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





                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)

                            CHAMBER ACTION
              Senate                               House
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 1                                 .
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 2                                 .
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 3                                 .
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 4                                                                

 5                                           ORIGINAL STAMP BELOW

 6

 7

 8

 9

10                                                                

11  Representative(s) Pruitt offered the following:

12

13         Amendment (with title amendment) 

14  Remove from the bill:  Everything after the enacting clause

15

16  and insert in lieu thereof:

17         Section 1.  Subsection (1) of section 112.65, Florida

18  Statutes, is amended to read:

19         112.65  Limitation of benefits.--

20         (1)  ESTABLISHMENT OF PROGRAM.--The normal retirement

21  benefit or pension payable to a retiree who becomes a member

22  of any retirement system or plan and who has not previously

23  participated in such plan, on or after January 1, 1980, shall

24  not exceed 100 percent of his or her average final

25  compensation.  However, nothing contained in this section

26  shall apply to supplemental retirement benefits or to pension

27  increases attributable to cost-of-living increases or

28  adjustments. For the purposes of this section, benefits

29  accruing in individual participant accounts established under

30  the Public Employee Optional Retirement Program established in

31  part II of chapter 121 are considered supplemental benefits.

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  As used in this section, the term "average final compensation"

 2  means the average of the member's earnings over a period of

 3  time which the governmental entity has established by statute,

 4  charter, or ordinance.

 5         Section 2.  Subsection (3) of section 121.021, Florida

 6  Statutes, is amended to read:

 7         121.021  Definitions.--The following words and phrases

 8  as used in this chapter have the respective meanings set forth

 9  unless a different meaning is plainly required by the context:

10         (3)  "System" means the general retirement system

11  established by this chapter to be known and cited as the

12  "Florida Retirement System," including, but not limited to,

13  the defined benefit retirement program administered under the

14  provisions of part I of this chapter and the defined

15  contribution retirement program known as the Public Employee

16  Optional Retirement Program and administered under the

17  provisions of part II of this chapter."

18         Section 3.  Chapter 121, Florida Statutes, is

19  designated as part I of said chapter, and part II, consisting

20  of sections 121.4501 through 121.571, is created to read:

21         121.4501  Public Employee Optional Retirement

22  Program.--

23         (1)  The Trustees of the State Board of Administration

24  shall establish an optional defined contribution retirement

25  program for members of the Florida Retirement System under

26  which retirement benefits will be provided for eligible

27  employees who elect to participate in the program. The

28  benefits to be provided for or on behalf of participants in

29  such optional retirement program shall be provided through

30  employee-directed investments, in accordance with s. 401(a) of

31  the Internal Revenue Code and its related regulations. The

                                  2

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  employers shall contribute, as provided in this section and s.

 2  121.571, toward the funding of such optional benefits.

 3         (2)  DEFINITIONS.--As used in this section, the term:

 4         (a)  "Approved provider" or "provider" means a private

 5  sector company that is selected and approved by the state

 6  board to offer one or more investment products or services to

 7  the Public Employee Optional Retirement Program. Private

 8  sector companies include investment management companies,

 9  insurance companies, depositories, and mutual fund companies.

10         (b)  "Department" means the Department of Management

11  Services.

12         (c)  "Division" means the Division of Retirement within

13  the Department of Management Services.

14         (d)  "Eligible employee" means an officer or employee,

15  as defined in s. 121.021(11), who:

16         1.  Is a member of, or is eligible for membership in,

17  the Florida Retirement System;

18         2.  Participates in, or is eligible to participate in,

19  the Senior Management Service Optional Annuity Program as

20  established under s. 121.055(6); or

21         3.  Is eligible to participate in, but does not

22  participate in, the State University System Optional

23  Retirement Program established under s. 121.35 or the State

24  Community College System Optional Retirement Program

25  established under s. 121.051(2)(c).

26

27  The term does not include any renewed member of the Florida

28  Retirement System, any member participating in the Deferred

29  Retirement Option Program established under s. 121.091(13), or

30  any employee participating in an optional retirement program

31  established under s. 121.35 or s. 121.051(2)(c).

                                  3

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1         (e)  "Employer" means an employer, as defined in s.

 2  121.021(10), of an eligible employee.

 3         (f)  "Participant" means an eligible employee who

 4  elects to participate in the Public Employee Optional

 5  Retirement Program and enrolls in such optional program as

 6  provided in subsection (4).

 7         (g)  "Public Employee Optional Retirement Program,"

 8  "optional program" or "optional retirement program" means the

 9  alternative defined contribution retirement program

10  established under this section.

11         (h)  "State board" or "board" means the State Board of

12  Administration.

13         (i)  "Trustees" means Trustees of the State Board of

14  Administration.

15         (j)  "Vested" or "vesting" means the guarantee that a

16  participant is eligible to receive a retirement benefit upon

17  completion of the required years of service under the Public

18  Employee Optional Retirement Program.

19         (3)  ELIGIBILITY; RETIREMENT SERVICE CREDIT.--

20         (a)  Participation in the Public Employee Optional

21  Retirement Program is limited to eligible employees.

22  Participation in the optional retirement program is in lieu of

23  participation in the defined benefit program of the Florida

24  Retirement System.

25         (b)  An eligible employee who is a member of the

26  defined benefit retirement program of the Florida Retirement

27  System at the time of his or her election to participate in

28  the Public Employee Optional Retirement Program shall retain

29  all retirement service credit earned under the defined benefit

30  retirement program of the Florida Retirement System as

31  credited under the system and shall be entitled to a deferred

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  benefit upon termination, if eligible under the system.

