House Bill 2393e1
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HB 2393, First Engrossed
1 A bill to be entitled
2 An act relating to retirement; amending s.
3 112.65, F.S.; providing that certain benefits
4 under chapter 121, F.S., shall be considered
5 supplemental benefits; amending s. 121.021,
6 F.S.; redefining the term "system" with respect
7 to the Florida Retirement System; designating
8 ss. 121.011-121.45, F.S., as part I of chapter
9 121, F.S.; designating ss. 121.4501-121.571,
10 F.S., as part II of chapter 121, F.S.; creating
11 s. 121.4501, F.S.; directing the State Board of
12 Administration to establish an optional defined
13 contribution retirement program for members of
14 the Florida Retirement System; providing
15 definitions; providing for eligibility and
16 retirement service credit; providing for
17 participation and enrollment; providing for
18 contributions; providing vesting requirements;
19 providing benefits; providing for
20 administration; providing for investment
21 options or products; providing for an education
22 component; providing participant information
23 requirements; providing that advisory
24 committees shall provide advice and assistance;
25 providing for federal requirements; providing
26 an investment policy statement; providing a
27 statement of fiduciary standards and
28 responsibilities; providing for disability
29 benefits; providing for social security and
30 health insurance subsidy coverage; creating s.
31 121.571, F.S.; providing for contributions;
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HB 2393, First Engrossed
1 amending ss. 121.021, 121.051, 121.0515,
2 121.052, 121.053, 121.081, 121.1115, 121.1122,
3 121.121, and 215.32, F.S.; providing that
4 members employed in a regularly established
5 position shall be vested after 8 years of
6 creditable service; conforming to the act;
7 amending s. 112.665, F.S.; correcting cross
8 references to conform to the act; amending s.
9 121.091, F.S.; upgrading service credit for
10 certain years for special risk members;
11 providing funding for the benefit increase;
12 providing a contingent contribution rate
13 increase; amending s. 121.091, F.S.; reducing
14 the service time required to qualify for
15 disability benefits to 8 years; amending s.
16 112.363, F.S.; revising language with respect
17 to the retiree health insurance subsidy to
18 include reference to the optional retirement
19 program; amending s. 121.055, F.S.; increasing
20 the number of personnel that may be designated
21 as Senior Management Service Class by local
22 governments; allowing senior management
23 optional annuity program benefits to be
24 distributed through a direct rollover;
25 providing for funding; providing contribution
26 rates; providing a statement of state purpose;
27 amending s. 121.031, F.S.; requiring an
28 actuarial study of the retirement system at
29 least annually; requiring the actuarial model
30 to include a rate stabilization mechanism;
31 defining the mechanism; providing future effect
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HB 2393, First Engrossed
1 for certain provisions; providing a contingent
2 effective date.
3
4 Be It Enacted by the Legislature of the State of Florida:
5
6 Section 1. Subsection (1) of section 112.65, Florida
7 Statutes, is amended to read:
8 112.65 Limitation of benefits.--
9 (1) The normal retirement benefit or pension payable
10 to a retiree who becomes a member of any retirement system or
11 plan and who has not previously participated in such plan, on
12 or after January 1, 1980, shall not exceed 100 percent of his
13 or her average final compensation. However, nothing contained
14 in this section shall apply to supplemental retirement
15 benefits or to pension increases attributable to
16 cost-of-living increases or adjustments. For the purposes of
17 this section, benefits accruing in individual participant
18 accounts established under the Public Employee Optional
19 Retirement Program established in part II of chapter 121 are
20 considered supplemental benefits. As used in this section, the
21 term "average final compensation" means the average of the
22 member's earnings over a period of time which the governmental
23 entity has established by statute, charter, or ordinance.
24 Section 2. Subsection (3) of section 121.021, Florida
25 Statutes, is amended to read:
26 121.021 Definitions.--The following words and phrases
27 as used in this chapter have the respective meanings set forth
28 unless a different meaning is plainly required by the context:
29 (3) "System" means the general retirement system
30 established by this chapter to be known and cited as the
31 "Florida Retirement System," including, but not limited to,
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HB 2393, First Engrossed
1 the defined benefit retirement program administered under the
2 provisions of part I of this chapter and the defined
3 contribution retirement program known as the Public Employee
4 Optional Retirement Program and administered under the
5 provisions of part II of this chapter."
6 Section 3. Chapter 121, Florida Statutes, is
7 designated as part I of said chapter, and part II, consisting
8 of sections 121.4501 through 121.571, is created to read:
9 121.4501 Public Employee Optional Retirement
10 Program.--
11 (1) The Trustees of the State Board of Administration
12 shall establish an optional defined contribution retirement
13 program for members of the Florida Retirement System under
14 which retirement benefits will be provided for eligible
15 employees who elect to participate in the program. The
16 benefits to be provided for or on behalf of participants in
17 such optional retirement program shall be provided through
18 employee-directed investments, in accordance with s. 401(a) of
19 the Internal Revenue Code and its related regulations. The
20 employers shall contribute, as provided in this section and s.
21 121.571, toward the funding of such optional benefits.
22 (2) DEFINITIONS.--As used in this section, the term:
23 (a) "Approved provider" or "provider" means a private
24 sector company that is selected and approved by the state
25 board to offer one or more investment products or services to
26 the Public Employee Optional Retirement Program. Private
27 sector companies include investment management companies,
28 insurance companies, depositories, and mutual fund companies.
29 (b) "De minimis account" refers to an account
30 containing total vested account contributions and accumulated
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1 earnings under the Public Employee Optional Retirement Program
2 of not more than $5,000.
3 (c) "Department" means the Department of Management
4 Services.
5 (d) "Division" means the Division of Retirement within
6 the Department of Management Services.
7 (e) "Eligible employee" means an officer or employee,
8 as defined in s. 121.021(11), who:
9 1. Is a member of, or is eligible for membership in,
10 the Florida Retirement System;
11 2. Participates in, or is eligible to participate in,
12 the Senior Management Service Optional Annuity Program as
13 established under s. 121.055(6); or
14 3. Is eligible to participate in, but does not
15 participate in, the State University System Optional
16 Retirement Program established under s. 121.35 or the State
17 Community College System Optional Retirement Program
18 established under s. 121.051(2)(c).
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20 The term does not include any renewed member of the Florida
21 Retirement System, any member participating in the Deferred
22 Retirement Option Program established under s. 121.091(13), or
23 any employee participating in an optional retirement program
24 established under s. 121.35 or s. 121.051(2)(c).
25 (f) "Employer" means an employer, as defined in s.
26 121.021(10), of an eligible employee.
27 (g) "Participant" means an eligible employee who
28 elects to participate in the Public Employee Optional
29 Retirement Program and enrolls in such optional program as
30 provided in subsection (4).
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1 (h) "Public Employee Optional Retirement Program,"
2 "optional program" or "optional retirement program" means the
3 alternative defined contribution retirement program
4 established under this section.
5 (i) "State board" or "board" means the State Board of
6 Administration.
7 (j) "Trustees" means Trustees of the State Board of
8 Administration.
9 (k) "Vested" or "vesting" means the guarantee that a
10 participant is eligible to receive a retirement benefit upon
11 completion of the required years of service under the Public
12 Employee Optional Retirement Program.
13 (3) ELIGIBILITY; RETIREMENT SERVICE CREDIT.--
14 (a) Participation in the Public Employee Optional
15 Retirement Program is limited to eligible employees.
16 Participation in the optional retirement program is in lieu of
17 participation in the defined benefit program of the Florida
18 Retirement System.
19 (b) An eligible employee who is a member of the
20 defined benefit retirement program of the Florida Retirement
21 System at the time of his or her election to participate in
22 the Public Employee Optional Retirement Program shall retain
23 all retirement service credit earned under the defined benefit
24 retirement program of the Florida Retirement System as
25 credited under the system and shall be entitled to a deferred
26 benefit upon termination, if eligible under the system.
27 However, election to participate in the Public Employee
28 Optional Retirement Program terminates the active membership
29 of the employee in the defined benefit program of the Florida
30 Retirement System, and the service of a participant in the
31 Public Employee Optional Retirement Program shall not be
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HB 2393, First Engrossed
1 creditable under the defined benefit retirement program of the
2 Florida Retirement System for purposes of benefit accrual but
3 shall be credited for purposes of vesting.
4 (c)1. Notwithstanding paragraph (b), each eligible
5 employee who elects to participate in the Public Employee
6 Optional Retirement Program and establishes one or more
7 individual participant accounts under the optional program may
8 elect to transfer to the optional program a sum representing
9 the present value of the employee's accumulated benefit
10 obligation under the defined benefit retirement program of the
11 Florida Retirement System. Upon such transfer, all service
12 credit previously earned under the defined benefit program of
13 the Florida Retirement System shall be nullified for purposes
14 of entitlement to a future benefit under the defined benefit
15 program of the Florida Retirement System. A participant is
16 precluded from transferring the accumulated benefit obligation
17 balance from the defined benefit program upon the expiration
18 of the period afforded to enroll in the optional program.
19 2. For purposes of this subsection, the present value
20 of the member's accumulated benefit obligation is based upon
21 the member's estimated creditable service and estimated
22 average final compensation as of midnight of the day prior to
23 the opening of the election window for the employee. The
24 actuarial present value of the employee's accumulated benefit
25 obligation shall be based on the following:
26 a. The discount rate and other relevant actuarial
27 assumptions used to value the Florida Retirement System Trust
28 Fund at the time the amount to be transferred is determined,
29 consistent with the factors provided in sub-subparagraphs b.
30 and c.
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1 b. A benefit commencement age, based on the member's
2 estimated creditable service as of midnight on May 31, 2002.
3 The benefit commencement age shall be the younger of the
4 following, but shall not be younger than the member's age as
5 of midnight on May 31, 2002:
6 (I) Age 62; or
7 (II) The age the member would attain if the member
8 completed 30 years of service with an employer, assuming the
9 member worked continuously from May 31, 2002, and disregarding
10 any vesting requirement that would otherwise apply under the
11 defined benefit program of the Florida Retirement System.
