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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5 ORIGINAL STAMP BELOW
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11 Representative(s) Pruitt offered the following:
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13 Amendment (with title amendment)
14 Remove from the bill: Everything after the enacting clause
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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
4
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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:
5
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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
7
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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
9
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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
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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
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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
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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.
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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.
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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.