 2  However, election to participate in the Public Employee

 3  Optional Retirement Program terminates the active membership

 4  of the employee in the defined benefit program of the Florida

 5  Retirement System, and the service of a participant in the

 6  Public Employee Optional Retirement Program shall not be

 7  creditable under the defined benefit retirement program of the

 8  Florida Retirement System for purposes of benefit accrual but

 9  shall be credited for purposes of vesting.

10         (c)1.  Notwithstanding paragraph (b), each eligible

11  employee who elects to participate in the Public Employee

12  Optional Retirement Program and establishes one or more

13  individual participant accounts under the optional program may

14  elect to transfer to the optional program a sum representing

15  the present value of the employee's accumulated benefit

16  obligation under the defined benefit retirement program of the

17  Florida Retirement System. Upon such transfer, all service

18  credit previously earned under the defined benefit program of

19  the Florida Retirement System shall be nullified for purposes

20  of entitlement to a future benefit under the defined benefit

21  program of the Florida Retirement System. A participant is

22  precluded from transferring the accumulated benefit obligation

23  balance from the defined benefit program upon the expiration

24  of the period afforded to enroll in the optional program.

25         2.  For purposes of this subsection, the present value

26  of the member's accumulated benefit obligation is based upon

27  the member's estimated creditable service and estimated

28  average final compensation as of midnight of the day prior to

29  the opening of the election window for the employee. The

30  actuarial present value of the employee's accumulated benefit

31  obligation shall be based on the following:

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1         a.  The discount rate and other relevant actuarial

 2  assumptions used to value the Florida Retirement System Trust

 3  Fund at the time the amount to be transferred is determined,

 4  consistent with the factors provided in sub-subparagraphs b.

 5  and c.

 6         b.  A benefit commencement age, based on the member's

 7  estimated creditable service as of midnight on May 31, 2002.

 8  The benefit commencement age shall be the younger of the

 9  following, but shall not be younger than the member's age as

10  of midnight on May 31, 2002:

11         (I)  Age 62; or

12         (II)  The age the member would attain if the member

13  completed 30 years of service with an employer, assuming the

14  member worked continuously from May 31, 2002, and disregarding

15  any vesting requirement that would otherwise apply under the

16  defined benefit program of the Florida Retirement System.

17         c.  For members of the Special Risk Class and for

18  members of the Special Risk Administrative Support Class

19  entitled to retain special risk normal retirement date, the

20  benefit commencement age shall be the younger of the

21  following, but shall not be younger than the member's age as

22  of midnight on May 31, 2002:

23         (I)  Age 55; or

24         (II)  The age the member would attain if the member

25  completed 25 years of service with an employer, assuming the

26  member worked continuously from May 31, 2002, and disregarding

27  any vesting requirement that would otherwise apply under the

28  defined benefit program of the Florida Retirement System.

29         d.  The calculation shall disregard vesting

30  requirements and early retirement reduction factors that would

31  otherwise apply under the defined benefit retirement program.

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1         3.  For each participant who elects to transfer moneys

 2  from the defined benefit program to his or her account in the

 3  optional program, the division shall recompute the amount

 4  transferred under subparagraph 2. not later than 60 days after

 5  the actual transfer of funds based upon the participant's

 6  actual creditable service and actual final average

 7  compensation as of the initial date of participation in the

 8  optional program. If the recomputed amount differs from the

 9  amount transferred under subparagraph 2. by $10 or more, the

10  division shall:

11         a.  Transfer, or cause to be transferred, from the

12  Florida Retirement System Trust Fund to the participant's

13  account in the optional program the excess, if any, of the

14  recomputed amount over the previously transferred amount

15  together with interest from the initial date of transfer to

16  the date of transfer under this subparagraph, based upon 8

17  percent effective annual interest, compounded annually.

18         b.  Transfer, or cause to be transferred, from the

19  participant's account to the Florida Retirement System Trust

20  Fund the excess, if any, of the previously transferred amount

21  over the recomputed amount, together with interest from the

22  initial date of transfer to the date of transfer under this

23  subparagraph, based upon 6 percent effective annual interest,

24  compounded annually, pro rata based on the participant's

25  allocation plan.

26         4.  As directed by the participant, the board shall

27  transfer or cause to be transferred the appropriate amounts to

28  the designated accounts. The board shall establish transfer

29  procedures by rule, but the actual transfer shall not be later

30  than 30 days after the effective date of the member's

31  participation in the optional program. Transfers are not

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  commissionable or subject to other fees and may be in the form

 2  of securities or cash as determined by the state board. Such

 3  securities shall be valued as of the date of receipt in the

 4  participant's account.

 5         5.  If the board or the division receives notification

 6  from the United States Internal Revenue Service that this

 7  paragraph or any portion of this paragraph will cause the

 8  retirement system, or a portion thereof, to be disqualified

 9  for tax purposes under the Internal Revenue Code, then the

10  portion that will cause the disqualification does not apply.