12 c. For members of the Special Risk Class and for
13 members of the Special Risk Administrative Support Class
14 entitled to retain special risk normal retirement date, the
15 benefit commencement age shall be the younger of the
16 following, but shall not be younger than the member's age as
17 of midnight on May 31, 2002:
18 (I) Age 55; or
19 (II) The age the member would attain if the member
20 completed 25 years of service with an employer, assuming the
21 member worked continuously from May 31, 2002, and disregarding
22 any vesting requirement that would otherwise apply under the
23 defined benefit program of the Florida Retirement System.
24 d. The calculation shall disregard vesting
25 requirements and early retirement reduction factors that would
26 otherwise apply under the defined benefit retirement program.
27 3. For each participant who elects to transfer moneys
28 from the defined benefit program to his or her account in the
29 optional program, the division shall recompute the amount
30 transferred under subparagraph 2. not later than 60 days after
31 the actual transfer of funds based upon the participant's
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1 actual creditable service and actual final average
2 compensation as of the initial date of participation in the
3 optional program. If the recomputed amount differs from the
4 amount transferred under subparagraph 2. by $10 or more, the
5 division shall:
6 a. Transfer, or cause to be transferred, from the
7 Florida Retirement System Trust Fund to the participant's
8 account in the optional program the excess, if any, of the
9 recomputed amount over the previously transferred amount
10 together with interest from the initial date of transfer to
11 the date of transfer under this subparagraph, based upon 8
12 percent effective annual interest, compounded annually.
13 b. Transfer, or cause to be transferred, from the
14 participant's account to the Florida Retirement System Trust
15 Fund the excess, if any, of the previously transferred amount
16 over the recomputed amount, together with interest from the
17 initial date of transfer to the date of transfer under this
18 subparagraph, based upon 6 percent effective annual interest,
19 compounded annually, pro rata based on the participant's
20 allocation plan.
21 4. As directed by the participant, the board shall
22 transfer or cause to be transferred the appropriate amounts to
23 the designated accounts. At least 10 percent of the amount
24 transferred shall be transferred to a stable value product.
25 The board shall establish transfer procedures by rule, but the
26 actual transfer shall not be later than 30 days after the
27 effective date of the member's participation in the optional
28 program. Transfers are not commissionable or subject to other
29 fees and may be in the form of securities or cash as
30 determined by the state board. Such securities shall be valued
31 as of the date of receipt in the participant's account.
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1 5. If the board or the division receives notification
2 from the United States Internal Revenue Service that this
3 paragraph or any portion of this paragraph will cause the
4 retirement system, or a portion thereof, to be disqualified
5 for tax purposes under the Internal Revenue Code, then the
6 portion that will cause the disqualification does not apply.
7 Upon such notice, the state board and the division shall
8 notify the presiding officers of the Legislature.
9 (4) PARTICIPATION; ENROLLMENT.--
10 (a)1. With respect to an eligible employee who is
11 employed in a regularly established position on June 1, 2002,
12 by a state employer:
13 a. Any such employee may elect to participate in the
14 Public Employee Optional Retirement Program in lieu of
15 retaining his or her membership in the defined benefit program
16 of the Florida Retirement System. The election must be made in
17 writing or by electronic means and must be filed with the
18 department and the personnel officer of the employer within 90
19 days after June 1, 2002, or, in the case of an active employee
20 who is on a leave of absence on June 1, 2002, within 90 days
21 after the conclusion of the leave of absence. This election is
22 irrevocable, except as provided in paragraph (e). Upon making
23 such election, the employee shall be enrolled as a participant
24 of the Public Employee Optional Retirement Program, the
25 employee's membership in the Florida Retirement System shall
26 be governed by the provisions of this part and the employee's
27 membership in the defined benefit program of the Florida
28 Retirement System shall terminate. The employee's enrollment
29 in the Public Employee Optional Retirement Program shall be
30 effective the first day of the month for which a full month's
31 employer contribution is made to the optional program.
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1 b. Any such employee who fails to elect to participate
2 in the Public Employee Optional Retirement Program within the
3 prescribed 90 days is deemed to have elected to retain
4 membership in the defined benefit program of the Florida
5 Retirement System and the employee's option to elect to
6 participate in the optional program is forfeited.
7 2. With respect to employees who become eligible to
8 participate in the Public Employee Optional Retirement Program
9 by reason of employment in a regularly established position
10 with a state employer commencing after June 1, 2002:
11 a. Any such employee shall, by default, be enrolled in
12 the defined benefit retirement program of the Florida
13 Retirement System at the commencement of employment, and may,
14 within 180 days after employment commences, elect to
15 participate in the Public Employee Optional Retirement
16 Program. The employee's election must be made in writing or by
17 electronic means and must be filed with the personnel officer
18 of the employer. The election to participate in the optional
19 program is irrevocable, except as provided in paragraph (e).
20 b. If the employee files such election before the
21 initial payroll is submitted for the employee, enrollment in
22 the Public Employee Optional Retirement Program shall be
23 effective on the first day of employment.
24 c. If the employee files such election within 180 days
25 after employment commences, but after the initial payroll is
26 submitted for the employee, enrollment in the optional program
27 shall be effective on the first day of the month for which a
28 full month's employer contribution is made to the optional
29 program.
30 d. Any such employee who fails to elect to participate
31 in the Public Employee Optional Retirement Program within the
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1 prescribed 180 days is deemed to have elected to retain
2 membership in the defined benefit program of the Florida
3 Retirement System and the employee's option to elect to
4 participate in the optional program is forfeited.
5 3. For purposes of this paragraph, "state employer"
6 means any agency, board, branch, commission, community
7 college, department, institution, institution of higher
8 education, or water management district of the state, which
9 participates in the Florida Retirement System for the benefit
10 of certain employees.
11 (b)1. With respect to an eligible employee who is
12 employed in a regularly established position on September 1,
13 2002, by a district school board employer:
14 a. Any such employee may elect to participate in the
15 Public Employee Optional Retirement Program in lieu of
16 retaining his or her membership in the defined benefit program
17 of the Florida Retirement System. The election must be made in
18 writing or by electronic means and must be filed with the
19 department and the personnel officer of the employer within 90
20 days after September 1, 2002, or, in the case of an active
21 employee who is on a leave of absence on September 1, 2002,
22 within 90 days after the conclusion of the leave of absence.
23 This election is irrevocable, except as provided in paragraph
24 (e). Upon making such election, the employee shall be enrolled
25 as a participant of the Public Employee Optional Retirement
26 Program, the employee's membership in the Florida Retirement
27 System shall be governed by the provisions of this part and
28 the employee's membership in the defined benefit program of
29 the Florida Retirement System shall terminate. The employee's
30 enrollment in the Public Employee Optional Retirement Program
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1 shall be effective the first day of the month for which a full
2 month's employer contribution is made to the optional program.
3 b. Any such employee who fails to elect to participate
4 in the Public Employee Optional Retirement Program within the
5 prescribed 90 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 2. With respect to employees who become eligible to
10 participate in the Public Employee Optional Retirement Program
11 by reason of employment in a regularly established position
12 with a district school board employer commencing after
13 September 1, 2002:
14 a. Any such employee shall, by default, be enrolled in
15 the defined benefit retirement program of the Florida
16 Retirement System at the commencement of employment, and may,
17 within 180 days after employment commences, elect to
18 participate in the Public Employee Optional Retirement
19 Program. The employee's election must be made in writing or by
20 electronic means and must be filed with the personnel officer
21 of the employer. The election to participate in the optional
22 program is irrevocable, except as provided in paragraph (e).
23 b. If the employee files such election before the
24 initial payroll is submitted for the employee, enrollment in
25 the Public Employee Optional Retirement Program shall be
26 effective on the first day of employment.
27 c. If the employee files such election within 180 days
28 after employment commences, but after the initial payroll is
29 submitted for the employee, enrollment in the optional program
30 shall be effective on the first day of the month for which a
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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, "district school
10 board employer" means any district school board that
11 participates in the Florida Retirement System for the benefit
12 of certain employees, or a charter school or chapter technical
13 career center that participates in the Florida Retirement
14 System as provided in s. 121.051(2)(d).
15 (c)1. With respect to an eligible employee who is
16 employed in a regularly established position on December 1,
17 2002, by a local 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 December 1, 2002, or, in the case of an active
25 employee who is on a leave of absence on December 1, 2002,
26 within 90 days after the conclusion of the leave of absence.
27 This election is irrevocable. Upon making such election, the
28 employee shall be enrolled as a participant of the Public
29 Employee Optional Retirement Program, the employee's
30 membership in the Florida Retirement System will be governed
31 by the provisions of this part and the employee's membership
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1 in the defined benefit program of the Florida Retirement
2 System shall terminate. The employee's enrollment in the
3 Public Employee Optional Retirement Program shall be effective
4 the first day of the month for which a full month's employer
5 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 local employer commencing after December 1, 2002:
16 a. Any such employee shall, by default, be enrolled in
17 the defined benefit retirement program of the Florida
18 Retirement System at the commencement of employment, and may,
19 within 180 days after employment commences, elect to
20 participate in the Public Employee Optional Retirement
21 Program. The employee's election must be made in writing or by
22 electronic means and must be filed with the personnel officer
23 of the employer. The election to participate in the optional
24 program is irrevocable, except as provided in paragraph (e).
25 b. If the employee files such election before the
26 initial payroll is submitted for the employee, enrollment in
27 the Public Employee Optional Retirement Program shall be
28 effective on the first day of employment.
29 c. If the employee files such election within 90 days
30 after employment commences, but after the initial payroll is
31 submitted for the employee, enrollment in the optional program
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1 shall be effective on the first day of the month for which a
2 full month's employer contribution is made to the optional
3 program.
4 d. Any such employee who fails to elect to participate
5 in the Public Employee Optional Retirement Program within the
6 prescribed 180 days is deemed to have elected to retain
7 membership in the defined benefit program of the Florida
8 Retirement System and the employee's option to elect to
9 participate in the optional program is forfeited.
10 3. For purposes of this paragraph, "local employer"
11 means any employer not included in paragraph (a) or paragraph
12 (b).
13 (d) Contributions available for self-direction by a
14 participant who has not selected on or more specific
15 investment products shall be allocated as prescribed by the
16 board. The third-party administrator shall notify any such
17 participant at least quarterly that the participant should
18 take an affirmative action to make an asset allocation among
19 the optional program products.
