5  and insert:
    6         Section 6. Subsection (1), paragraphs (a) and (g) of
    7  subsection (4), subsection (8), and paragraphs (a), (b), (c),
    8  and (h) of subsection (10) of section 121.4501, Florida
    9  Statutes, are amended, and paragraph (h) is added to subsection
   10  (4) of that section, to read:
   11         121.4501 Florida Retirement System Investment Plan.—
   12         (1) The Trustees of the State Board of Administration shall
   13  establish a defined contribution program called the “Florida
   14  Retirement System Investment Plan” or “investment plan” for
   15  members of the Florida Retirement System under which retirement
   16  benefits will be provided for eligible employees who elect to
   17  participate in the program and for employees initially enrolled
   18  on or after July 1, 2014, in positions covered by the Elected
   19  Officers’ Class or the Senior Management Service Class and are
   20  compulsory members of the investment plan unless otherwise
   21  eligible to withdraw from the system under s. 121.052(3)(d) or
   22  s. 121.055(1)(b)2., or to participate in an optional retirement
   23  program under s. 121.051(1)(a), s. 121.051(2)(c), or s. 121.35.
   24  Investment plan membership continues if there is subsequent
   25  employment in a position covered by another membership class.
   26  The retirement benefits shall be provided through member
   27  directed investments, in accordance with s. 401(a) of the
   28  Internal Revenue Code and related regulations. The employer and
   29  employee shall make contributions, as provided in this section
   30  and ss. 121.571 and 121.71, to the Florida Retirement System
   31  Investment Plan Trust Fund toward the funding of benefits.
   32         (4) PARTICIPATION; ENROLLMENT.—
   33         (a)1. Effective June 1, 2002, through February 28, 2003, a
   34  90-day election period was provided to each eligible employee
   35  participating in the Florida Retirement System, preceded by a
   36  90-day education period, permitting each eligible employee to
   37  elect membership in the investment plan, and an employee who
   38  failed to elect the investment plan during the election period
   39  remained in the pension plan. An eligible employee who was
   40  employed in a regularly established position during the election
   41  period was granted the option to make one subsequent election,
   42  as provided in paragraph (g). With respect to an eligible
   43  employee who did not participate in the initial election period
   44  or who was initially employee who is employed in a regularly
   45  established position after the close of the initial election
   46  period but before July 1, 2014, on June 1, 2002, by a state
   47  employer:
   48         a. Any such employee may elect to participate in the
   49  investment plan in lieu of retaining his or her membership in
   50  the pension plan. The election must be made in writing or by
   51  electronic means and must be filed with the third-party
   52  administrator by August 31, 2002, or, in the case of an active
   53  employee who is on a leave of absence on April 1, 2002, by the
   54  last business day of the 5th month following the month the leave
   55  of absence concludes. This election is irrevocable, except as
   56  provided in paragraph (g). Upon making such election, the
   57  employee shall be enrolled as a member of the investment plan,
   58  the employee’s membership in the Florida Retirement System is
   59  governed by the provisions of this part, and the employee’s
   60  membership in the pension plan terminates. The employee’s
   61  enrollment in the investment plan is effective the first day of
   62  the month for which a full month’s employer contribution is made
   63  to the investment plan.
   64         b. Any such employee who fails to elect to participate in
   65  the investment plan within the prescribed time period is deemed
   66  to have elected to retain membership in the pension plan, and
   67  the employee’s option to elect to participate in the investment
   68  plan is forfeited.
   69         2. With respect to employees who become eligible to
   70  participate in the investment plan by reason of employment in a
   71  regularly established position with a state employer commencing
   72  after April 1, 2002:
   73         a. Any such employee shall, by default, be enrolled in the
   74  pension plan at the commencement of employment, and may, by the
   75  last business day of the 5th month following the employee’s
   76  month of hire, elect to participate in the investment plan. The
   77  employee’s election must be made in writing or by electronic
   78  means and must be filed with the third-party administrator. The
   79  election to participate in the investment plan is irrevocable,
   80  except as provided in paragraph (g).
   81         a.b. If the employee files such election within the
   82  prescribed time period, enrollment in the investment plan is
   83  effective on the first day of employment. The retirement
   84  contributions paid through the month of the employee plan change
   85  shall be transferred to the investment program, and, effective
   86  the first day of the next month, the employer and employee must
   87  pay the applicable contributions based on the employee
   88  membership class in the program.
