House Bill 1665e1

CODING: Words stricken are deletions; words underlined are additions.







                                          HB 1665, First Engrossed



  1                      A bill to be entitled

  2         An act relating to the City of Orlando, Orange

  3         County, revising language with respect to the

  4         pension fund of the fire department of the

  5         city; amending chapter 23444, Laws of Florida,

  6         1945, as amended; providing that DROP

  7         participants shall not participate in the fund;

  8         amending the cost-of-living increase for

  9         members and beneficiaries, with the actuarial

10         cost thereof being borne by the members;

11         providing an effective date for all

12         retirements; providing for a deferred

13         retirement option plan as an improvement to

14         present pension benefits with the additional

15         cost thereof being borne by the members;

16         providing for employer pick up of member

17         contributions; providing for changes necessary

18         to obtain tax qualification; providing an

19         effective date.

20

21  Be It Enacted by the Legislature of the State of Florida:

22

23         Section 1.  Section 2 of chapter 23444, Laws of

24  Florida, 1945, as amended by chapter 73-573, Laws of Florida,

25  is amended to read:

26         Section 2.  Members of said Fire Department shall be

27  construed as including all officers and firefighters firemen

28  and firewomen regularly employed in said department, and whose

29  employment shall be regular and continuous and not of a

30  temporary character, provided, however, the secretaries,

31  stenographers and switchboard operators shall not be covered


                                  1

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1665, First Engrossed



  1  by the provisions of this Act. For the purposes of this Act

  2  the term widow shall include widower; reference to the

  3  masculine pronoun shall include the feminine and vice-versa;

  4  the term "issue" shall include a member's natural and adopted

  5  children as well as those in gestation. Further provided that

  6  members who are DROP participants will no longer be

  7  participants in this fund, nor eligible for any benefits

  8  hereunder.

  9         Section 2.  Section 19 of chapter 23444, Laws of

10  Florida, 1945, as created by chapter 88-518, Laws of Florida,

11  is amended to read:

12         Section 19.  Cost of Living Increase.

13         (1)  After the effective date of this act, any member

14  of the Orlando Fire Department who retires prior to age 62

15  with 20 25 or more years of actual credited service shall

16  receive a triennial cost-of-living increase of 5 percent

17  compound starting 3 years after retirement, or, in the case of

18  a DROP participant, 3 years after termination of employment

19  ,and ending with the last triennial anniversary of retirement

20  prior to age 65. Any actuarially-determined additional cost

21  resulting from this additional benefit shall be borne by the

22  members of the firefighters pension plan. Members who

23  terminate employment without being eligible for a

24  cost-of-living increase under this section will not be

25  entitled to any refund of the contribution they made to fund

26  this benefit.

27         (2)  The benefit provided for in subsection (1), with

28  the additional cost thereof being borne by the members, shall

29  not become effective and shall be of no force and effect

30  unless and until approved by a majority of the members of the

31  firefighters pension plan at an election conducted by the


                                  2

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1665, First Engrossed



  1  Orlando Firefighters Pension Board within 90 days after the

  2  effective date of this act.

  3         Section 3.  A new section 17 is added to chapter 23444,

  4  Laws of Florida, 1945, as amended, to read:

  5         Section 17.  Effective Date of Retirement.

  6         Any retirement under this plan, whether for service or

  7  disability, will be effective the first day of the month

  8  following the last day the member works prior to retiring or

  9  becoming a DROP participant.

10         Section 4.  A new section 21 is added to chapter 23444,

11  Laws of Florida, 1945, as amended, to read:

12         Section 21.  Deferred Retirement Option Plan.

13         (1)  Deferred Retirement Option Plan--The Deferred

14  Retirement Option Plan, hereinafter referred to as the "DROP,"

15  allows any member who has elected to participate in the DROP,

16  hereinafter referred to as a "DROP participant," to receive a

17  lump-sum payment, or other payment, in addition to a monthly

18  pension, upon termination of employment. No benefits shall be

19  paid under this section unless the DROP participant has

20  terminated employment.

21         (2)  DROP Eligibility--Any member may elect to

22  participate in the DROP following the date upon which the

23  member completes 20 years of active service as a firefighter

24  with the City of Orlando and is eligible for a service

25  retirement pension. A member may participate in the DROP only

26  once.

