The Florida Senate

¹121.35  Optional retirement program for the State University System.--

(1)  OPTIONAL RETIREMENT PROGRAM ESTABLISHED.--The Division of Retirement shall establish an optional retirement program under which contracts providing retirement and death benefits may be purchased for eligible members of the State University System who elect to participate in the program. The benefits to be provided for or on behalf of participants in such optional retirement program shall be provided through individual contracts or individual certificates issued for group annuity contracts, which may be fixed, variable, or a combination thereof, in accordance with s. 403(b) of the Internal Revenue Code. Any individual contract or certificate shall state the annuity plan on its face page, and shall include, but not be limited to, a statement of ownership, the contract benefits, annuity income options, limitations, expense charges, and surrender charges, if any. The state shall contribute, as provided in this section, toward the purchase of such optional benefits.

(2)  ELIGIBILITY FOR PARTICIPATION IN OPTIONAL PROGRAM.--

(a)  Participation in the optional retirement program provided by this section shall be limited to persons who are otherwise eligible for membership in the Florida Retirement System; who are employed or appointed for no less than one academic year; and who are employed in one of the following State University System positions:

1.  Positions classified as instructional and research faculty which are exempt from the career service under the provisions of s. 110.205(2)(d).

2.  Positions classified as administrative and professional which are exempt from the career service under the provisions of s. 110.205(2)(d), provided that only those positions that are included in the State University System Executive Service, or those which the division determines meet the following criteria, shall be eligible to participate: The duties and responsibilities of the position shall include either the formulation, interpretation, or implementation of academic policies, or the performance of functions which are unique or specialized within higher education and which frequently involve the support of the academic mission of the university; and recruiting to fill vacancies in the position shall be conducted within the national or regional market. The employer shall submit an application, including a certification that the position meets the criteria for eligibility, to the division for each administrative and professional position not in the Executive Service for which it seeks eligibility for the optional retirement program.

3.  The Chancellor and the university presidents.

(b)  For purposes of this section, both the appointees and employees are referred to as "employees," and the "employer" of an appointee or employee is the individual institution within the State University System or the Board of Regents, whichever is appropriate with respect to the particular employee or appointee.

(c)  For purposes of this section, the Division of Retirement is referred to as the "division."

(d)  For purposes of this section, the authority granted to the Board of Regents may be exercised by the board or by the Chancellor of the State University System.

(3)  ELECTION OF OPTIONAL PROGRAM.--

(a)  Any eligible employee who is employed on or before March 1, 1984, may elect to participate in the optional retirement program in lieu of participation in the Florida Retirement System. Such election shall be made in writing and filed with the division and the personnel officer of the employer on or before June 1, 1984. Upon such election, participation in the optional program will take effect July 1, 1984, and election to so participate will terminate the membership of the employee in the Florida Retirement System. Any eligible employee who is employed on or before March 1, 1984, and who fails to make an election to participate in the optional program by June 1, 1984, shall be deemed to have elected to retain membership in the Florida Retirement System.

(b)1.  Any employee who becomes eligible to participate in the optional retirement program by reason of initial employment commencing after March 1, 1984, but before January 1, 1993, may, within 90 days after the date of commencement of employment, elect to participate in the optional program. Such election shall be made in writing and filed with the personnel officer of the employer. The eligible employees described in this subparagraph shall be enrolled in the Florida Retirement System at the commencement of employment, with the exception of those employees who file an election with the personnel officer of the employer prior to the submission of the initial payroll for the employee. For such employees, participation will be effective on the first day of employment or on July 1, 1984, whichever is later. If an eligible employee, as described in this subparagraph, files an election to participate in the optional program within 90 days after the commencement of employment, but after the submission by the employer of the initial payroll for the employee, the employee's participation in the optional program will not be effective until the first day of the month for which a full month's employer contribution may be made, or until July 1, 1984, whichever is later. Any eligible employee who does not within 90 days after commencement of such employment elect to participate in the optional program shall be deemed to have elected to retain membership in the Florida Retirement System.