20 (e) After the period during which an eligible employee
21 had the choice to elect the defined benefit program or the
22 Public Employee Optional Retirement Program, the employee
23 shall have one opportunity, at the employee's discretion, to
24 choose to move from the defined benefit program to the Public
25 Employee Optional Retirement Program or from the Public
26 Employee Optional Retirement Program to the defined benefit
27 program. This paragraph shall be contingent upon approval from
28 the Internal Revenue Service for including the choice
29 described herein within the programs offered by the Florida
30 Retirement System.
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1 1. If the employee chooses to move to the Public
2 Employee Optional Retirement Program, the applicable
3 provisions of this section shall govern the transfer.
4 2. If the employee chooses to move to the defined
5 benefit program, the employee must transfer from his or her
6 Public Employee Optional Retirement Program account and from
7 other employee moneys as necessary, a sum representing all
8 contributions that would have been made to the defined benefit
9 plan for that employee and the actual return that would have
10 been earned on those contributions had they been invested in
11 the defined benefit program.
12 (5) CONTRIBUTIONS.--
13 (a) Each employer shall contribute on behalf of each
14 participant in the Public Employee Optional Retirement Program
15 an amount based on a percentage of the employee's monthly
16 compensation as set forth in s. 121.571. The plan fiduciary
17 shall ensure that all plan assets are held in a trust,
18 pursuant to s. 401 of the Internal Revenue Code. The employer
19 shall forward all contributions under this program to the
20 third-party administrator. The fiduciary shall ensure that
21 said contributions are allocated as follows:
22 1. The portion earmarked for participant accounts
23 shall be used to purchase interests in the appropriate
24 investment vehicles for the accounts of each participant as
25 specified by the participant, or in accordance with paragraph
26 (4)(d).
27 2. The portion earmarked for administrative and
28 educational expenses shall be transferred to the board.
29 3. The portion earmarked for disability benefits shall
30 be transferred to the department.
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1 (b) Employers are responsible for notifying
2 participants regarding maximum contribution levels permitted
3 under the Internal Revenue Code. If a participant contributes
4 to any other tax-deferred plan, he or she is responsible for
5 ensuring that total contributions made to the optional program
6 and to any other such plan do not exceed federally permitted
7 maximums.
8 (6) VESTING REQUIREMENTS.--
9 (a)1. With respect to employer contributions paid on
10 behalf of the participant to the Public Employee Optional
11 Retirement Program, plus interest and earnings thereon and
12 less investment fees and administrative charges, a participant
13 shall be vested after completing 1 work year, as defined in s.
14 121.021(54) with an employer, including any service while the
15 participant was a member of the defined benefit retirement
16 program or an optional retirement program authorized under s.
17 121.051(2)(c) or s. 121.055(6).
18 2. If the participant terminates employment prior to
19 satisfying the vesting requirements, the nonvested
20 accumulation shall be transferred from the participant's
21 accounts to the state board for deposit in the suspense
22 account of the Public Employee Optional Retirement Program
23 Trust Fund of the board. If the terminated participant is
24 reemployed as an eligible employee within 5 years, the state
25 board shall transfer to the participant's account any amount
26 of the moneys previously transferred from the participant's
27 accounts to the Public Employee Optional Retirement Program
28 Trust Fund, plus interest calculated at 3.0 percent per annum,
29 calculated from the date of transfer to the date of
30 reemployment.
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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:
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1 (a) Benefits shall be provided in accordance with s.
2 401(a) of the Internal Revenue Code.
3 (b) Benefits shall accrue in individual accounts that
4 are participant-directed, portable, and funded by employer
5 contributions and earnings thereon.
6 (c) Benefits shall be payable in accordance with the
7 following terms and conditions:
8 1. To the extent vested, benefits shall be payable
9 only to a participant, or to his or her beneficiaries as
10 designated by the participant.
11 2. Benefits shall be paid by the third-party
12 administrator or designated approved providers in accordance
13 with the law, the contracts, and any applicable board rule or
14 policy.
15 3. To begin receiving the benefits, the participant
16 must be terminated from all employment with all Florida
17 Retirement System employers, as provided in s. 121.021(39), or
18 the participant must be deceased. If a participant elects to
19 receive his or her benefits upon termination of employment,
20 the participant must submit a written application to the
21 third-party administrator indicating his or her preferred
22 distribution date and selecting an authorized method of
23 distribution as provided in paragraph (d). The participant may
24 defer receipt of benefits until he or she chooses to make such
25 application, subject to federal requirements.
26 4. In the event of a participant's death, moneys
27 accumulated by, or on behalf of, the participant, less
28 withholding taxes remitted to the Internal Revenue Service,
29 shall be distributed to the participant's designated
30 beneficiary or beneficiaries, or to the participant's estate,
31 as if the participant retired on the date of death, as
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1 provided in paragraph (e). No other death benefits shall be
2 available for survivors of participants under the Public
3 Employee Optional Retirement Program, except for such
4 benefits, or coverage for such benefits, as are separately
5 afforded by the employer, at the employer's discretion.
6 (d) Upon receipt by the third-party administrator of a
7 properly executed application for distribution of benefits,
8 the total accumulated benefit shall be payable to the
9 participant, as:
10 1. A lump-sum distribution to the participant;
11 2. A lump-sum direct rollover distribution whereby all
12 accrued benefits, plus interest and investment earnings, are
13 paid from the participant's account directly to the custodian
14 of an eligible retirement plan, as defined in s. 402(c)(8)(B)
15 of the Internal Revenue Code, on behalf of the participant; or
16 3. Periodic distributions, as authorized by the state
17 board.
18 (e) Survivor benefits shall be payable as:
19 1. A lump-sum distribution payable to the
20 beneficiaries, or to the deceased participant's estate;
21 2. An eligible rollover distribution on behalf of the
22 surviving spouse of a deceased participant, whereby all
23 accrued benefits, plus interest and investment earnings, are
24 paid from the deceased participant's account directly to the
25 custodian of an individual retirement account or an individual
26 retirement annuity, as described in s. 402(c)(9) of the
27 Internal Revenue Code, on behalf of the surviving spouse; or
28 3. A partial lump-sum payment whereby a portion of the
29 accrued benefit is paid to the deceased participant's
30 surviving spouse or other designated beneficiaries, less
31 withholding taxes remitted to the Internal Revenue Service,
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HB 2393, First Engrossed
1 and the remaining amount is transferred directly to the
2 custodian of an individual retirement account or an individual
3 retirement annuity, as described in s. 402(c)(9) of the
4 Internal Revenue Code, on behalf of the surviving spouse. The
5 proportions must be specified by the participant or the
6 surviving beneficiary.
7
8 This paragraph does not abrogate other applicable provisions
9 of state or federal law providing for payment of death
10 benefits.
11 (f) The benefits payable to any person under the
12 Public Employee Optional Retirement Program, and any
13 contributions accumulated under such program, are not subject
14 to assignment, execution, attachment, or any legal process,
15 except for qualified domestic relations orders by a court of
16 competent jurisdiction, income deduction orders as provided in
17 s. 61.1301, and federal income tax levies.
18 (8) ADMINISTRATION OF PROGRAM.--
19 (a) The Public Employee Optional Retirement Program
20 shall be administered by the state board and affected
21 employers. The board shall adopt rules establishing the role
22 and responsibilities of affected state, local government, and
23 education-related employers, the state board, the department,
24 and third-party contractors in administering the Public
25 Employee Optional Retirement Program. The department shall
26 adopt rules necessary to implement the optional program in
27 coordination with the defined benefit retirement program and
28 the disability benefits available under the optional program.
29 (b)1. The state board shall select and contract with
30 one third-party administrator to provide administrative
31 services. With the approval of the state board, the
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1 third-party administrator may subcontract with other
2 organizations to provide components of the administrative
3 services. As a cost of administration, the board may
4 compensate any such contractor for its services, in accordance
5 with the terms of the contract, as is deemed necessary or
6 proper by the board. The third-party administrator may not be
7 an approved provider or be affiliated with an approved
8 provider.
9 2. Administrative services include, but are not
10 limited to, services relating to consolidated billing;
11 individual and collective recordkeeping and accounting; asset
12 purchase, control, and safekeeping; and direct disbursement of
13 funds to and from the third-party administrator, the division,
14 the board, employers, participants, approved providers, and
15 beneficiaries.
16 3. The state board shall select and contract with one
17 or more organizations to provide educational services. With
18 approval of the board, the organizations may subcontract with
19 other organizations to provide components of the educational
20 services. As a cost of administration, the board may
21 compensate any such contractor for its services in accordance
22 with the terms of the contract, as is deemed necessary or
23 proper by the board. The education organization may not be an
24 approved provider or be affiliated with an 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
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HB 2393, First Engrossed
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, but not limited to, retirement planning and
10 investment allocation information concerning its products and
11 services.
12 (c)1. In evaluating and selecting a third-party
13 administrator, the board shall establish criteria under which
14 it shall consider the relative capabilities and qualifications
15 of each proposed administrator. In developing such criteria,
16 the board shall consider:
17 a. The administrator's demonstrated experience in
18 providing administrative services to public or private sector
19 retirement systems.
20 b. The administrator's demonstrated experience in
21 providing daily valued recordkeeping to defined contribution
22 plans.
23 c. The administrator's ability and willingness to
24 coordinate its activities with the Florida Retirement System
25 employers, the board, and the division, and to supply to such
26 employers, the board, and the division the information and
27 data they require, including, but not limited to, monthly
28 management reports, quarterly participant reports, and ad hoc
29 reports requested by the department or board.
30 d. The cost-effectiveness and levels of the
31 administrative services provided.
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1 e. The administrator's ability to interact with the
2 participants, the employers, the board, the division, and the
3 providers; the means by which participants may access account
4 information, direct investment of contributions, make changes
5 to their accounts, transfer moneys between available
6 investment vehicles, transfer moneys between investment
7 products; and any fees that apply to such activities.
8 f. Any other factor deemed necessary by the Trustees
9 of the State Board of Administration.