11  Upon such notice, the state board and the division shall

12  notify the presiding officers of the Legislature.

13         (4)  PARTICIPATION; ENROLLMENT.--

14         (a)1.  With respect to an eligible employee who is

15  employed in a regularly established position on June 1, 2002,

16  by a state employer:

17         a.  Any such employee may elect to participate in the

18  Public Employee Optional Retirement Program in lieu of

19  retaining his or her membership in the defined benefit program

20  of the Florida Retirement System. The election must be made in

21  writing or by electronic means and must be filed with the

22  department and the personnel officer of the employer within 90

23  days after June 1, 2002, or, in the case of an active employee

24  who is on a leave of absence on June 1, 2002, within 90 days

25  after the conclusion of the leave of absence. This election is

26  irrevocable, except as provided in paragraph (e). Upon making

27  such election, the employee shall be enrolled as a participant

28  of the Public Employee Optional Retirement Program, the

29  employee's membership in the Florida Retirement System shall

30  be governed by the provisions of this part, and the employee's

31  membership in the defined benefit program of the Florida

                                  8

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  Retirement System shall terminate. The employee's enrollment

 2  in the Public Employee Optional Retirement Program shall be

 3  effective the first day of the month for which a full month's

 4  employer contribution is made to the optional program.

 5         b.  Any such employee who fails to elect to participate

 6  in the Public Employee Optional Retirement Program within the

 7  prescribed 90 days is deemed to have elected to retain

 8  membership in the defined benefit program of the Florida

 9  Retirement System and the employee's option to elect to

10  participate in the optional program is forfeited.

11         2.  With respect to employees who become eligible to

12  participate in the Public Employee Optional Retirement Program

13  by reason of employment in a regularly established position

14  with a state employer commencing after June 1, 2002:

15         a.  Any such employee shall, by default, be enrolled in

16  the defined benefit retirement program of the Florida

17  Retirement System at the commencement of employment, and may,

18  within 180 days after employment commences, elect to

19  participate in the Public Employee Optional Retirement

20  Program. The employee's election must be made in writing or by

21  electronic means and must be filed with the personnel officer

22  of the employer. The election to participate in the optional

23  program is irrevocable, except as provided in paragraph (e).

24         b.  If the employee files such election before the

25  initial payroll is submitted for the employee, enrollment in

26  the Public Employee Optional Retirement Program shall be

27  effective on the first day of employment.

28         c.  If the employee files such election within 180 days

29  after employment commences, but after the initial payroll is

30  submitted for the employee, enrollment in the optional program

31  shall be effective on the first day of the month for which a

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  full month's employer contribution is made to the optional

 2  program.

 3         d.  Any such employee who fails to elect to participate

 4  in the Public Employee Optional Retirement Program within the

 5  prescribed 180 days is deemed to have elected to retain

 6  membership in the defined benefit program of the Florida

 7  Retirement System and the employee's option to elect to

 8  participate in the optional program is forfeited.

 9         3.  For purposes of this paragraph, "state employer"

10  means any agency, board, branch, commission, community

11  college, department, institution, institution of higher

12  education, or water management district of the state, which

13  participates in the Florida Retirement System for the benefit

14  of certain employees.

15         (b)1.  With respect to an eligible employee who is

16  employed in a regularly established position on September 1,

17  2002, by a district school board employer:

18         a.  Any such employee may elect to participate in the

19  Public Employee Optional Retirement Program in lieu of

20  retaining his or her membership in the defined benefit program

21  of the Florida Retirement System. The election must be made in

22  writing or by electronic means and must be filed with the

23  department and the personnel officer of the employer within 90

24  days after September 1, 2002, or, in the case of an active

25  employee who is on a leave of absence on September 1, 2002,

26  within 90 days after the conclusion of the leave of absence.

27  This election is irrevocable, except as provided in paragraph

28  (e). Upon making such election, the employee shall be enrolled

29  as a participant of the Public Employee Optional Retirement

30  Program, the employee's membership in the Florida Retirement

31  System shall be governed by the provisions of this part, and

                                  10

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  the employee's membership in the defined benefit program of

 2  the Florida Retirement System shall terminate. The employee's

 3  enrollment in the Public Employee Optional Retirement Program

 4  shall be effective the first day of the month for which a full

 5  month's employer contribution is made to the optional program.

 6         b.  Any such employee who fails to elect to participate

 7  in the Public Employee Optional Retirement Program within the

 8  prescribed 90 days is deemed to have elected to retain

 9  membership in the defined benefit program of the Florida

10  Retirement System and the employee's option to elect to

11  participate in the optional program is forfeited.

12         2.  With respect to employees who become eligible to

13  participate in the Public Employee Optional Retirement Program

14  by reason of employment in a regularly established position

15  with a district school board employer commencing after

16  September 1, 2002:

17         a.  Any such employee shall, by default, be enrolled in

18  the defined benefit retirement program of the Florida

19  Retirement System at the commencement of employment, and may,

20  within 180 days after employment commences, elect to

21  participate in the Public Employee Optional Retirement

22  Program. The employee's election must be made in writing or by

23  electronic means and must be filed with the personnel officer

24  of the employer. The election to participate in the optional

25  program is irrevocable, except as provided in paragraph (e).