   89         b.c. An employee who fails to elect to participate in the
   90  investment plan within the prescribed time period is deemed to
   91  have elected to retain membership in the pension plan, and the
   92  employee’s option to elect to participate in the investment plan
   93  is forfeited.
   94         2.3. With respect to employees who become eligible to
   95  participate in the investment plan pursuant to s.
   96  121.051(2)(c)3. or s. 121.35(3)(i), the employee may elect to
   97  participate in the investment plan in lieu of retaining his or
   98  her membership in the State Community College System Optional
   99  Retirement Program or the State University System Optional
  100  Retirement Program. The election must be made in writing or by
  101  electronic means and must be filed with the third-party
  102  administrator. This election is irrevocable, except as provided
  103  in paragraph (g). Upon making such election, the employee shall
  104  be enrolled as a member in the investment plan, the employee’s
  105  membership in the Florida Retirement System is governed by the
  106  provisions of this part, and the employee’s participation in the
  107  State Community College System Optional Retirement Program or
  108  the State University System Optional Retirement Program
  109  terminates. The employee’s enrollment in the investment plan is
  110  effective on the first day of the month for which a full month’s
  111  employer and employee contribution is made to the investment
  112  plan.
  113         3.4. For purposes of this paragraph, “state employer” means
  114  any agency, board, branch, commission, community college,
  115  department, institution, institution of higher education, or
  116  water management district of the state, which participates in
  117  the Florida Retirement System for the benefit of certain
  118  employees.
  119         (g) After the period during which an eligible employee had
  120  the choice to elect the pension plan or the investment plan, or
  121  the month following the receipt of the eligible employee’s plan
  122  election, if sooner, the employee shall have one opportunity, at
  123  the employee’s discretion, to choose to move from the pension
  124  plan to the investment plan or from the investment plan to the
  125  pension plan. Eligible employees may elect to move between plans
  126  only if they are earning service credit in an employer-employee
  127  relationship consistent with s. 121.021(17)(b), excluding leaves
  128  of absence without pay. Effective July 1, 2005, such elections
  129  are effective on the first day of the month following the
  130  receipt of the election by the third-party administrator and are
  131  not subject to the requirements regarding an employer-employee
  132  relationship or receipt of contributions for the eligible
  133  employee in the effective month, except when the election is
  134  received by the third-party administrator. This paragraph is
  135  contingent upon approval by the Internal Revenue Service. This
  136  paragraph does not apply to compulsory investment plan members
  137  under paragraph (h).
  138         1. If the employee chooses to move to the investment plan,
  139  the provisions of subsection (3) govern the transfer.
  140         2. If the employee chooses to move to the pension plan, the
  141  employee must transfer from his or her investment plan account,
  142  and from other employee moneys as necessary, a sum representing
  143  the present value of that employee’s accumulated benefit
  144  obligation immediately following the time of such movement,
  145  determined assuming that attained service equals the sum of
  146  service in the pension plan and service in the investment plan.
  147  Benefit commencement occurs on the first date the employee is
  148  eligible for unreduced benefits, using the discount rate and
  149  other relevant actuarial assumptions that were used to value the
  150  pension plan liabilities in the most recent actuarial valuation.
  151  For any employee who, at the time of the second election,
  152  already maintains an accrued benefit amount in the pension plan,
  153  the then-present value of the accrued benefit is deemed part of
  154  the required transfer amount. The division must ensure that the
  155  transfer sum is prepared using a formula and methodology
  156  certified by an enrolled actuary. A refund of any employee
  157  contributions or additional member payments made which exceed
  158  the employee contributions that would have accrued had the
  159  member remained in the pension plan and not transferred to the
  160  investment plan is not permitted.
  161         3. Notwithstanding subparagraph 2., an employee who chooses
  162  to move to the pension plan and who became eligible to
  163  participate in the investment plan by reason of employment in a
  164  regularly established position with a state employer after June
  165  1, 2002; a district school board employer after September 1,
  166  2002; or a local employer after December 1, 2002, must transfer
  167  from his or her investment plan account, and from other employee
  168  moneys as necessary, a sum representing the employee’s actuarial
  169  accrued liability. A refund of any employee contributions or
  170  additional member participant payments made which exceed the
  171  employee contributions that would have accrued had the member
  172  remained in the pension plan and not transferred to the
  173  investment plan is not permitted.