27         (3)  DROP Participation--

28         (a)  An eligible member may participate in the Forward

29  DROP for a period not to exceed a maximum of 60 months or, in

30  the alternative, may participate in the Back DROP for a period

31  not to exceed 36 months. Notwithstanding, DROP participation


                                  3

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1665, First Engrossed



  1  may not continue beyond the date when the member's combined

  2  years of credited service and time in the DROP equals 360

  3  months.

  4         (b)  A member may apply to participate in the DROP by

  5  submitting an application to the Board of Trustees, which

  6  shall include the following:

  7         1.  A written election to participate in the DROP. Once

  8  submitted to the Board of Trustees, this election will be

  9  irrevocable.

10         2.  Selection of the DROP participation and termination

11  dates that satisfy the limitation stated in subsection (2) and

12  paragraph (a). Such termination date shall be in a binding

13  letter of resignation, establishing a deferred termination

14  date.

15         3.  A properly completed DROP application for a service

16  retirement pension.

17         4.  A properly completed designation of named

18  beneficiaries in the event the member dies while participating

19  in the DROP.

20         5.  Any other information as may be required by the

21  Board of Trustees.

22         (c)  The DROP participant shall be a retiree under the

23  provisions of the pension plan. However, participation in the

24  DROP does not alter the DROP participant's employment status,

25  nor does it constitute a contract or guarantee of continued

26  employment.

27         (d)  A DROP participant shall not accrue additional

28  credited service under the pension plan after the effective

29  date of DROP participation.

30         (4)  Benefits Payable Under the DROP--

31


                                  4

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1665, First Engrossed



  1         (a)  Effective with the date of DROP participation, the

  2  DROP participant's initial monthly service retirement pension,

  3  including credited service and average monthly salary, shall

  4  be determined and fixed. Such service retirement pension and

  5  earnings shall be credited to the DROP participant's DROP

  6  account no less than monthly. Such earnings shall be credited

  7  as provided in subsection (7).

  8         (b)  The effective date of DROP participation for a

  9  participant who has elected to receive benefits under the

10  pension plan shall be the first day of the month selected by

11  the member to begin retirement under the pension plan and

12  participation in the DROP.

13         (c)  The service retirement pension and earnings

14  thereon shall be credited to the DROP participant's DROP

15  account periodically, as pension benefit payments would have

16  otherwise been made.

17         (5)  DROP Types--A member eligible for a service

18  retirement pension may elect a Forward DROP or a Back DROP,

19  but not both.

20         (a)  Forward DROP--Under a Forward DROP, a member may

21  retire, deferring receipt of the service retirement pension

22  while continuing employment with the city. In that case, the

23  deferred monthly service retirement pension shall be credited

24  to the DROP participant's DROP account on behalf of the DROP

25  participant, as provided in subsection (4), for the specified

26  period of the DROP participation, as provided in subsection

27  (3). Upon termination of employment, the DROP participant

28  shall receive the balance of his or her DROP account and begin

29  to receive the monthly service retirement pension.

30         1.  A DROP participant remains an employee and receives

31  all the benefits of being an employee during the DROP


                                  5

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1665, First Engrossed



  1  participation period; provided, however, the DROP participant

  2  is not eligible to participate in any other city provided

  3  pension or long term disability plan. A DROP participant shall

  4  be subject to termination of employment during the DROP

  5  participation period to the same extent as he or she was prior

  6  to participating in the DROP.

  7         2.  Effective with the start date of a DROP

  8  participant's Forward DROP participation, a member's

  9  contribution and the normal cost contribution to the pension

10  fund by the city, on behalf of the member, shall cease.

11         (b)  Back DROP--Under a Back DROP, a member may retire

12  with a retroactive date of retirement. A member may not select

13  a retroactive retirement date earlier than the date upon which

14  the member first became eligible for a service retirement

15  pension, and in no event shall the retroactive date of

16  retirement be more than 36 months prior to the date of Back

17  DROP election. The monthly service retirement pension shall be

18  determined as of the retroactive retirement date. The member

19  shall then be credited with an account balance in his or her

20  DROP account that is equal to the account balance he or she

21  would have had if he or she had timely elected a Forward DROP

22  under paragraph (a) on the retroactive retirement date. Upon

23  termination of employment, the Back DROP participant shall

24  receive or transfer the balance of this DROP account, pursuant

25  to subsection (10), and shall begin to receive the monthly

26  service retirement pension adjusted to reflect the retroactive

27  retirement date.