10 g. The recommendations of the Public Employee Optional
11 Retirement Program Advisory Committee established in
12 subsection (12).
13 2. In evaluating and selecting an educational
14 provider, the board shall establish criteria under which it
15 shall consider the relative capabilities and qualifications of
16 each proposed educational provider. In developing such
17 criteria, the board shall consider:
18 a. Demonstrated experience in providing educational
19 services to public or private sector retirement systems.
20 b. Ability and willingness to coordinate its
21 activities with the Florida Retirement System employers, the
22 board, and the division, and to supply to such employers, the
23 board, and the division the information and data they require,
24 including, but not limited to, reports on educational
25 contacts.
26 c. The cost-effectiveness and levels of the
27 educational services provided.
28 d. Ability to provide educational services via
29 different media, including, but not limited to, the Internet,
30 personal contact, seminars, brochures, and newsletters.
31
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HB 2393, First Engrossed
1 e. Any other factor deemed necessary by the Trustees
2 of the State Board of Administration.
3 f. The recommendations of the Public Employee Optional
4 Retirement Program Advisory Committee established in
5 subsection (12).
6 3. The establishment of the criteria shall be solely
7 within the discretion of the board.
8 (d) The board shall develop the form and content of
9 all contracts to be offered under the Public Employee Optional
10 Retirement Program. In developing its contracts, the board
11 must consider:
12 1. The nature and extent of the rights and benefits to
13 be afforded participants in relation to the required
14 contributions under the program.
15 2. The suitability of the rights and benefits to be
16 afforded participants to the needs of the participants and the
17 interests of employers in the recruitment and retention of
18 eligible employees.
19 (e)1. The board may contract with any consultant for
20 professional services, including legal, consulting,
21 accounting, and actuarial services, deemed necessary to
22 implement and administer the optional program by the Trustees
23 of the State Board of Administration. The board may enter into
24 a contract with one or more vendors to provide low-cost
25 investment advice to participants, supplemental to education
26 provided by the third-party administrator. All fees under any
27 such contract shall be paid by those participants who choose
28 to use the services of the vendor.
29 2. The department may contract with consultants for
30 professional services, including legal, consulting,
31 accounting, and actuarial services, deemed necessary to
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HB 2393, First Engrossed
1 implement and administer the optional program in coordination
2 with the defined benefit program of the Florida Retirement
3 System. The department, in coordination with the board, may
4 enter into a contract with the third-party administrator in
5 order to coordinate services common to the various programs
6 within the Florida Retirement System.
7 (f) The third-party administrator shall not receive
8 direct or indirect compensation from an approved provider,
9 except as specifically provided for in the contract with the
10 board.
11 (g) The board shall resolve any conflict between the
12 third-party administrator and an approved provider, when such
13 conflict threatens the implementation or administration of the
14 program or the quality of services to employees.
15 (9) INVESTMENT OPTIONS OR PRODUCTS; PERFORMANCE
16 REVIEW.--
17 (a) The board shall develop policy and procedures for
18 selecting, evaluating, and monitoring the performance of
19 approved providers and investment products to which employees
20 may direct retirement contributions under the program. In
21 accordance with such policy and procedures, the board shall
22 designate and contract for a number of investment products as
23 determined by the board. The board shall select one or more
24 providers who offer multiple investment products when such an
25 approach is determined by the board to afford value to the
26 participants otherwise not available through individual
27 investment products.
28 (b) The board shall consider investment options or
29 products it considers appropriate to give participants the
30 opportunity to accumulate retirement benefits, subject to the
31 following:
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HB 2393, First Engrossed
1 1. The Public Employee Optional Retirement Program
2 must offer a diversified mix of low-cost investment products
3 that span the risk-return spectrum.
4 2. Investment options or products offered by the group
5 of approved providers may include mutual funds, group annuity
6 contracts, individual retirement annuities, interests in
7 trusts, and other such financial instruments.
8 3. The board shall not contract with any provider that
9 imposes a front-end, back-end, contingent or deferred sales
10 charge, or any other fee that limits or restricts the ability
11 of participants to select any investment product available in
12 the optional program.
13 (c) In evaluating and selecting approved providers and
14 products, the board shall establish criteria under which it
15 shall consider the relative capabilities and qualifications of
16 each proposed provider company and product. In developing such
17 criteria, the board shall consider the following to the extent
18 such factors may be applied in connection with investment
19 products, services or providers:
20 1. Experience in the United States providing
21 retirement products and related financial services under
22 defined contribution retirement plans.
23 2. Financial strength and stability which shall be
24 evidenced by the highest ratings assigned by nationally
25 recognized rating services when comparing proposed providers
26 that are so rated.
27 3. Intrastate and interstate portability of the
28 product offered, including early withdrawal options.
29 4. Compliance with the Internal Revenue Code.
30 5. The cost-effectiveness of the product provided and
31 the levels of service supporting the product relative to its
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HB 2393, First Engrossed
1 benefits and its characteristics, including, without
2 limitation, the level of risk borne by the provider.
3 6. The provider company's ability and willingness to
4 coordinate its activities with Florida Retirement System
5 employers, the department, and the board, and to supply to
6 such employers, the department, and the board the information
7 and data they require.
8 7. The methods available to participants to interact
9 with the provider company; the means by which participants may
10 access account information, direct investment of
11 contributions, make changes to their accounts, transfer moneys
12 between available investment vehicles, and transfer moneys
13 between provider companies; and any fees that apply to such
14 activities.
15 8. The provider company's policies with respect to the
16 transfer of individual account balances, contributions, and
17 earnings thereon, both internally among investment products
18 offered by the provider company and externally between
19 approved providers, as well as any fees, charges, reductions,
20 or penalties that may be applied.
21 9. An evaluation of specific investment products,
22 taking into account each product's track record in meeting its
23 investment return objectives net of all related fees,
24 expenses, and charges, including, but not limited to,
25 investment management fees, loads, distribution and marketing
26 fees, custody fees, recordkeeping fees, education fees,
27 annuity expenses, and consulting fees.
28 10. Organizational factors, including, but not limited
29 to, financial solvency, organizational depth, and experience
30 in providing institutional and retail investment services.
31
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HB 2393, First Engrossed
1 (d) As a condition of offering any investment option
2 or product in the optional retirement program, the approved
3 provider must agree to make the investment product or service
4 available under the most beneficial terms offered to any other
5 customer, subject to approval by the Trustees of the State
6 Board of Administration.
7 (e) The board shall regularly review the performance
8 of each approved provider and product and related
9 organizational factors to ensure continued compliance with
10 established selection criteria and with board policy and
11 procedures. Providers and products may be terminated subject
12 to contract provisions. The board shall adopt procedures to
13 transfer account balances from terminated products or
14 providers to other products or providers in the optional
15 program.
16 (10) EDUCATION COMPONENT.--
17 (a) The board, in coordination with the department,
18 shall provide for an education component for system members in
19 a manner consistent with the provisions of this section. The
20 education component must be available to eligible employees at
21 least 90 days prior to the beginning date of the election
22 period for the employees of the respective types of employers.
23 (b) The education component must provide system
24 members with impartial and balanced information about plan
25 choices. The education component must involve multimedia
26 formats. Program comparisons must, to the greatest extent
27 possible, be based upon the retirement income that different
28 retirement programs may provide to the participant. The board
29 shall monitor the performance of the contract to ensure that
30 the program is conducted in accordance with the contract,
31 applicable law, and the rules of the board.
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HB 2393, First Engrossed
1 (c) The board, in coordination with the department,
2 shall provide for an initial and ongoing transfer education
3 component to provide system members with information necessary
4 to make informed plan choice decisions. The transfer education
5 component must include, but is not limited to, information on:
6 1. The amount of money available to a member to
7 transfer to the defined contribution program.
8 2. The features of and differences between the defined
9 benefit program and the defined contribution program, both
10 generally and specifically, as those differences may affect
11 the member.
12 3. The expected benefit available if the member were
13 to retire under each of the retirement programs, based on
14 appropriate alternative sets of assumptions.
15 4. The rate of return from investments in the defined
16 contribution program and the period of time over which such
17 rate of return must be achieved to equal or exceed the
18 expected monthly benefit payable to the member under the
19 defined benefit program.
20 5. The historical rates of return for the investment
21 alternatives available in the defined contribution programs.
22 6. The benefits and historical rates of return on
23 investments available in deferred compensation plans or a plan
24 under s. 403(b) of the Internal Revenue Code for which the
25 employee may be eligible.
26 7. The program choices available to employees of the
27 State University System and the comparative benefits of each
28 available program, if applicable.
29 8. Payout options available in each of the retirement
30 programs.
31
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HB 2393, First Engrossed
1 (d) An ongoing education and communication component
2 must provide system members with information necessary to make
3 informed decisions about choices within their program of
4 membership and in preparation for retirement. The component
5 must include, but is not limited to, information concerning:
6 1. Rights and conditions of membership.
7 2. Benefit features within the program, options, and
8 effects of certain decisions.
9 3. Coordination of contributions and benefits with a
10 deferred compensation plan under s. 457 or a plan under s.
11 403(b) of the Internal Revenue Code.
12 4. Significant program changes.
13 5. Contribution rates and program funding status.
14 6. Planning for retirement.
15 (e) Descriptive materials must be prepared under the
16 assumption that the employee is an unsophisticated investor,
17 and all materials used in the education component must be
18 approved by the state board prior to dissemination.
19 (f) The board and the department shall also establish
20 a communication component to provide program information to
21 participating employers and the employers' personnel and
22 payroll officers and to explain their respective
23 responsibilities in conjunction with the retirement programs.
24 (g) Funding for education of new employees may reflect
25 administrative costs to the optional program and the defined
26 benefit program.
27 (11) PARTICIPANT INFORMATION REQUIREMENTS.--The board
28 shall ensure that each participant is provided a quarterly
29 statement that accounts for the contributions made on behalf
30 of such participants; the interest and investment earnings
31
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HB 2393, First Engrossed
1 thereon; and any fees, penalties, or other deductions that
2 apply thereto. At a minimum, such statements must:
3 (a) Indicate the participant's investment options.
4 (b) State the market value of the account at the close
5 of the current quarter and previous quarter.