2.  Any employee who after March 1, 1984, but before January 1, 1993, becomes eligible to participate in the optional program by reason of a change in status due to the subsequent designation of the employee's position as one of those specified in paragraph (2)(a) or due to the employee's appointment, promotion, transfer, or reclassification to a position specified in paragraph (2)(a) may elect to participate in the optional program. Such employee shall be notified by the employer of the change in his or her eligibility status. Such employee may, within 90 days after the date of such notification, file with the personnel officer of the employer an election in writing to participate in the optional program in lieu of participation in the Florida Retirement System. Upon such election, participation in the optional program will be effective on the first day of the month for which a full month's employer contribution may be made or on July 1, 1984, whichever is later. Election to so participate shall terminate the membership of the employee in the Florida Retirement System. Any eligible employee who does not within 90 days after notification of his or her eligibility to participate in the optional program elect to participate in the program shall be deemed to have elected to retain membership in the Florida Retirement System.

(c)  Any employee who becomes eligible to participate in the optional retirement program on or after January 1, 1993, shall be a compulsory participant of the program unless such employee elects membership in the Florida Retirement System. Such election shall be made in writing and filed with the personnel officer of the employer. Any eligible employee who fails to make such election within the prescribed time period shall be deemed to have elected to participate in the optional retirement program.

1.  Any employee whose optional retirement program eligibility results from initial employment shall be enrolled in the program at the commencement of employment. If, within 90 days after commencement of employment, the employee elects membership in the Florida Retirement System, such membership shall be effective retroactive to the date of commencement of employment.

2.  Any employee whose optional retirement program eligibility results from a change in status due to the subsequent designation of the employee's position as one of those specified in paragraph (2)(a) or due to the employee's appointment, promotion, transfer, or reclassification to a position specified in paragraph (2)(a) shall be enrolled in the optional retirement program upon such change in status and shall be notified by the employer of such action. If, within 90 days after the date of such notification, the employee elects to retain membership in the Florida Retirement System, such continuation of membership shall be retroactive to the date of the change in status.

3.  Notwithstanding the provisions of this paragraph, effective July 1, 1997, any employee who is eligible to participate in the Optional Retirement Program and who fails to execute an annuity contract with one of the approved companies and to notify the division in writing as provided in subsection (4) within 90 days of the date of eligibility shall be deemed to have elected membership in the Florida Retirement System, except as provided in s. 121.051(1)(a). This provision shall also apply to any employee who terminates employment in an eligible position before executing the required annuity contract and notifying the division. Such membership shall be retroactive to the date of eligibility, and all appropriate contributions shall be transferred to the Florida Retirement System Trust Fund and the Health Insurance Subsidy Trust Fund.

(d)  Participants shall be fully and immediately vested in the optional retirement program only upon execution of an annuity contract.

(e)  The election by an eligible employee to participate in the optional retirement program shall be irrevocable for so long as the employee continues to meet the eligibility requirements specified in subsection (2), except as provided in paragraph (h). In the event that an employee participates in the optional retirement program for 90 days or more and is subsequently employed in an administrative or professional position which has been determined by the division, under subparagraph (2)(a)2., to be not otherwise eligible for participation in the optional retirement program, the employee shall continue participation in the optional program so long as the employee meets the other eligibility requirements for the program, except as provided in paragraph (h).

(f)  If an employee becomes ineligible to continue participation in the optional retirement program under subsection (2), the employee shall thereafter participate in the Florida Retirement System if he or she is otherwise eligible.

(g)  An eligible employee who is a member of the Florida Retirement System at the time of election to participate in the optional retirement program shall retain all retirement service credit earned under the Florida Retirement System, at the rate earned. No additional service credit in the Florida Retirement System shall be earned while the employee participates in the optional program, nor shall the employee be eligible for disability retirement under the Florida Retirement System.