28         (c)  Eligibility exception--Notwithstanding the

29  provisions of subsection 3(a), for 60 days after the effective

30  date of this act, a member with more than 324 months of

31  credited service may elect the Back DROP option and will not


                                  6

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1665, First Engrossed



  1  be subject to the combined years of credited service and DROP

  2  participation limitation of 360 months. Said member is subject

  3  to the maximum Back DROP participation period of 36 months. A

  4  member with more than 324 months of credited service as of the

  5  effective date of DROP who does not elect to participate in

  6  the DROP, as set forth herein, during this one-time window

  7  period shall forfeit the right to deviate from the conditions

  8  for participation in the DROP set forth in subsection (3).

  9         (6)  DROP Accounts--Individual DROP accounts shall be

10  established to account for each DROP participant's accrued

11  DROP benefits, but there shall be no requirement that funds be

12  segregated for any DROP participant. In the case of a member

13  who selects the Back DROP option, the amount of that member's

14  contributions made during the Back DROP period shall not be

15  refunded or credited to the member.

16         (7)  DROP Benefits Earnings and Reporting--

17         (a)  A DROP participant's DROP account shall accrue

18  earnings at 8% (eight percent) simple interest compounded

19  annually, unless the parties otherwise agree.

20         (b)  A DROP account shall be adjusted to reflect

21  earnings until such time as the DROP account is distributed in

22  full to the DROP participant or his or her beneficiaries.

23         (c)  The Board of Trustees shall report to each DROP

24  participant at least annually accrued DROP benefits in the

25  participant's DROP account.

26         (8)  Cost-of-Living Increase--A DROP participant will

27  not be eligible to participate in cost-of-living increases

28  during the DROP period. Cost-of-living increases will be made

29  pursuant to section 19, starting 3 years after the DROP

30  participant's termination of employment.

31


                                  7

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1665, First Engrossed



  1         (9)  Benefits Payable upon Termination of DROP--Upon

  2  the DROP participant's termination of employment, for any

  3  reason, whether by resignation, discharge, disability, or

  4  death, the monthly service retirement pension will be

  5  distributed according to the provisions of this plan and the

  6  balance of the DROP account shall be distributed to the DROP

  7  participant or, if deceased, the DROP participant's

  8  beneficiaries, as provided herein.

  9         (10)  Payment Conditions and Options--Upon the DROP

10  participant's termination of employment, for any reason,

11  whether by resignation, discharge, disability, or death, the

12  Board of Trustees shall distribute the balance of the DROP

13  participant's DROP account, subject to the following

14  provisions:

15         (a)  The Board of Trustees shall receive verification

16  from the city that such DROP participant has terminated

17  employment.

18         (b)  Following the termination of employment, the DROP

19  participant or, if deceased, such DROP participant's

20  beneficiaries shall elect on forms provided by the Board of

21  Trustees to receive payment of the balance of the DROP account

22  in accordance with one of the options listed below. For a DROP

23  participant or beneficiaries who fail to elect a method of

24  payment within 60 days of termination of employment, the Board

25  of Trustees shall pay the balance of the DROP account in one

26  lump sum as provided in subparagraph 1.

27         1.  Lump sum--The balance of the DROP account, less

28  taxes remitted to the Internal Revenue Service, if any, shall

29  be paid to the DROP participant or beneficiaries.

30         2.  Direct rollover--The balance of the DROP account

31  shall be paid directly to the custodian of an eligible


                                  8

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1665, First Engrossed



  1  retirement plan as defined in s. 402(c)(8)(B) of the Internal

  2  Revenue Code. However, in the case of an eligible rollover

  3  distribution to the widow or widower as a beneficiary, an

  4  eligible retirement plan is an individual retirement account

  5  or an individual retirement annuity as described in s.

  6  402(c)(9) of the Internal Revenue Code.

  7         3.  Partial lump sum--A portion of the balance of the

  8  DROP account shall be paid to the DROP participant or

  9  beneficiaries, less taxes remitted to the Internal Revenue

10  Service, if any, and the remaining balance of the DROP account

11  shall be transferred directly to the custodian of an eligible

12  retirement plan as defined in s. 402(c)(8)(B) of the Internal

13  Revenue Code. However, in the case of an eligible rollover

14  distribution to the widow or widower as a beneficiary, an

15  eligible retirement plan is an individual retirement account

16  or an individual retirement annuity as described in s.