6 (c) Show account gains and losses for the period and
7 changes in account accumulation unit values for the period.
8 (d) Itemize account contributions for the quarter.
9 (e) Indicate any account changes due to adjustment of
10 contribution levels, reallocation of contributions, balance
11 transfers, or withdrawals.
12 (f) Set forth any fees, charges, penalties, and
13 deductions that apply to the account.
14 (g) Indicate the amount of the account in which the
15 participant is fully vested and the amount of the account in
16 which the participant is not vested.
17 (h) Indicate each investment product's performance
18 relative to an appropriate market benchmark.
19
20 The third-party administrator shall provide quarterly and
21 annual summary reports to the board and any other reports
22 requested by the department or the board.
23 (12) ADVISORY COMMITTEES TO PROVIDE ADVICE AND
24 ASSISTANCE.--The Investment Advisory Council and the Public
25 Employee Optional Retirement Program Advisory Committee shall
26 assist the board in implementing and administering the Public
27 Employee Optional Retirement Program.
28 (a) The Investment Advisory Council, created pursuant
29 to s. 215.444, shall review the board's initial
30 recommendations regarding the criteria to be used in selecting
31 and evaluating approved providers and investment products. The
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HB 2393, First Engrossed
1 council may provide comments on the recommendations to the
2 board within 45 days after receiving the initial
3 recommendations. The board shall make the final determination
4 as to whether any investment provider or product, any
5 contractor, or any and all contract provisions shall be
6 approved for the program.
7 (b)1. The Public Employee Optional Retirement Program
8 Advisory Committee shall be composed of seven members. The
9 President of the Senate shall appoint two members, the Speaker
10 of the House of Representatives shall appoint two members, the
11 Governor shall appoint one member, the Treasurer shall appoint
12 one member, and the Comptroller shall appoint one member. The
13 members of the advisory committee shall elect a member as
14 chair. The appointments shall be made by September 1, 2000,
15 and the committee shall meet to organize by October 1, 2000.
16 The initial appointments shall be for a term of 24 months.
17 Each appointing authority shall fill any vacancy occurring
18 among its appointees for the remainder of the original.
19 2. The advisory committee shall make recommendations
20 on the selection of the third-party administrator and related
21 subcontractors and the selection, design, and implementation
22 of the education component of the program, and the selection
23 of investment products and providers. The committee's
24 recommendations on selection criteria for the third-party
25 administrator must be forwarded to the Trustees of the State
26 Board of Administration by January 1, 2001. The
27 recommendations on the design and implementation of the
28 education component must be forwarded to the trustees by May
29 1, 2001.
30 3. The advisory committee's recommendations and
31 activities shall be guided by the best interests of the
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HB 2393, First Engrossed
1 employees, considering the interests of employers, and the
2 intent of the Legislature in establishing the Public Employee
3 Optional Retirement Program.
4 4. The staff of the state board and the department
5 shall assist the advisory committee.
6 (13) FEDERAL REQUIREMENTS.--
7 (a) Provisions of this section shall be construed, and
8 the Public Employee Optional Retirement Program shall be
9 administered, so as to comply with the Internal Revenue Code,
10 26 U.S.C., and specifically with plan qualification
11 requirements imposed on governmental plans under s. 401(a) of
12 the Internal Revenue Code.
13 (b) Any section or provision of this chapter which is
14 susceptible to more than one construction must be interpreted
15 in favor of the construction most likely to satisfy
16 requirements imposed by s. 401(a) of the Internal Revenue
17 Code.
18 (c) Contributions payable under this section for any
19 limitation year may not exceed the maximum amount allowable
20 for qualified defined contribution pension plans under
21 applicable provisions of the Internal Revenue Code. If an
22 employee who has elected to participate in the Public Employee
23 Optional Retirement Program participates in any other plan
24 that is maintained by the participating employer, benefits
25 that accrue under the Public Employee Optional Retirement
26 Program shall be considered primary for any aggregate
27 limitation applicable under s. 415 of the Internal Revenue
28 Code.
29 (14) INVESTMENT POLICY STATEMENT.--
30 (a) Investment products and approved providers
31 selected for the Public Employee Optional Retirement Program
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1 shall be in conformance with the Public Employee Optional
2 Retirement Program Investment Policy Statement, herein
3 referred to as the "statement," as developed and approved by
4 the Trustees of the State Board of Administration. The
5 statement must include, among other items, the investment
6 objectives of the Public Employee Optional Retirement Program,
7 manager selection and monitoring guidelines, and performance
8 measurement criteria. As required from time to time, the
9 executive director of the state board may present recommended
10 changes in the statement to the board for approval.
11 (b) Prior to presenting the statement, or any
12 recommended changes thereto, to the state board, the executive
13 director of the board shall present such statement or changes
14 to the Investment Advisory Council for review. The council
15 shall present the results of its review to the board prior to
16 the board's final approval of the statement or changes in the
17 statement.
18 (15) STATEMENT OF FIDUCIARY STANDARDS AND
19 RESPONSIBILITIES.--
20 (a) Investment of optional defined contribution
21 retirement plan assets shall be made for the sole interest and
22 exclusive purpose of providing benefits to plan participants
23 and beneficiaries and defraying reasonable expenses of
24 administering the plan. The program's assets are to be
25 invested, on behalf of the program participants, with the
26 care, skill, and diligence that a prudent person acting in a
27 like manner would undertake. The performance of the investment
28 duties set forth in this paragraph shall comply with the
29 fiduciary standards set forth in the Employee Retirement
30 Income Security Act of 1974 at 29 U.S.C. s. 1104(a)(1)(A)-(C).
31 In case of conflict with other provisions of law authorizing
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HB 2393, First Engrossed
1 investments, the investment and fiduciary standards set forth
2 in this subsection shall prevail.
3 (b) If a participant or beneficiary of the Public
4 Employee Optional Retirement Program exercises control over
5 the assets in his or her account, as determined by reference
6 to regulations of the United States Department of Labor under
7 section 404(c) of the Employee Retirement Income Security Act
8 of 1974 and all applicable laws governing the operation of the
9 program, no program fiduciary shall be liable for any loss to
10 a participant's or beneficiary's account which results from
11 such participant's or beneficiary's exercise of control.
12 (16) DISABILITY BENEFITS.--For any participant of the
13 optional retirement program who becomes totally and
14 permanently disabled, as defined in s. 121.091(4)(b), the
15 participant shall be entitled to receive those moneys that
16 have accrued in his or her participant account. It is the
17 intent of the legislature to design a disability benefit for
18 participants of the optional program similar to those
19 disability benefits afforded defined benefit program members.
20 The department is directed to study the potential options of
21 such coverage, including self-insurance and commercial
22 coverage, the alternative methods of administering such
23 benefits, and the fiscal impacts on the employees and
24 employers, and to make recommendations to the legislature by
25 January 15, 2001.
26 (17) SOCIAL SECURITY COVERAGE.--Social security
27 coverage shall be provided for all officers and employees who
28 become participants of the optional program. Any modification
29 of the present agreement with the Social Security
30 Administration, or referendum required under the Social
31 Security Act, for the purpose of providing social security
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HB 2393, First Engrossed
1 coverage for any member shall be requested by the state agency
2 in compliance with the applicable provisions of the Social
3 Security Act governing such coverage. However, retroactive
4 social security coverage for service prior to December 1,
5 1970, with the employer shall not be provided for any member
6 who was not covered under the agreement as of November 30,
7 1970.
8 (18) RETIREE HEALTH INSURANCE SUBSIDY.--All officers
9 and employees who are participants of the optional program
10 shall be eligible to receive the retiree health insurance
11 subsidy, subject to the provisions of s. 112.363.
12 121.571 Contributions.--Contributions to the Public
13 Employee Optional Retirement Program shall be made as follows:
14 (1) CONTRIBUTION RATES GENERALLY.--The contributions
15 established in this section shall fund the Public Employee
16 Optional Retirement Program and shall be paid by each
17 participant's employer to the third-party administrator based
18 on the class membership of the participant. The contributions
19 are stated as a percentage of each participant's gross
20 compensation for the calendar month. A change in a
21 contribution rate is effective the first day of the month for
22 which a full month's employer contribution is made on or after
23 the beginning date of the change. Contribution rates may be
24 modified by general law.
25 (2) CONTRIBUTIONS TO PARTICIPANTS' ACCOUNTS.--Employer
26 and participant contributions to participant accounts shall be
27 accounted for separately. Interest and investment earnings on
28 employer contributions shall accrue on a tax-deferred basis
29 until proceeds are distributed. Pursuant thereto:
30 (a) All contributions made on behalf of a participant
31 pursuant to this subsection shall be transferred by the
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HB 2393, First Engrossed
1 employer to the third-party administrator for deposit in the
2 participant's account.
3 (b) Retirement contributions for Regular Class members
4 of the optional retirement plan are as follows:
5 Dates of Contribution Employers
6 Rate Changes
7 Effective July 1, 2002: 9.0%
8 (c) Retirement contributions for Special Risk Class
9 members of the optional retirement plan are as follows:
10 Dates of Contribution Employers
11 Rate Changes
12 Effective July 1, 2002: 20.0%
13 (d) Retirement contributions for Special Risk
14 Administrative Support Class members of the optional
15 retirement plan are as follows:
16 Dates of Contribution Employers
17 Rate Changes
18 Effective July 1, 2002: 11.35%
19 (e) Retirement contributions for Elected Officers'
20 Class members of the optional retirement plan are as follows:
21 Dates of Contribution Employers
22 Rate Changes
23 Effective July 1, 2002:
24 Legislators 13.40%
25 Governor, Lt. Governor,
26 Cabinet Officers 13.40%
27 State Attorneys, Public
28 Defenders 13.40%
29 Justices, Judges 18.90%
30 County Elected Officers 16.20%
31
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1 (f) Retirement contributions for Senior Management
2 Service Class members of the optional retirement plan are as
3 follows:
4 Dates of Contribution Employers
5 Rate Changes
6 Effective July 1, 2002: 10.95%
7 (3) CONTRIBUTIONS TO DISABILITY ACCOUNT.--
8 (a) All contributions made on behalf of a participant
9 pursuant to this subsection shall be transferred by the
10 employer to the third-party administrator for deposit in the
11 Public Employee Disability Trust Fund administered by the
12 Division of Retirement. Such contributions, less any fees or
13 charges authorized by the Legislature to offset the costs of
14 administering the disability component of the optional
15 retirement program, shall be used to provide disability
16 coverage for participants in the optional retirement program.