  174         4. An employee’s ability to transfer from the pension plan
  175  to the investment plan pursuant to paragraphs (a)-(d), and the
  176  ability of a current employee to have an option to later
  177  transfer back into the pension plan under subparagraph 2., shall
  178  be deemed a significant system amendment. Pursuant to s.
  179  121.031(4), any resulting unfunded liability arising from actual
  180  original transfers from the pension plan to the investment plan
  181  must be amortized within 30 plan years as a separate unfunded
  182  actuarial base independent of the reserve stabilization
  183  mechanism defined in s. 121.031(3)(f). For the first 25 years, a
  184  direct amortization payment may not be calculated for this base.
  185  During this 25-year period, the separate base shall be used to
  186  offset the impact of employees exercising their second program
  187  election under this paragraph. The actuarial funded status of
  188  the pension plan will not be affected by such second program
  189  elections in any significant manner, after due recognition of
  190  the separate unfunded actuarial base. Following the initial 25
  191  year period, any remaining balance of the original separate base
  192  shall be amortized over the remaining 5 years of the required
  193  30-year amortization period.
  194         5. If the employee chooses to transfer from the investment
  195  plan to the pension plan and retains an excess account balance
  196  in the investment plan after satisfying the buy-in requirements
  197  under this paragraph, the excess may not be distributed until
  198  the member retires from the pension plan. The excess account
  199  balance may be rolled over to the pension plan and used to
  200  purchase service credit or upgrade creditable service in the
  201  pension plan.
  202         (h)1. All employees initially enrolled on or after July 1,
  203  2014, in positions covered by the Elected Officers’ Class or the
  204  Senior Management Service Class are compulsory members of the
  205  investment plan, except those eligible to withdraw from the
  206  system under s. 121.052(3)(d) or s. 121.055(1)(b)2., or those
  207  eligible for optional retirement programs under s.
  208  121.051(1)(a), s. 121.051(2)(c), or s. 121.35. Employees
  209  eligible to withdraw from the system under s. 121.052(3)(d) or
  210  s. 121.055(1)(b)2. may choose to withdraw from the system or to
  211  participate in the investment plan as provided in those
  212  sections. Employees eligible for optional retirement programs
  213  under s. 121.051(2)(c) or s. 121.35, except as provided in s.
  214  121.051(1)(a), may choose to participate in the optional
  215  retirement program or the investment plan as provided in those
  216  sections. Investment plan membership continues if there is
  217  subsequent employment in a position covered by another
  218  membership class. Membership in the pension plan is not
  219  permitted, except as provided in s. 121.591(2). Employees
  220  initially enrolled in the Florida Retirement System before July
  221  1, 2014, may retain their membership in the pension plan or
  222  investment plan and are eligible to use the election opportunity
  223  specified in paragraph (g).
  224         2. Employees initially enrolled on or after July 1, 2014,
  225  are not permitted to use the election opportunity specified in
  226  paragraph (g).
  227         3. The amount of retirement contributions paid by the
  228  employee and employer, as required under s. 121.72, shall be
  229  placed in a default fund as designated by the state board until
  230  an account is activated in the investment plan, at which time
  231  the member may move the contributions from the default fund to
  232  other funds provided in the investment plan.
  233         (8) INVESTMENT PLAN ADMINISTRATION.—The investment plan
  234  shall be administered by the state board and affected employers.
  235  The state board may require oaths, by affidavit or otherwise,
  236  and acknowledgments from persons in connection with the
  237  administration of its statutory duties and responsibilities for
  238  the investment plan. An oath, by affidavit or otherwise, may not
  239  be required of a member at the time of enrollment.
  240  Acknowledgment of an employee’s election to participate in the
  241  program shall be no greater than necessary to confirm the
  242  employee’s election, except for members initially enrolled on or
  243  after July 1, 2014, as provided in paragraph (4)(h). The state
  244  board shall adopt rules to carry out its statutory duties with
  245  respect to administering the investment plan, including
  246  establishing the roles and responsibilities of affected state,
  247  local government, and education-related employers, the state
  248  board, the department, and third-party contractors. The
  249  department shall adopt rules necessary to administer the
  250  investment plan in coordination with the pension plan and the
  251  disability benefits available under the investment plan.