17  402(c)(9) of the Internal Revenue Code. The proportions shall

18  be specified by the DROP participant or beneficiaries.

19         4.  Other methods--The balance of the DROP account

20  shall be paid by a method that is in compliance with the

21  Internal Revenue Code and as adopted by the Board of Trustees.

22         (c)  The form of payment selected by the DROP

23  participant or beneficiaries complies with the minimum

24  distribution requirements of the Internal Revenue Code.

25         (11)  Disability--A DROP participant is not eligible to

26  apply for a disability pension under this pension plan.

27         (12)  Death of a DROP Participant--

28         (a)  Upon the death of a DROP participant, the named

29  DROP beneficiaries shall be entitled to apply for and receive

30  the balance of the DROP participant's DROP account as provided

31  in subsections (9) and (10). DROP payments to a beneficiary


                                  9

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1665, First Engrossed



  1  shall be in addition to any other retirement benefits payable

  2  to the beneficiary.

  3         (b)  The monthly service retirement pension accrued to

  4  the DROP account during the month of the DROP participant's

  5  death shall be the final monthly service retirement pension

  6  benefit credited for such DROP participant.

  7         (c)  Eligibility to participate in the DROP terminates

  8  upon the death of the DROP participant. If the DROP

  9  participant dies on or after the effective date of enrollment

10  in the DROP, but prior to the first monthly service retirement

11  pension benefit being credited to the DROP, pension plan

12  benefits shall be paid in accordance with applicable

13  provisions of this pension plan.

14         (d)  A DROP participant's beneficiaries shall not be

15  eligible to receive survivor benefits as provided in sections

16  8 and 10.

17         (13)  A DROP participant shall not be deemed to have

18  been reemployed after retirement as that term is used

19  elsewhere in the plan.

20         (14)  Any actuarially-determined additional cost

21  resulting from the benefits in this section shall be borne by

22  the members of the pension plan.

23         Section 5.  A new section 24 is added to chapter 23444,

24  Laws of Florida, 1945, as amended, to read:

25         Section 24.

26         (1)  Upon implementation, the city shall solely for the

27  purpose of compliance with s. 414(h) of the Internal Revenue

28  Code, pick up, for the purpose specified in that section,

29  member contributions required by the act for all salary earned

30  by the member after implementation. Member contributions

31  picked up under the provisions of this section shall be


                                  10

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1665, First Engrossed



  1  treated as city contributions for purposes of determining

  2  income tax obligations under the Internal Revenue Code;

  3  however, such picked up member contributions shall be included

  4  in the determination of the member's gross annual salary for

  5  all other purposes under federal and state laws.

  6         (2)  Members' contributions picked up under this

  7  section shall continue to be designated member contributions

  8  for all purposes of the act and shall be considered as part of

  9  the member's salary for purposes of determining the amount of

10  the member's contributions. The provisions of this section are

11  mandatory, and the member shall have no option concerning the

12  pick up or to receive the contributed amounts directly instead

13  of having them paid by the city to the pension fund.

14         (3)  Implementation occurs upon authorization by the

15  Board of Trustees following receipt of a favorable letter of

16  determination as to the qualified plan status of the fund. In

17  no event may implementation occur other than at the beginning

18  of a pay period.

19         Section 6.  A new section 27 is added to chapter 23444,

20  Laws of Florida, 1945, as amended, to read:

21         Section 27.  Tax Qualification and Statutory Minimums--

22         (a)  The legislative body of the City of Orlando is

23  authorized to amend the pension plan to the limited extent

24  necessary to obtain tax qualification of the plan under the

25  Internal Revenue Code, but must obtain prior agreement of the

26  members and their collective bargaining agent, if any, should

27  such required amendments change any plan benefits.

28         (b)  The legislative body of the City of Orlando is

29  authorized to amend the pension plan to the limited extent

30  necessary to comply with the minimum standards and benefits

31  levels required by Chapter 175, Florida Statutes, in order to


                                  11

CODING: Words stricken are deletions; words underlined are additions.






                                          HB 1665, First Engrossed



  1  allow the plan to receive funds from the Police and

  2  Firefighters' Premium Tax Trust Fund, but must obtain prior

  3  agreement of the members and their collective bargaining

  4  agent, if any, should such required amendments change any plan

  5  benefits.

  6         Section 7.  This act shall take effect October 1, 2000.

  7

  8

  9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31


                                  12