26         b.  If the employee files such election before the

27  initial payroll is submitted for the employee, enrollment in

28  the Public Employee Optional Retirement Program shall be

29  effective on the first day of employment.

30         c.  If the employee files such election within 180 days

31  after employment commences, but after the initial payroll is

                                  11

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  submitted for the employee, enrollment in the optional program

 2  shall be effective on the first day of the month for which a

 3  full month's employer contribution is made to the optional

 4  program.

 5         d.  Any such employee who fails to elect to participate

 6  in the Public Employee Optional Retirement Program within the

 7  prescribed 180 days is deemed to have elected to retain

 8  membership in the defined benefit program of the Florida

 9  Retirement System and the employee's option to elect to

10  participate in the optional program is forfeited.

11         3.  For purposes of this paragraph, "district school

12  board employer" means any district school board that

13  participates in the Florida Retirement System for the benefit

14  of certain employees, or a charter school or charter technical

15  career center that participates in the Florida Retirement

16  System as provided in s. 121.051(2)(d).

17         (c)1.  With respect to an eligible employee who is

18  employed in a regularly established position on December 1,

19  2002, by a local employer:

20         a.  Any such employee may elect to participate in the

21  Public Employee Optional Retirement Program in lieu of

22  retaining his or her membership in the defined benefit program

23  of the Florida Retirement System. The election must be made in

24  writing or by electronic means and must be filed with the

25  department and the personnel officer of the employer within 90

26  days after December 1, 2002, or, in the case of an active

27  employee who is on a leave of absence on December 1, 2002,

28  within 90 days after the conclusion of the leave of absence.

29  This election is irrevocable. Upon making such election, the

30  employee shall be enrolled as a participant of the Public

31  Employee Optional Retirement Program, the employee's

                                  12

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  membership in the Florida Retirement System shall be governed

 2  by the provisions of this part, and the employee's membership

 3  in the defined benefit program of the Florida Retirement

 4  System shall terminate. The employee's enrollment in the

 5  Public Employee Optional Retirement Program shall be effective

 6  the first day of the month for which a full month's employer

 7  contribution is made to the optional program.

 8         b.  Any such employee who fails to elect to participate

 9  in the Public Employee Optional Retirement Program within the

10  prescribed 90 days is deemed to have elected to retain

11  membership in the defined benefit program of the Florida

12  Retirement System and the employee's option to elect to

13  participate in the optional program is forfeited.

14         2.  With respect to employees who become eligible to

15  participate in the Public Employee Optional Retirement Program

16  by reason of employment in a regularly established position

17  with a local employer commencing after December 1, 2002:

18         a.  Any such employee shall, by default, be enrolled in

19  the defined benefit retirement program of the Florida

20  Retirement System at the commencement of employment, and may,

21  within 180 days after employment commences, elect to

22  participate in the Public Employee Optional Retirement

23  Program. The employee's election must be made in writing or by

24  electronic means and must be filed with the personnel officer

25  of the employer. The election to participate in the optional

26  program is irrevocable, except as provided in paragraph (e).

27         b.  If the employee files such election before the

28  initial payroll is submitted for the employee, enrollment in

29  the Public Employee Optional Retirement Program shall be

30  effective on the first day of employment.

31         c.  If the employee files such election within 180 days

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  after employment commences, but after the initial payroll is

 2  submitted for the employee, enrollment in the optional program

 3  shall be effective on the first day of the month for which a

 4  full month's employer contribution is made to the optional

 5  program.

 6         d.  Any such employee who fails to elect to participate

 7  in the Public Employee Optional Retirement Program within the

 8  prescribed 180 days is deemed to have elected to retain

 9  membership in the defined benefit program of the Florida

10  Retirement System and the employee's option to elect to

11  participate in the optional program is forfeited.

12         3.  For purposes of this paragraph, "local employer"

13  means any employer not included in paragraph (a) or paragraph

14  (b).

15         (d)  Contributions available for self-direction by a

16  participant who has not selected one or more specific

17  investment products shall be allocated as prescribed by the

18  board. The third-party administrator shall notify any such

19  participant at least quarterly that the participant should

20  take an affirmative action to make an asset allocation among

21  the optional program products.

22         (e)  After the period during which an eligible employee

23  had the choice to elect the defined benefit program or the

24  Public Employee Optional Retirement Program, the employee

25  shall have one opportunity, at the employee's discretion, to

26  choose to move from the defined benefit program to the Public

27  Employee Optional Retirement Program or from the Public

28  Employee Optional Retirement Program to the defined benefit

29  program. This paragraph shall be contingent upon approval from

30  the Internal Revenue Service for including the choice

31  described herein within the programs offered by the Florida

                                  14

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  Retirement System.

 2         1.  If the employee chooses to move to the Public

 3  Employee Optional Retirement Program, the applicable

 4  provisions of this section shall govern the transfer.

 5         2.  If the employee chooses to move to the defined

 6  benefit program, the employee must transfer from his or her

 7  Public Employee Optional Retirement Program account and from

 8  other employee moneys as necessary, a sum representing all

 9  contributions that would have been made to the defined benefit

10  plan for that employee and the actual return that would have

11  been earned on those contributions had they been invested in

12  the defined benefit program.