(h)  A participant in the optional retirement program may not participate in more than one state-administered retirement system, plan, or class simultaneously. Except as provided in s. 121.052(6)(d), a participant who is or becomes dually employed in two or more positions covered by the Florida Retirement System, one of which is eligible for the optional program and one of which is not, may remain a member of the optional program and contributions shall be paid as required only on the salary earned in the position eligible for the optional program during such period of dual employment; or, within 90 days after becoming dually employed, he or she may elect membership in the Regular Class of the Florida Retirement System in lieu of the optional program and contributions shall be paid as required on the total salary received for all employment. At retirement, the average final compensation used to calculate any benefits for which the member becomes eligible under the Florida Retirement System shall be based on all salary reported for both positions during such period of dual employment. When such member ceases to be dually employed, he or she may, within 90 days, elect to remain in the Florida Retirement System class for which he or she is eligible or to again become a participant in the optional retirement program. Failure to elect membership in the optional program within 90 days shall result in compulsory membership in the Florida Retirement System, except that a member filling a faculty position under a faculty practice plan at the University of Florida or the Medical Center at the University of South Florida shall again participate in the optional retirement program as required in s. 121.051(1)(a).

(4)  CONTRIBUTIONS.--

(a)  Each employer shall contribute on behalf of each participant in the optional retirement program an amount equal to the normal cost portion of the employer retirement contribution which would be required if the participant were a regular member of the Florida Retirement System, plus the portion of the contribution rate required in s. 112.363(8) that would otherwise be assigned to the Retiree Health Insurance Subsidy Trust Fund, less an amount approved by the Legislature which shall be deducted by the division to provide for the administration of this program. The payment of the contributions to the optional program which is required by this paragraph for each participant shall be made by the employer to the division, which shall forward the contributions to the designated company or companies contracting for payment of benefits for the participant under the program. However, such contributions paid on behalf of an employee described in paragraph (3)(c) shall not be forwarded to a company and shall not begin to accrue interest until the employee has executed an annuity contract and notified the division.

(b)  Each employer shall contribute on behalf of each participant in the optional retirement program an amount equal to the unfunded actuarial accrued liability portion of the employer contribution which would be required for members of the Florida Retirement System. This contribution shall be paid to the division for transfer to the Florida Retirement System Trust Fund.

(c)  An Optional Retirement Program Trust Fund shall be established in the State Treasury and administered by the Division of Retirement to make payments to the provider companies on behalf of the optional retirement program participants, and to transfer the unfunded liability portion of the state optional retirement program contributions to the Florida Retirement System Trust Fund.

(d)  Contributions required for social security by each employer and each participant, in the amount required for social security coverage as now or hereafter may be provided by the federal Social Security Act, shall be maintained for each participant in the optional retirement program and shall be in addition to the retirement contributions specified in this subsection.

(e)  Each participant in the optional retirement program who has executed an annuity contract may contribute by way of salary reduction or deduction a percentage amount of the participant's gross compensation not to exceed the percentage amount contributed by the employer to the optional program, but in no case may such contribution exceed federal limitations. Payment of the participant's contributions shall be made by the financial officer of the employer to the division which shall forward the contributions to the designated company or companies contracting for payment of benefits for the participant under the program. A participant may not make, through salary reduction, any voluntary employee contributions to any other plan under s. 403(b) of the Internal Revenue Code, with the exception of a custodial account under s. 403(b)(7) of the Internal Revenue Code, until he or she has made an employee contribution to his or her optional program equal to the employer contribution. A participant is responsible for monitoring his or her individual tax-deferred income to ensure he or she does not exceed the maximum deferral amounts permitted under the Internal Revenue Code.

(5)  BENEFITS.--

(a)  Benefits shall be payable under the optional retirement program only to vested participants in the program, or their beneficiaries as designated by the participant in the contract with a provider company, and such benefits shall be paid only by the designated company in accordance with the terms of the annuity contract or contracts applicable to the participant. The participant must be terminated from all employment with all Florida Retirement System employers, as provided in s. 121.021(39), to begin receiving the employer-funded benefit. Benefits funded by employer contributions shall be payable only as a lifetime annuity to the participant, his beneficiary, or his estate, except for:

1.  A lump-sum payment to the beneficiary upon the death of the participant; or

2.  A cash-out of a de minimis account upon the request of a former participant who has been terminated for a minimum of 6 months from the employment that entitled him to optional retirement program participation. A de minimis account is an account with a provider company containing employer contributions and accumulated earnings of not more than $3,500 made under the provisions of this chapter. Such cash-out must be a complete liquidation of the account balance with that company and is subject to the provisions of the Internal Revenue Code.