17 (b) Disability contributions for Regular Class members
18 of the optional retirement plan are as follows:
19 Dates of Contribution Employers
20 Rate Changes
21 Effective July 1, 2002: 0.39%
22 (c) Disability contribution for Special Risk Class
23 members of the optional retirement plan are as follows:
24 Dates of Contribution Employers
25 Rate Changes
26 Effective July 1, 2002: 1.25%
27 (d) Disability contribution for Special Risk
28 Administrative Support Class members of the optional
29 retirement plan are as follows:
30 Dates of Contribution Employers
31 Rate Changes
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HB 2393, First Engrossed
1 Effective July 1, 2002: 0.73%
2 (e) Disability contribution for Elected Officers'
3 Class members of the optional retirement plan are as follows:
4 Dates of Contribution Employers
5 Rate Changes
6 Effective July 1, 2002:
7 Legislators 0.61%
8 Governor, Lt. Governor,
9 Cabinet Officers 0.61%
10 State Attorneys, Public
11 Defenders 0.61%
12 Justices, Judges 1.45%
13 County Elected Officers 0.86%
14 (f) Disability contribution for Senior Management
15 Service Class members of the optional retirement plan are as
16 follows:
17 Dates of Contribution Employers
18 Rate Changes
19 Effective July 1, 2002: 0.50%
20 (4) CONTRIBUTIONS FOR SOCIAL SECURITY COVERAGE AND FOR
21 RETIREE HEALTH INSURANCE SUBSIDY.--Contributions required
22 under this section shall be in addition to employer and member
23 contributions required for social security and the Retiree
24 Health Insurance Subsidy Trust Fund as provided in s. 121.071.
25 (5) ADMINISTRATIVE AND EDUCATIONAL
26 CONTRIBUTIONS.--Effective June 1, 2002, the contribution rate
27 for each employer shall be 0.1 percent on behalf of each
28 participant to fund the administrative and educational
29 expenses of the optional program. All contributions made on
30 behalf of a participant pursuant to this subsection shall be
31
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1 transferred to the third-party administrator for deposit in
2 the board's administrative fund.
3 (6) DEDUCTIONS.--The board or the third-party
4 administrator may deduct reasonable fees and apply appropriate
5 charges to participants' accounts. Payments for third-party
6 administrative or educational expenses shall be made only
7 pursuant to the terms of the approved contracts for such
8 services. In no event shall administrative and educational
9 expenses exceed the portion of employer contributions
10 earmarked for such expenses pursuant to this section, except
11 for reasonable administrative charges assessed against
12 participant accounts of persons for whom no employer
13 contributions are made during the year. Investment management
14 fees shall be deducted from the gross returns earned by each
15 authorized investment product or approved provider, pursuant
16 to the terms of the contract between the provider and the
17 board.
18 (7) PAYMENT AND DISTRIBUTION OF
19 CONTRIBUTIONS.--Contributions made pursuant to this section
20 shall be paid by the employer to the third-party administrator
21 by electronic funds transfer no later than the 5th day of the
22 month immediately following the month during which the payroll
23 period ended. The board and the third-party administrator
24 shall ensure that the contributions are distributed to the
25 appropriate trust funds or participant accounts in a timely
26 manner.
27 Section 4. Effective July 1, 2001, subsections (29)
28 and (45) of section 121.021, Florida Statutes, are amended to
29 read:
30
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1 121.021 Definitions.--The following words and phrases
2 as used in this chapter have the respective meanings set forth
3 unless a different meaning is plainly required by the context:
4 (29) "Normal retirement date" means the first day of
5 any month following the date a member attains one of the
6 following statuses:
7 (a) If a Regular Class member, the member:
8 1. Completes 8 10 or more years of creditable service
9 and attains age 62; or
10 2. Completes 30 years of creditable service,
11 regardless of age, which may include a maximum of 4 years of
12 military service credit as long as such credit is not claimed
13 under any other system.
14 (b) If a Special Risk Class member, the member:
15 1. Completes 8 10 or more years of creditable service
16 in the Special Risk Class and attains age 55;
17 2. Completes 25 years of creditable service in the
18 Special Risk Class, regardless of age; or
19 3. Completes 25 years of creditable service and
20 attains age 52, which service may include a maximum of 4 years
21 of military service credit as long as such credit is not
22 claimed under any other system and the remaining years are in
23 the Special Risk Class.
24 (c) If a Senior Management Service Class member, the
25 member:
26 1. Completes 7 years of creditable service in the
27 Senior Management Service Class and attains age 62; or
28 2. Completes 30 years of any creditable service,
29 regardless of age, which may include a maximum of 4 years of
30 military service credit as long as such credit is not claimed
31 under any other system.
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HB 2393, First Engrossed
1 (d) If an Elected Officers' Class member, the member:
2 1. Completes 8 years of creditable service in the
3 Elected Officers' Class and attains age 62; or
4 2. Completes 30 years of any creditable service,
5 regardless of age, which may include a maximum of 4 years of
6 military service credit as long as such credit is not claimed
7 under any other system.
8
9 "Normal retirement age" is attained on the "normal retirement
10 date."
11 (45)(a) "Vested" or "vesting" means the guarantee that
12 a member is eligible to receive a future retirement benefit
13 upon completion of the required years of creditable service
14 for the employee's class of membership, even though the member
15 may have terminated covered employment before reaching normal
16 or early retirement date. Being vested does not entitle a
17 member to a disability benefit. Provisions governing
18 entitlement to disability benefits are set forth under s.
19 121.091(4) based on a disability caused by an injury or
20 disease that occurs after termination of covered employment.
21 (b) Effective July 1, 2001, an 8-year vesting
22 requirement shall be implemented for the Regular Class, the
23 Special Risk Class, and the Special Risk Administrative
24 Support Class of the defined benefit program of the Florida
25 Retirement System. Pursuant thereto:
26 1. Any member employed in a regularly established
27 position on July 1, 2001, who completes or has completed a
28 total of 8 years of creditable service shall be considered
29 vested as described in paragraph (a).
30 2. Any member not employed in a regularly established
31 position on July 1, 2001, shall be deemed vested upon
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HB 2393, First Engrossed
1 completion of 8 years of creditable service, provided that
2 such member is employed in a covered position for at least 1
3 work year after July 1, 2001. However, no member shall be
4 required to complete more years of creditable service than
5 would have been required for that member to vest under
6 retirement laws in effect before July 1, 2001.
7 Section 5. Paragraph (a) of subsection (2) of section
8 121.051, Florida Statutes, is amended to read:
9 121.051 Participation in the system.--
10 (2) OPTIONAL PARTICIPATION.--
11 (a)1. Any officer or employee who is a member of an
12 existing system, except any officer or employee of any
13 nonprofit professional association or corporation, may elect,
14 if eligible, to become a member of this system at any time
15 between April 15, 1971, and June 1, 1971, inclusive, by
16 notifying his or her employer in writing of the desire to
17 transfer membership from the existing system to this system.
18 Any officer or employee who was a member of an existing system
19 on December 1, 1970, and who did not elect to become a member
20 of this system shall continue to be covered under the existing
21 system subject to the provisions of s. 121.045. A person who
22 has retired under any state retirement system shall not be
23 eligible to transfer to the Florida Retirement System created
24 by this chapter subsequent to such retirement. Any officer or
25 employee who, prior to July 1, 1947, filed a written rejection
26 of membership in a state retirement system and who continues
27 employment without participating in the Florida Retirement
28 System may withdraw the rejection in writing and, if otherwise
29 eligible, participate in the Florida Retirement System and
30 purchase prior service in accordance with this chapter. Any
31 former member of an existing system who was permitted to
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HB 2393, First Engrossed
1 transfer to the Florida Retirement System while employed by
2 the University Athletic Association, Inc., a nonprofit
3 association connected with the University of Florida, during
4 this or subsequent transfer periods, contrary to the
5 provisions of this paragraph, is hereby confirmed as a member
6 of the Florida Retirement System, the provisions of this
7 paragraph to the contrary notwithstanding. Any officer or
8 employee of the University Athletic Association, Inc.,
9 employed prior to July 1, 1979, who was a member of the
10 Florida Retirement System and who chose in writing on a
11 University Athletic Association Plan Participation Election
12 form, between July 1, 1979, and March 31, 1980, inclusively,
13 to terminate his or her participation in the Florida
14 Retirement System shall hereby have such termination of
15 participation confirmed and declared irrevocable retroactive
16 to the date Florida Retirement System retirement contributions
17 ceased to be reported for such officer or employee. The
18 following specific conditions shall apply to any such officer
19 or employee whose participation was so terminated: The officer
20 or employee shall retain all creditable service earned in the
21 Florida Retirement System through the month that retirement
22 contributions ceased to be reported and no creditable service
23 shall be earned after such month; the officer or employee
24 shall not be eligible for disability retirement or death in
25 line of duty benefits if such occurred after the date that
26 participation terminated; and, the officer or employee may
27 participate in the Florida Retirement System in the future
28 only if employed by a participating employer in a regularly
29 established position.
30 2. Any member transferring from the existing system
31 under chapter 238 shall retain rights to survivor benefits
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HB 2393, First Engrossed
1 under that chapter through November 30, 1975, or until fully
2 insured for disability benefits under social security,
3 whichever is the earliest date, and thereafter no such rights
4 shall exist.
5 3. Any officer or employee who is a member of an
6 existing system on April 15, 1972, and who was eligible to
7 transfer to this system under the provisions of subparagraph
8 1., but who elected to remain in the existing system, may
9 elect, if eligible under the Social Security Act, 42 U.S.C. s.
10 418(d)(6)(F), to become a member of this system at any time
11 between April 15, 1972, and June 30, 1972, inclusive, by
12 notifying his or her employer in writing of the desire to
13 transfer membership from an existing system to this system.