13         (5)  CONTRIBUTIONS.--

14         (a)  Each employer shall contribute on behalf of each

15  participant in the Public Employee Optional Retirement Program

16  an amount based on a percentage of the employee's monthly

17  compensation as set forth in s. 121.571. The state board,

18  acting as plan fiduciary, shall ensure that all plan assets

19  are held in a trust, pursuant to s. 401 of the Internal

20  Revenue Code. The employer shall forward all contributions

21  under this program to the third-party administrator. The

22  fiduciary shall ensure that said contributions are allocated

23  as follows:

24         1.  The portion earmarked for participant accounts

25  shall be used to purchase interests in the appropriate

26  investment vehicles for the accounts of each participant as

27  specified by the participant, or in accordance with paragraph

28  (4)(d).

29         2.  The portion earmarked for administrative and

30  educational expenses shall be transferred to the board.

31         3.  The portion earmarked for disability benefits shall

                                  15

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  be transferred to the department.

 2         (b)  Employers are responsible for notifying

 3  participants regarding maximum contribution levels permitted

 4  under the Internal Revenue Code. If a participant contributes

 5  to any other tax-deferred plan, he or she is responsible for

 6  ensuring that total contributions made to the optional program

 7  and to any other such plan do not exceed federally permitted

 8  maximums.

 9         (6)  VESTING REQUIREMENTS.--

10         (a)1.  With respect to employer contributions paid on

11  behalf of the participant to the Public Employee Optional

12  Retirement Program, plus interest and earnings thereon and

13  less investment fees and administrative charges, a participant

14  shall be vested after completing 1 work year, as defined in s.

15  121.021(54) with an employer, including any service while the

16  participant was a member of the defined benefit retirement

17  program or an optional retirement program authorized under s.

18  121.051(2)(c) or s. 121.055(6).

19         2.  If the participant terminates employment prior to

20  satisfying the vesting requirements, the nonvested

21  accumulation shall be transferred from the participant's

22  accounts to the state board for deposit in the suspense

23  account of the Public Employee Optional Retirement Program

24  Trust Fund of the board. If the terminated participant is

25  reemployed as an eligible employee within 5 years, the state

26  board shall transfer to the participant's account any amount

27  of the moneys previously transferred from the participant's

28  accounts to the Public Employee Optional Retirement Program

29  Trust Fund, plus interest calculated at 3.0 percent per annum,

30  calculated from the date of transfer to the date of

31  reemployment.

                                  16

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1         (b)1.  A participant shall be vested in the amount

 2  transferred from the defined benefit program, plus interest

 3  and earnings thereon and less administrative charges and

 4  investment fees, upon meeting the service requirements for the

 5  participant's membership class as set forth in s. 121.021(29).

 6  The third-party administrator shall account for such amounts

 7  for each participant. The division shall notify the

 8  participant and the third-party administrator when the

 9  participant has satisfied the vesting period for Florida

10  Retirement System purposes.

11         2.  If the participant terminates employment prior to

12  satisfying the vesting requirements, the nonvested

13  accumulation shall be transferred from the participant's

14  accounts to the state board for deposit in the suspense

15  account of the Public Employee Optional Retirement Program

16  Trust Fund of the board. If the terminated participant is

17  reemployed as an eligible employee within 5 years, the state

18  board shall transfer to the participant's account any amount

19  of the moneys previously transferred from the participant's

20  accounts to the Public Employee Optional Retirement Program

21  Trust Fund, plus interest calculated at 6.0 percent per annum,

22  calculated from the date of transfer to the date of

23  reemployment.

24         (c)  Any nonvested accumulations transferred from a

25  participant's account to the suspense account shall be

26  forfeited by the participant if the participant is not

27  reemployed as an eligible employee within 5 years after

28  termination.

29         (7)  BENEFITS.--Under the Public Employee Optional

30  Retirement Program:

31         (a)  Benefits shall be provided in accordance with s.

                                  17

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  401(a) of the Internal Revenue Code.

 2         (b)  Benefits shall accrue in individual accounts that

 3  are participant-directed, portable, and funded by employer

 4  contributions and earnings thereon.

 5         (c)  Benefits shall be payable in accordance with the

 6  following terms and conditions:

 7         1.  To the extent vested, benefits shall be payable

 8  only to a participant, or to his or her beneficiaries as

 9  designated by the participant.

10         2.  Benefits shall be paid by the third-party

11  administrator or designated approved providers in accordance

12  with the law, the contracts, and any applicable board rule or

13  policy.

14         3.  To begin receiving the benefits, the participant

15  must be terminated from all employment with all Florida

16  Retirement System employers, as provided in s. 121.021(39), or

17  the participant must be deceased. If a participant elects to

18  receive his or her benefits upon termination of employment,

19  the participant must submit a written application to the

20  third-party administrator indicating his or her preferred

21  distribution date and selecting an authorized method of

22  distribution as provided in paragraph (d). The participant may

23  defer receipt of benefits until he or she chooses to make such

24  application, subject to federal requirements.