(b)  The benefits payable to any person under the optional retirement program, and any contribution accumulated under such program, shall not be subject to assignment, execution, or attachment or to any legal process whatsoever.

(c)  A participant who chooses to receive his or her benefits upon termination of employment shall have responsibility to notify the provider company of the date on which he or she wishes the annuity funded by employer contributions to begin. Benefits may be deferred until such time as the participant chooses to make such application.

(d)  Benefits funded by the participant's personal contributions may be paid out at any time and in any form within the limits provided in the contract between the participant and his or her provider company. The participant shall notify the provider company regarding the date and provisions under which he or she wants to receive the employee-funded portion of the plan.

(6)  ADMINISTRATION OF PROGRAM.--

(a)  The optional retirement program authorized by this section shall be administered by the division. The division shall adopt rules establishing the responsibilities of the Board of Regents and institutions in the State University System in administering the optional retirement program. The Board of Regents shall, no more than 90 days after July 1, 1983, submit to the division its recommendations for the annuity contracts to be offered by the companies chosen by the division. The recommendations of the board shall include the following:

1.  The nature and extent of the rights and benefits in relation to the required contributions; and

2.  The suitability of the rights and benefits to the needs of the participants and the interests of the institutions in the recruitment and retention of eligible employees.

(b)  After receiving and considering the recommendations of the Board of Regents, the division shall designate no more than four companies from which annuity contracts may be purchased under the program and shall approve the form and content of the optional retirement program contracts. Upon application by a qualified Florida domestic company, the division shall give reasonable notice to all other such companies that it intends to designate one of such companies as a fifth company from which annuity contracts may be purchased pursuant to this section and that they may apply for such designation prior to the deadline established by said notice. At least 60 days after giving such notice and upon receipt of the recommendation of the Board of Regents, the division shall so designate one of such companies as the fifth company from which such contracts may be purchased.

(c)  Effective July 1, 1997, the State Board of Administration shall review and make recommendations to the division on the acceptability of all investment products proposed by provider companies of the optional retirement program before they are offered through annuity contracts to the participants and may advise the division of any changes necessary to ensure that the optional retirement program offers an acceptable mix of investment products. The division shall make the final determination as to whether an investment product will be approved for the program.

(d)  The provisions of each contract applicable to a participant in the optional retirement program shall be contained in a written program description which shall include a report of pertinent financial and actuarial information on the solvency and actuarial soundness of the program and the benefits applicable to the participant. Such description shall be furnished by the companies to each participant in the program and to the division upon commencement of participation in the program and annually thereafter.

(e)  The division shall ensure that each participant in the optional retirement program is provided an accounting of the total contribution and the annual contribution made by and on behalf of such participant.

History.--s. 1, ch. 83-197; s. 1, ch. 86-255; s. 9, ch. 87-373; s. 15, ch. 88-382; s. 4, ch. 89-126; s. 34, ch. 89-526; s. 18, ch. 90-274; s. 10, ch. 92-122; s. 60, ch. 92-279; s. 55, ch. 92-326; s. 5, ch. 93-285; s. 34, ch. 94-249; s. 1431, ch. 95-147; s. 17, ch. 97-180; s. 14, ch. 98-138.

¹Note.--Section 16, ch. 98-138, provides that "[i]t is the intent of the Legislature that the amendments to sections 121.021, 121.051, 121.0515, 121.052, 121.053, 121.055, 121.071, 121.081, 121.091, 121.111, 121.121, 121.122, 121.35, and 121.40, Florida Statutes, made by this act are intended to be supplemental to other amendments to those sections which are enacted at the 1998 regular session of the Legislature, unless a contrary intent is specifically indicated in this act or in such other amendments."