14 Such transfer shall be subject to the following conditions:
15 a. All persons electing to transfer to the Florida
16 Retirement System under this subparagraph shall be transferred
17 on July 1, 1972, and shall thereafter be subject to the
18 provisions of the Florida Retirement System retroactively to
19 November 30, 1970, and at retirement have their benefits
20 calculated in accordance with the provisions of s. 121.091.
21 b. Social security coverage incidental to such
22 elective membership in the Florida Retirement System shall be
23 effective November 30, 1970, and all amounts required from a
24 member for retroactive social security coverage shall, at the
25 time such election is made, be deducted from the individual
26 account of the member, and the difference between the amount
27 remaining in the individual account of such member and the
28 total amount which such member would have contributed had he
29 or she become a member of the Florida Retirement System on
30 November 30, 1970, shall be paid into the system trust fund
31 and added to the member's individual account prior to July 1,
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HB 2393, First Engrossed
1 1975, or by his or her date of retirement, if earlier.
2 Interest at the rate of 8 percent per annum, compounded
3 annually until paid, shall be charged on any balance remaining
4 unpaid on said date.
5 c. There is appropriated out of the system trust fund
6 into the Social Security Contribution Trust Fund the amount
7 required by federal laws and regulations to be contributed
8 with respect to social security coverage for the years after
9 November 30, 1970, of the members of an existing system who
10 transfer to the Florida Retirement System in accordance with
11 this subparagraph and who qualify for retroactive social
12 security coverage. The amount paid from this appropriation
13 with respect to the employees of any employer shall be charged
14 to the employing agency. There shall be credited against this
15 charge the difference between the matching contributions
16 actually made for the affected employees from November 30,
17 1970, to June 30, 1972, and the amount of matching
18 contributions that would have been required under the Florida
19 Retirement System.
20 d. The net amounts charged the employing agencies for
21 employees transferring to the Florida Retirement System under
22 this subparagraph shall be paid to the system trust fund prior
23 to July 1, 1975. Interest at the rate of 8 percent per annum,
24 compounded annually until paid, shall be charged on any
25 balance remaining unpaid on said date.
26 e. The administrator shall request such modification
27 of the state's agreement with the Social Security
28 Administration, or any referendum required under the Social
29 Security Act governing social security coverage, as may be
30 required to implement the provisions of this law. Retroactive
31 social security coverage for service with an employer prior to
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HB 2393, First Engrossed
1 November 30, 1970, shall not be provided for any member who
2 was not covered under the agreement as of November 30, 1970.
3 4. Any officer or employee who was a member of an
4 existing system on December 1, 1970, and who is still a member
5 of an existing system, except any officer or employee of any
6 nonprofit professional association or corporation, may elect,
7 if eligible, to become a member of this system at any time
8 between September 1, 1974, and November 30, 1974, inclusive,
9 by notifying his or her employer in writing of the desire to
10 transfer membership from the existing system to this system.
11 This decision to transfer or not to transfer shall become
12 irrevocable on November 30, 1974. All members electing to
13 transfer during the transfer period shall become members of
14 the Florida Retirement System on January 1, 1975, and shall be
15 subject to the provisions of the Florida Retirement System on
16 and after that date. Any officer or employee who was a member
17 of an existing system on December 1, 1970, and who does not
18 elect to become a member of this system shall continue to be
19 covered under the existing system, subject to the provisions
20 of s. 121.045. Any member transferring from the Teachers'
21 Retirement System of Florida under chapter 238 to the Florida
22 Retirement System on January 1, 1975, shall retain rights to
23 survivor benefits under chapter 238 from January 1, 1975,
24 through December 31, 1979, or until fully insured for
25 disability benefits under the Social Security Act, whichever
26 is the earliest date, and thereafter no such rights shall
27 exist.
28 5.a. Any officer or employee who was a member of an
29 existing system on December 1, 1970, and who is still a member
30 of an existing system, except any officer or employee of any
31 nonprofit professional association or corporation, may elect,
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HB 2393, First Engrossed
1 if eligible, to become a member of this system at any time
2 between January 2, 1982, and May 31, 1982, inclusive, by
3 notifying his or her employer in writing of the desire to
4 transfer membership from the existing system to this system.
5 This decision to transfer or not to transfer shall become
6 irrevocable on May 31, 1982. All members electing to transfer
7 during the transfer period shall become members of the Florida
8 Retirement System on July 1, 1982, and shall be subject to the
9 provisions of the Florida Retirement System on and after that
10 date. Any officer or employee who was a member of an existing
11 system on December 1, 1970, and who does not elect to become a
12 member of this system shall continue to be covered under the
13 existing system, subject to the provisions of s. 121.045. Any
14 member transferring from the Teachers' Retirement System under
15 chapter 238 to the Florida Retirement System on January 1,
16 1979, shall retain rights to survivor benefits under chapter
17 238 from January 1, 1979, through December 31, 1983, or until
18 fully insured for disability benefits under the federal Social
19 Security Act, whichever is the earliest date, and thereafter
20 no such rights shall exist. Any such member transferring to
21 the Florida Retirement System on July 1, 1982, shall retain
22 rights to survivor benefits under chapter 238 from July 1,
23 1982, through June 30, 1987, or until fully insured for
24 disability benefits under the federal Social Security Act,
25 whichever is the earliest date, and thereafter no such rights
26 shall exist.
27 b. Any deficit, as determined by the state actuary,
28 accruing to the Survivors' Benefit Trust Fund of the Teachers'
29 Retirement System and resulting from the passage of chapter
30 78-308, Laws of Florida, and chapter 80-242, Laws of Florida,
31
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HB 2393, First Engrossed
1 shall become an obligation of the Florida Retirement System
2 Trust Fund.
3 6. Any active member of an existing system who was not
4 employed in a covered position during a time when transfer to
5 the Florida Retirement System was allowed as described in rule
6 22B-1.004(2)(a), Florida Administrative Code, or as provided
7 in paragraph (1)(c) of this section, may elect, if eligible,
8 to become a member of this system at any time between January
9 1, 1991, and May 29, 1991, inclusive, by notifying his or her
10 employer in writing of the desire to transfer membership from
11 the existing system to this system. The decision to transfer
12 or not to transfer shall become irrevocable on May 29, 1991.
13 Failure to notify the employer shall result in compulsory
14 membership in the existing system. All members electing to
15 transfer during the transfer period shall become members of
16 the Florida Retirement System on July 1, 1991, and shall be
17 subject to the provisions of the Florida Retirement System on
18 and after that date. Any member so transferring from the
19 existing system under chapter 238 to the Florida Retirement
20 System on July 1, 1991, shall retain rights to survivor
21 benefits under that chapter from July 1, 1991, through June
22 30, 1996, or until fully insured for benefits under the
23 federal Social Security Act, whichever is the earliest date,
24 and thereafter no such rights shall exist.
25 Section 6. Effective July 1, 2001, paragraph (a) of
26 subsection (7) of section 121.0515, Florida Statutes, is
27 amended to read:
28 121.0515 Special risk membership; criteria;
29 designation and removal of classification; credits for past
30 service and prior service; retention of special risk normal
31 retirement date.--
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HB 2393, First Engrossed
1 (7) RETENTION OF SPECIAL RISK NORMAL RETIREMENT
2 DATE.--
3 (a) A special risk member who is moved or reassigned
4 to a nonspecial risk law enforcement, firefighting,
5 correctional, or emergency medical care administrative support
6 position with the same agency, or who is subsequently employed
7 in such a position with any law enforcement, firefighting,
8 correctional, or emergency medical care agency under the
9 Florida Retirement System, shall participate in the Special
10 Risk Administrative Support Class and shall earn credit for
11 such service at the same percentage rate as that earned by a
12 regular member. Notwithstanding the provisions of subsection
13 (4), service in such an administrative support position shall,
14 for purposes of s. 121.091, apply toward satisfaction of the
15 special risk normal retirement date, as defined in s.
16 121.021(29)(b), provided that, while in such position, the
17 member remains certified as a law enforcement officer,
18 firefighter, correctional officer, emergency medical
19 technician, or paramedic; remains subject to reassignment at
20 any time to a position qualifying for special risk membership;
21 and completes an aggregate of 8 10 or more years of service as
22 a designated special risk member prior to retirement.
23 Section 7. Effective July 1, 2001, subsection (8) of
24 section 121.052, Florida Statutes, is amended to read:
25 121.052 Membership class of elected officers.--
26 (8) NORMAL RETIREMENT DATE; VESTING REQUIREMENT.--A
27 member of the Elected Officers' Class shall have the same
28 normal retirement date as defined in s. 121.021(29) for a
29 member of the regular class of the Florida Retirement System,
30 except that only 8 years of creditable service in this class
31 are needed to attain the normal retirement date specified in
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HB 2393, First Engrossed
1 s. 121.021(29)(a). Any public service commissioner who was
2 removed from the Elected State Officers' Class on July 1,
3 1979, after attaining at least 8 years of creditable service
4 in that class shall be considered to have reached the normal
5 retirement date upon attaining age 62 as required in s.
6 121.021(29)(a).
7 Section 8. Paragraph (a) of subsection (1) of section
8 121.053, Florida Statutes, is amended to read:
9 121.053 Participation in the Elected Officers' Class
10 for retired members.--
11 (1)(a) Any member who retired under any existing
12 system as defined in s. 121.021(2), and receives a benefit
13 thereof, and who serves in an office covered by the Elected
14 Officers' Class for a period of at least 8 years, shall be
15 entitled to receive an additional retirement benefit for such
16 elected officer service prior to July 1, 1990, under the
17 Elected Officers' Class of the Florida Retirement System, as
18 follows:
19 1. Upon completion of 8 or more years of creditable
20 service in an office covered by the Elected Officers' Class,
21 s. 121.052, such member shall notify the administrator of his
22 or her intent to purchase elected officer service prior to
23 July 1, 1990, and shall pay the member contribution applicable
24 for the period being claimed, plus 4 percent interest
25 compounded annually from the first year of service claimed
26 until July 1, 1975, and 6.5 percent interest compounded
27 annually thereafter, until full payment is made to the Florida
28 Retirement System Trust Fund; however, such member may
29 purchase retirement credit under the Elected Officers' Class
30 only for such service as an elected officer.