25         4.  In the event of a participant's death, moneys

26  accumulated by, or on behalf of, the participant, less

27  withholding taxes remitted to the Internal Revenue Service,

28  shall be distributed to the participant's designated

29  beneficiary or beneficiaries, or to the participant's estate,

30  as if the participant retired on the date of death, as

31  provided in paragraph (e). No other death benefits shall be

                                  18

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  available for survivors of participants under the Public

 2  Employee Optional Retirement Program, except for such

 3  benefits, or coverage for such benefits, as are separately

 4  afforded by the employer, at the employer's discretion.

 5         (d)  Upon receipt by the third-party administrator of a

 6  properly executed application for distribution of benefits,

 7  the total accumulated benefit shall be payable to the

 8  participant, as:

 9         1.  A lump-sum distribution to the participant;

10         2.  A lump-sum direct rollover distribution whereby all

11  accrued benefits, plus interest and investment earnings, are

12  paid from the participant's account directly to the custodian

13  of an eligible retirement plan, as defined in s. 402(c)(8)(B)

14  of the Internal Revenue Code, on behalf of the participant; or

15         3.  Periodic distributions, as authorized by the state

16  board.

17         (e)  Survivor benefits shall be payable as:

18         1.  A lump-sum distribution payable to the

19  beneficiaries, or to the deceased participant's estate;

20         2.  An eligible rollover distribution on behalf of the

21  surviving spouse of a deceased participant, whereby all

22  accrued benefits, plus interest and investment earnings, are

23  paid from the deceased participant's account directly to the

24  custodian of an individual retirement account or an individual

25  retirement annuity, as described in s. 402(c)(9) of the

26  Internal Revenue Code, on behalf of the surviving spouse; or

27         3.  A partial lump-sum payment whereby a portion of the

28  accrued benefit is paid to the deceased participant's

29  surviving spouse or other designated beneficiaries, less

30  withholding taxes remitted to the Internal Revenue Service,

31  and the remaining amount is transferred directly to the

                                  19

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  custodian of an individual retirement account or an individual

 2  retirement annuity, as described in s. 402(c)(9) of the

 3  Internal Revenue Code, on behalf of the surviving spouse. The

 4  proportions must be specified by the participant or the

 5  surviving beneficiary.

 6

 7  This paragraph does not abrogate other applicable provisions

 8  of state or federal law providing for payment of death

 9  benefits.

10         (f)  The benefits payable to any person under the

11  Public Employee Optional Retirement Program, and any

12  contributions accumulated under such program, are not subject

13  to assignment, execution, attachment, or any legal process,

14  except for qualified domestic relations orders by a court of

15  competent jurisdiction, income deduction orders as provided in

16  s. 61.1301, and federal income tax levies.

17         (8)  ADMINISTRATION OF PROGRAM.--

18         (a)  The Public Employee Optional Retirement Program

19  shall be administered by the state board and affected

20  employers. The board shall adopt rules establishing the role

21  and responsibilities of affected state, local government, and

22  education-related employers, the state board, the department,

23  and third-party contractors in administering the Public

24  Employee Optional Retirement Program. The department shall

25  adopt rules necessary to implement the optional program in

26  coordination with the defined benefit retirement program and

27  the disability benefits available under the optional program.

28         (b)1.  The state board shall select and contract with

29  one third-party administrator to provide administrative

30  services. With the approval of the state board, the

31  third-party administrator may subcontract with other

                                  20

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  organizations or individuals to provide components of the

 2  administrative services. As a cost of administration, the

 3  board may compensate any such contractor for its services, in

 4  accordance with the terms of the contract, as is deemed

 5  necessary or proper by the board. The third-party

 6  administrator may not be an approved provider or be affiliated

 7  with an approved provider.

 8         2.  Administrative services include, but are not

 9  limited to, services relating to consolidated billing;

10  individual and collective recordkeeping and accounting; asset

11  purchase, control, and safekeeping; and direct disbursement of

12  funds to and from the third-party administrator, the division,

13  the board, employers, participants, approved providers, and

14  beneficiaries.

15         3.  The state board shall select and contract with one

16  or more organizations to provide educational services. With

17  approval of the board, the organizations may subcontract with

18  other organizations or individuals to provide components of

19  the educational services. As a cost of administration, the

20  board may compensate any such contractor for its services in

21  accordance with the terms of the contract, as is deemed

22  necessary or proper by the board. The education organization

23  may not be an approved provider or be affiliated with an

24  approved provider.

25         4.  Educational services shall be designed by the board

26  and department to assist employers, eligible employees,

27  participants, and beneficiaries in order to maintain

28  compliance with United States Department of Labor regulations

29  under section 404(c) of the Employee Retirement Income

30  Security Act of 1974 and to assist employees in their choice

31  of defined benefit or defined contribution retirement

                                  21

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  alternatives. Educational services include, but are not

 2  limited to, disseminating educational materials; providing

 3  retirement planning education; explaining the differences

 4  between the defined benefit retirement plan and the defined

 5  contribution retirement plan; and offering financial planning

 6  guidance on matters such as investment diversification,

 7  investment risks, investment costs, and asset allocation. An

 8  approved provider may also provide educational information,

 9  including retirement planning and investment allocation

10  information concerning its products and services.

11         (c)1.  In evaluating and selecting a third-party

12  administrator, the board shall establish criteria under which

13  it shall consider the relative capabilities and qualifications

14  of each proposed administrator. In developing such criteria,

15  the board shall consider:

16         a.  The administrator's demonstrated experience in

17  providing administrative services to public or private sector

18  retirement systems.