  252         (a)1. The state board shall select and contract with a
  253  third-party administrator to provide administrative services if
  254  those services cannot be competitively and contractually
  255  provided by the division. With the approval of the state board,
  256  the third-party administrator may subcontract to provide
  257  components of the administrative services. As a cost of
  258  administration, the state board may compensate any such
  259  contractor for its services, in accordance with the terms of the
  260  contract, as is deemed necessary or proper by the board. The
  261  third-party administrator may not be an approved provider or be
  262  affiliated with an approved provider.
  263         2. These administrative services may include, but are not
  264  limited to, enrollment of eligible employees, collection of
  265  employer and employee contributions, disbursement of
  266  contributions to approved providers in accordance with the
  267  allocation directions of members; services relating to
  268  consolidated billing; individual and collective recordkeeping
  269  and accounting; asset purchase, control, and safekeeping; and
  270  direct disbursement of funds to and from the third-party
  271  administrator, the division, the state board, employers,
  272  members, approved providers, and beneficiaries. This section
  273  does not prevent or prohibit a bundled provider from providing
  274  any administrative or customer service, including accounting and
  275  administration of individual member benefits and contributions;
  276  individual member recordkeeping; asset purchase, control, and
  277  safekeeping; direct execution of the member’s instructions as to
  278  asset and contribution allocation; calculation of daily net
  279  asset values; direct access to member account information; or
  280  periodic reporting to members, at least quarterly, on account
  281  balances and transactions, if these services are authorized by
  282  the state board as part of the contract.
  283         (b)1. The state board shall select and contract with one or
  284  more organizations to provide educational services. With
  285  approval of the state board, the organizations may subcontract
  286  to provide components of the educational services. As a cost of
  287  administration, the state board may compensate any such
  288  contractor for its services in accordance with the terms of the
  289  contract, as is deemed necessary or proper by the board. The
  290  education organization may not be an approved provider or be
  291  affiliated with an approved provider.
  292         2. Educational services shall be designed by the state
  293  board and department to assist employers, eligible employees,
  294  members, and beneficiaries in order to maintain compliance with
  295  United States Department of Labor regulations under s. 404(c) of
  296  the Employee Retirement Income Security Act of 1974 and to
  297  assist employees in their choice of pension plan or investment
  298  plan retirement alternatives. Educational services include, but
  299  are not limited to, disseminating educational materials;
  300  providing retirement planning education; explaining the pension
  301  plan and the investment plan; and offering financial planning
  302  guidance on matters such as investment diversification,
  303  investment risks, investment costs, and asset allocation. An
  304  approved provider may also provide educational information,
  305  including retirement planning and investment allocation
  306  information concerning its products and services.
  307         (c)1. In evaluating and selecting a third-party
  308  administrator, the state board shall establish criteria for
  309  evaluating the relative capabilities and qualifications of each
  310  proposed administrator. In developing such criteria, the state
  311  board shall consider:
  312         a. The administrator’s demonstrated experience in providing
  313  administrative services to public or private sector retirement
  314  systems.
  315         b. The administrator’s demonstrated experience in providing
  316  daily valued recordkeeping to defined contribution programs.
  317         c. The administrator’s ability and willingness to
  318  coordinate its activities with employers, the state board, and
  319  the division, and to supply to such employers, the board, and
  320  the division the information and data they require, including,
  321  but not limited to, monthly management reports, quarterly member
  322  reports, and ad hoc reports requested by the department or state
  323  board.
  324         d. The cost-effectiveness and levels of the administrative
  325  services provided.
  326         e. The administrator’s ability to interact with the
  327  members, the employers, the state board, the division, and the
  328  providers; the means by which members may access account
  329  information, direct investment of contributions, make changes to
  330  their accounts, transfer moneys between available investment
  331  vehicles, and transfer moneys between investment products; and
  332  any fees that apply to such activities.
  333         f. Any other factor deemed necessary by the state board.
  334         2. In evaluating and selecting an educational provider, the
  335  state board shall establish criteria under which it shall
  336  consider the relative capabilities and qualifications of each
  337  proposed educational provider. In developing such criteria, the
  338  state board shall consider:
  339         a. Demonstrated experience in providing educational
  340  services to public or private sector retirement systems.
  341         b. Ability and willingness to coordinate its activities
  342  with the employers, the state board, and the division, and to
  343  supply to such employers, the board, and the division the
  344  information and data they require, including, but not limited
  345  to, reports on educational contacts.
  346         c. The cost-effectiveness and levels of the educational
  347  services provided.
  348         d. Ability to provide educational services via different
  349  media, including, but not limited to, the Internet, personal
  350  contact, seminars, brochures, and newsletters.
  351         e. Any other factor deemed necessary by the state board.
  352         3. The establishment of the criteria shall be solely within
  353  the discretion of the state board.
  354         (d) The state board shall develop the form and content of
  355  any contracts to be offered under the investment plan. In
  356  developing the contracts, the board shall consider:
  357         1. The nature and extent of the rights and benefits to be
  358  afforded in relation to the contributions required under the
  359  plan.
  360         2. The suitability of the rights and benefits provided and
  361  the interests of employers in the recruitment and retention of
  362  eligible employees.
  363         (e)1. The state board may contract for professional
  364  services, including legal, consulting, accounting, and actuarial
  365  services, deemed necessary to implement and administer the
  366  investment plan. The state board may enter into a contract with
  367  one or more vendors to provide low-cost investment advice to
  368  members, supplemental to education provided by the third-party
  369  administrator. All fees under any such contract shall be paid by
  370  those members who choose to use the services of the vendor.
  371         2. The department may contract for professional services,
  372  including legal, consulting, accounting, and actuarial services,
  373  deemed necessary to implement and administer the investment plan
  374  in coordination with the pension plan. The department, in
  375  coordination with the state board, may enter into a contract
  376  with the third-party administrator in order to coordinate
  377  services common to the various programs within the Florida
  378  Retirement System.
  379         (f) The third-party administrator may not receive direct or
  380  indirect compensation from an approved provider, except as
  381  specifically provided for in the contract with the state board.
  382         (g) The state board shall receive and resolve member
  383  complaints against the program, the third-party administrator,
  384  or any program vendor or provider; shall resolve any conflict
  385  between the third-party administrator and an approved provider
  386  if such conflict threatens the implementation or administration
  387  of the program or the quality of services to employees; and may
  388  resolve any other conflicts. The third-party administrator shall
  389  retain all member records for at least 5 years for use in
  390  resolving any member conflicts. The state board, the third-party
  391  administrator, or a provider is not required to produce
  392  documentation or an audio recording to justify action taken with
  393  regard to a member if the action occurred 5 or more years before
  394  the complaint is submitted to the state board. It is presumed
  395  that all action taken 5 or more years before the complaint is
  396  submitted was taken at the request of the member and with the
  397  member’s full knowledge and consent. To overcome this
  398  presumption, the member must present documentary evidence or an
  399  audio recording demonstrating otherwise.
  400         (10) EDUCATION COMPONENT.—
  401         (a) The state board, in coordination with the department,
  402  shall provide for an education component for eligible employees
  403  system members in a manner consistent with the provisions of
  404  this subsection section. The education component must be
  405  available to eligible employees at least 90 days prior to the
  406  beginning date of the election period for the employees of the
  407  respective types of employers.
  408         (b) The education component must provide system members
  409  with impartial and balanced information about plan choices
  410  except for members initially enrolled on or after July 1, 2014,
  411  as provided in paragraph (4)(h). The education component must
  412  involve multimedia formats. Program comparisons must, to the
  413  greatest extent possible, be based upon the retirement income
  414  that different retirement programs may provide to the member.
  415  The state board shall monitor the performance of the contract to
  416  ensure that the program is conducted in accordance with the
  417  contract, applicable law, and the rules of the state board.
  418         (c) The state board, in coordination with the department,
  419  shall provide for an initial and ongoing transfer education
  420  component to provide system members, except for those members
  421  initially enrolled on or after July 1, 2014, as provided in
  422  paragraph (4)(h), with information necessary to make informed
  423  
  424  ================= T I T L E  A M E N D M E N T ================
  425         And the title is amended as follows:
  426         Delete lines 1503 - 1518
  427  and insert:
  428         investment plan; revising a provision relating to
  429         acknowledgement of an employee’s election to
  430         participate in the investment plan; authorizing
  431         certain employees to elect to participate in the
  432         pension plan, rather than the default investment plan,
  433         within a specified time; providing for the transfer of
  434         certain contributions; revising the education
  435         component; deleting the obligation of system employers
  436         to communicate the existence of both retirement plans
  437         to certain employees; conforming provisions and cross
  438         references to changes made by the act; amending s.
  439         121.591, F.S.; revising provisions