19         b.  The administrator's demonstrated experience in

20  providing daily valued recordkeeping to defined contribution

21  plans.

22         c.  The administrator's ability and willingness to

23  coordinate its activities with the Florida Retirement System

24  employers, the board, and the division, and to supply to such

25  employers, the board, and the division the information and

26  data they require, including, but not limited to, monthly

27  management reports, quarterly participant reports, and ad hoc

28  reports requested by the department or board.

29         d.  The cost-effectiveness and levels of the

30  administrative services provided.

31         e.  The administrator's ability to interact with the

                                  22

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  participants, the employers, the board, the division, and the

 2  providers; the means by which participants may access account

 3  information, direct investment of contributions, make changes

 4  to their accounts, transfer moneys between available

 5  investment vehicles, and transfer moneys between investment

 6  products; and any fees that apply to such activities.

 7         f.  Any other factor deemed necessary by the Trustees

 8  of the State Board of Administration.

 9         g.  The recommendations of the Public Employee Optional

10  Retirement Program Advisory Committee established in

11  subsection (12).

12         2.  In evaluating and selecting an educational

13  provider, the board shall establish criteria under which it

14  shall consider the relative capabilities and qualifications of

15  each proposed educational provider. In developing such

16  criteria, the board shall consider:

17         a.  Demonstrated experience in providing educational

18  services to public or private sector retirement systems.

19         b.  Ability and willingness to coordinate its

20  activities with the Florida Retirement System employers, the

21  board, and the division, and to supply to such employers, the

22  board, and the division the information and data they require,

23  including, but not limited to, reports on educational

24  contacts.

25         c.  The cost-effectiveness and levels of the

26  educational services provided.

27         d.  Ability to provide educational services via

28  different media, including, but not limited to, the Internet,

29  personal contact, seminars, brochures, and newsletters.

30         e.  Any other factor deemed necessary by the Trustees

31  of the State Board of Administration.

                                  23

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1         f.  The recommendations of the Public Employee Optional

 2  Retirement Program Advisory Committee established in

 3  subsection (12).

 4         3.  The establishment of the criteria shall be solely

 5  within the discretion of the board.

 6         (d)  The board shall develop the form and content of

 7  any contracts to be offered under the Public Employee Optional

 8  Retirement Program. In developing its contracts, the board

 9  must consider:

10         1.  The nature and extent of the rights and benefits to

11  be afforded in relation to the required contributions under

12  the program.

13         2.  The suitability of the rights and benefits to be

14  afforded and the interests of employers in the recruitment and

15  retention of eligible employees.

16         (e)1.  The board may contract with any consultant for

17  professional services, including legal, consulting,

18  accounting, and actuarial services, deemed necessary to

19  implement and administer the optional program by the Trustees

20  of the State Board of Administration. The board may enter into

21  a contract with one or more vendors to provide low-cost

22  investment advice to participants, supplemental to education

23  provided by the third-party administrator. All fees under any

24  such contract shall be paid by those participants who choose

25  to use the services of the vendor.

26         2.  The department may contract with consultants for

27  professional services, including legal, consulting,

28  accounting, and actuarial services, deemed necessary to

29  implement and administer the optional program in coordination

30  with the defined benefit program of the Florida Retirement

31  System. The department, in coordination with the board, may

                                  24

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  enter into a contract with the third-party administrator in

 2  order to coordinate services common to the various programs

 3  within the Florida Retirement System.

 4         (f)  The third-party administrator shall not receive

 5  direct or indirect compensation from an approved provider,

 6  except as specifically provided for in the contract with the

 7  board.

 8         (g)  The board shall resolve any conflict between the

 9  third-party administrator and an approved provider when such

10  conflict threatens the implementation or administration of the

11  program or the quality of services to employees and may

12  resolve any other conflicts.

13         (9)  INVESTMENT OPTIONS OR PRODUCTS; PERFORMANCE

14  REVIEW.--

15         (a)  The board shall develop policy and procedures for

16  selecting, evaluating, and monitoring the performance of

17  approved providers and investment products to which employees

18  may direct retirement contributions under the program. In

19  accordance with such policy and procedures, the board shall

20  designate and contract for a number of investment products as

21  determined by the board. The board shall select one or more

22  providers who offer multiple investment products when such an

23  approach is determined by the board to afford value to the

24  participants otherwise not available through individual

25  investment products. The board shall review and manage all

26  educational materials, contract terms, fee schedules, and

27  other aspects of the approved provider relationships to ensure

28  that no provider is unduly favored or penalized by virtue of

29  its status within the plan.

30         (b)  The board shall consider investment options or

31  products it considers appropriate to give participants the

                                  25

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  opportunity to accumulate retirement benefits, subject to the

 2  following:

 3         1.  The Public Employee Optional Retirement Program

 4  must offer a diversified mix of low-cost investment products

 5  that span the risk-return spectrum.

 6         2.  Investment options or products offered by the group

 7  of approved providers may include mutual funds, group annuity

 8  contracts, individual retirement annuities, interests in

 9  trusts, collective trusts, separate accounts, and other such

10  financial instruments.

11         3.  The board shall not contract with any provider that

12  imposes a front-end, back-end, contingent, or deferred sales

13  charge, or any other fee that limits or restricts the ability

14  of participants to select any investment product available in

15  the optional program.

16         (c)  In evaluating and selecting approved providers and

17  products, the board shall establish criteria under which it

18  shall consider the relative capabilities and qualifications of

19  each proposed provider company and product. In developing such

20  criteria, the board shall consider the following to the extent

21  such factors may be applied in connection with investment

22  products, services, or providers:

23         1.  Experience in the United States providing

24  retirement products and related financial services under

25  defined contribution retirement plans.

26         2.  Financial strength and stability which shall be

27  evidenced by the highest ratings assigned by nationally

28  recognized rating services when comparing proposed providers

29  that are so rated.

30         3.  Intrastate and interstate portability of the

31  product offered, including early withdrawal options.

                                  26

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1         4.  Compliance with the Internal Revenue Code.

 2         5.  The cost-effectiveness of the product provided and

 3  the levels of service supporting the product relative to its

 4  benefits and its characteristics, including, without

 5  limitation, the level of risk borne by the provider.

 6         6.  The provider company's ability and willingness to

 7  coordinate its activities with Florida Retirement System

 8  employers, the department, and the board, and to supply to

 9  such employers, the department, and the board the information

10  and data they require.

11         7.  The methods available to participants to interact

12  with the provider company; the means by which participants may

13  access account information, direct investment of

14  contributions, make changes to their accounts, transfer moneys

15  between available investment vehicles, and transfer moneys

16  between provider companies; and any fees that apply to such

17  activities.

18         8.  The provider company's policies with respect to the

19  transfer of individual account balances, contributions, and

20  earnings thereon, both internally among investment products

21  offered by the provider company and externally between

22  approved providers, as well as any fees, charges, reductions,

23  or penalties that may be applied.

24         9.  An evaluation of specific investment products,

25  taking into account each product's experience in meeting its

26  investment return objectives net of all related fees,

27  expenses, and charges, including, but not limited to,

28  investment management fees, loads, distribution and marketing

29  fees, custody fees, recordkeeping fees, education fees,

30  annuity expenses, and consulting fees.

31         10.  Organizational factors, including, but not limited

                                  27

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  to, financial solvency, organizational depth, and experience

 2  in providing institutional and retail investment services.

 3         (d)  As a condition of offering any investment option

 4  or product in the optional retirement program, the approved

 5  provider must agree to make the investment product or service

 6  available under the most beneficial terms offered to any other

 7  customer, subject to approval by the Trustees of the State

 8  Board of Administration.

 9         (e)  The board shall regularly review the performance

10  of each approved provider and product and related

11  organizational factors to ensure continued compliance with

12  established selection criteria and with board policy and

13  procedures. Providers and products may be terminated subject

14  to contract provisions. The board shall adopt procedures to

15  transfer account balances from terminated products or

16  providers to other products or providers in the optional

17  program.

18         (10)  EDUCATION COMPONENT.--

19         (a)  The board, in coordination with the department,

20  shall provide for an education component for system members in

21  a manner consistent with the provisions of this section. The

22  education component must be available to eligible employees at

23  least 90 days prior to the beginning date of the election

24  period for the employees of the respective types of employers.

25         (b)  The education component must provide system

26  members with impartial and balanced information about plan

27  choices. The education component must involve multimedia

28  formats. Program comparisons must, to the greatest extent

29  possible, be based upon the retirement income that different

30  retirement programs may provide to the participant. The board

31  shall monitor the performance of the contract to ensure that

                                  28

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  the program is conducted in accordance with the contract,

 2  applicable law, and the rules of the board.

 3         (c)  The board, in coordination with the department,

 4  shall provide for an initial and ongoing transfer education

 5  component to provide system members with information necessary

 6  to make informed plan choice decisions. The transfer education

 7  component must include, but is not limited to, information on:

 8         1.  The amount of money available to a member to

 9  transfer to the defined contribution program.

10         2.  The features of and differences between the defined

11  benefit program and the defined contribution program, both

12  generally and specifically, as those differences may affect

13  the member.

14         3.  The expected benefit available if the member were

15  to retire under each of the retirement programs, based on

16  appropriate alternative sets of assumptions.

17         4.  The rate of return from investments in the defined

18  contribution program and the period of time over which such

19  rate of return must be achieved to equal or exceed the

20  expected monthly benefit payable to the member under the

21  defined benefit program.

22         5.  The historical rates of return for the investment

23  alternatives available in the defined contribution programs.

24         6.  The benefits and historical rates of return on

25  investments available in a typical deferred compensation plan

26  or a typical plan under s. 403(b) of the Internal Revenue Code

27  for which the employee may be eligible.

28         7.  The program choices available to employees of the

29  State University System and the comparative benefits of each

30  available program, if applicable.

31         8.  Payout options available in each of the retirement

                                  29

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                                                   HOUSE AMENDMENT

    dhs-21                              Bill No. HB 2393, 1st Eng.

    Amendment No.     (for drafter's use only)





 1  programs.

 2         (d)  An ongoing education and communication component

 3  must provide system members with information necessary to make

 4  informed decisions about choices within their program of

 5  membership and in preparation for retirement. The component

 6  must include, but is not limited to, information concerning:

 7         1.  Rights and conditions of membership.