31
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HB 2393, First Engrossed
1 2. Upon payment of the amount specified in
2 subparagraph 1., the employer shall pay into the Florida
3 Retirement System Trust Fund the applicable employer
4 contribution for the period of elected officer service prior
5 to July 1, 1990, being claimed by the member, plus 4 percent
6 interest compounded annually from the first year of service
7 claimed until July 1, 1975, and 6.5 percent interest
8 compounded annually thereafter, until full payment is made to
9 the Florida Retirement System Trust Fund.
10 Section 9. Effective July 1, 2001, paragraph (i) of
11 subsection (1) of section 121.081, Florida Statutes, is
12 amended to read:
13 121.081 Past service; prior service;
14 contributions.--Conditions under which past service or prior
15 service may be claimed and credited are:
16 (1)
17 (i) An employee of a state agency who was a member of
18 a state-administered retirement system and who was granted
19 educational leave with pay pursuant to a written educational
20 leave-with-pay policy may claim such period of educational
21 leave as past service subject to the following conditions:
22 1. The educational leave must have occurred prior to
23 December 31, 1971;
24 2. The member must have completed at least 8 10 years
25 of creditable service excluding the period of the educational
26 leave;
27 3. The employee must have returned to employment with
28 a state agency employer who participated in the retirement
29 system, which return was immediately upon termination of the
30 educational leave, and must have remained on the employer's
31
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HB 2393, First Engrossed
1 payroll for at least 1 calendar month following the return to
2 employment;
3 4. The employee must be a member of the Florida
4 Retirement System at the time he or she claims such service;
5 5. Not more than 24 months of creditable service may
6 be claimed for such period of educational leave with pay;
7 6. The service must not be claimed under any other
8 state or federal retirement system; and
9 7. The member must pay to the retirement trust fund
10 for claiming such past-service credit an amount equal to 8
11 percent of his or her gross annual salary immediately prior to
12 the educational leave with pay for each year of past service
13 claimed, plus 4 percent interest thereon compounded annually
14 each June 30 from the first year of service claimed until July
15 1, 1975, and 6.5 percent interest thereafter on the unpaid
16 balance compounded annually each June 30 until paid.
17 Section 10. Effective July 1, 2001, paragraph (b) of
18 subsection (1) of section 121.1115, Florida Statutes, is
19 amended to read:
20 121.1115 Purchase of retirement credit for
21 out-of-state and federal service.--Effective January 1, 1995,
22 a member of the Florida Retirement System may purchase
23 creditable service for periods of public employment in another
24 state and receive creditable service for such periods of
25 employment. Service with the Federal Government, including any
26 military service, may be claimed. Upon completion of each year
27 of service earned under the Florida Retirement System, a
28 member may purchase up to 1 year of retirement credit for his
29 or her out-of-state service, subject to the following
30 provisions:
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HB 2393, First Engrossed
1 (1) LIMITATIONS AND CONDITIONS.--To receive credit for
2 the out-of-state service:
3 (b) The member must have completed a minimum of 8 10
4 years of creditable service under the Florida Retirement
5 System, excluding out-of-state service and in-state service
6 claimed and purchased under s. 121.1122.
7 Section 11. Effective July 1, 2001, paragraph (a) of
8 subsection (2) of section 121.1122, Florida Statutes, is
9 amended to read:
10 121.1122 Purchase of retirement credit for in-state
11 public service and in-state service in accredited nonpublic
12 schools and colleges, including charter schools and charter
13 technical career centers.--Effective January 1, 1998, a member
14 of the Florida Retirement System may purchase creditable
15 service for periods of certain public or nonpublic employment
16 performed in this state, as provided in this section.
17 (2) LIMITATIONS AND CONDITIONS.--
18 (a) A member is not eligible to receive credit for
19 in-state service under this section until he or she has
20 completed 8 10 years of creditable service under the Florida
21 Retirement System, excluding service purchased under this
22 section and out-of-state service claimed and purchased under
23 s. 121.1115.
24 Section 12. Effective July 1, 2001, paragraph (a) of
25 subsection (1) of section 121.121, Florida Statutes, is
26 amended to read:
27 121.121 Authorized leaves of absence.--
28 (1) A member may purchase creditable service for up to
29 2 work years of authorized leaves of absence if:
30
31
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HB 2393, First Engrossed
1 (a) The member has completed a minimum of 8 10 years
2 of creditable service, excluding periods for which a leave of
3 absence was authorized;
4 Section 13. Paragraph (b) of subsection (2) of section
5 215.32, Florida Statutes, is amended to read:
6 215.32 State funds; segregation.--
7 (2) The source and use of each of these funds shall be
8 as follows:
9 (b)1. The trust funds shall consist of moneys received
10 by the state which under law or under trust agreement are
11 segregated for a purpose authorized by law. The state agency
12 or branch of state government receiving or collecting such
13 moneys shall be responsible for their proper expenditure as
14 provided by law. Upon the request of the state agency or
15 branch of state government responsible for the administration
16 of the trust fund, the Comptroller may establish accounts
17 within the trust fund at a level considered necessary for
18 proper accountability. Once an account is established within a
19 trust fund, the Comptroller may authorize payment from that
20 account only upon determining that there is sufficient cash
21 and releases at the level of the account.
22 2. In order to maintain a minimum number of trust
23 funds in the State Treasury, each state agency or the judicial
24 branch may consolidate, if permitted under the terms and
25 conditions of their receipt, the trust funds administered by
26 it; provided, however, the agency or judicial branch employs
27 effectively a uniform system of accounts sufficient to
28 preserve the integrity of such trust funds; and provided,
29 further, that consolidation of trust funds is approved by the
30 Administration Commission or the Chief Justice.
31
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HB 2393, First Engrossed
1 3. All such moneys are hereby appropriated to be
2 expended in accordance with the law or trust agreement under
3 which they were received, subject always to the provisions of
4 chapter 216 relating to the appropriation of funds and to the
5 applicable laws relating to the deposit or expenditure of
6 moneys in the State Treasury.
7 4.a. Notwithstanding any provision of law restricting
8 the use of trust funds to specific purposes, unappropriated
9 cash balances from selected trust funds may be authorized by
10 the Legislature for transfer to the Budget Stabilization Fund
11 and Working Capital Fund in the General Appropriations Act.
12 b. This subparagraph does not apply to trust funds
13 required by federal programs or mandates; trust funds
14 established for bond covenants, indentures, or resolutions
15 whose revenues are legally pledged by the state or public body
16 to meet debt service or other financial requirements of any
17 debt obligations of the state or any public body; the State
18 Transportation Trust Fund; the trust fund containing the net
19 annual proceeds from the Florida Education Lotteries; the
20 Florida Retirement System Trust Fund; trust funds under the
21 management of the Board of Regents, where such trust funds are
22 for auxiliary enterprises, self-insurance, and contracts,
23 grants, and donations, as those terms are defined by general
24 law; trust funds that serve as clearing funds or accounts for
25 the Comptroller or state agencies; trust funds that account
26 for assets held by the state in a trustee capacity as an agent
27 or fiduciary for individuals, private organizations, or other
28 governmental units; and other trust funds authorized by the
29 State Constitution.
30 Section 14. Paragraph (e) of subsection (1) of section
31 112.665, Florida Statutes, is amended to read:
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1 112.665 Duties of Department of Management Services.--
2 (1) The Department of Management Services shall:
3 (e) Issue, by January 1 annually, a report to the
4 Special District Information Program of the Department of
5 Community Affairs that includes the participation in and
6 compliance of special districts with the local government
7 retirement system provisions in s. 112.63 and the
8 state-administered retirement system provisions as specified
9 in part I of chapter 121; and
10 Section 15. Paragraphs (a) of subsection (1) of
11 section 121.091, Florida Statutes, are amended to read:
12 121.091 Benefits payable under the system.--Benefits
13 may not be paid under this section unless the member has
14 terminated employment as provided in s. 121.021(39)(a) or
15 begun participation in the Deferred Retirement Option Program
16 as provided in subsection (13), and a proper application has
17 been filed in the manner prescribed by the department. The
18 department may cancel an application for retirement benefits
19 when the member or beneficiary fails to timely provide the
20 information and documents required by this chapter and the
21 department's rules. The department shall adopt rules
22 establishing procedures for application for retirement
23 benefits and for the cancellation of such application when the
24 required information or documents are not received.
25 (1) NORMAL RETIREMENT BENEFIT.--Upon attaining his or
26 her normal retirement date, the member, upon application to
27 the administrator, shall receive a monthly benefit which shall
28 begin to accrue on the first day of the month of retirement
29 and be payable on the last day of that month and each month
30 thereafter during his or her lifetime. The normal retirement
31 benefit, including any past or additional retirement credit,
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1 may not exceed 100 percent of the average final compensation.
2 The amount of monthly benefit shall be calculated as the
3 product of A and B, subject to the adjustment of C, if
4 applicable, as set forth below:
5 (a)1. For creditable years of Regular Class service, A
6 is 1.60 percent of the member's average final compensation, up
7 to the member's normal retirement date. Upon completion of the
8 first year after the normal retirement date, A is 1.63 percent
9 of the member's average final compensation. Following the
10 second year after the normal retirement date, A is 1.65
11 percent of the member's average final compensation. Following
12 the third year after the normal retirement date, and for
13 subsequent years, A is 1.68 percent of the member's average
14 final compensation.
15 2. For creditable years of special risk service, A is:
16 a. Two percent of the member's average final
17 compensation for all creditable years prior to October 1,
18 1974;
19 b. Three percent of the member's average final
20 compensation for all creditable years after September 30,
21 1974, and before October 1, 1978;
22 c. Two percent of the member's average final
23 compensation for all creditable years after September 30,
24 1978, and before January 1, 1989;
25 d. Two and two-tenths percent of the member's final
26 monthly compensation for all creditable years after December
27 31, 1988, and before January 1, 1990;
28 e. Two and four-tenths percent of the member's average
29 final compensation for all creditable years after December 31,
30 1989, and before January 1, 1991;
31
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1 f. Two and six-tenths percent of the member's average
2 final compensation for all creditable years after December 31,
3 1990, and before January 1, 1992;
4 g. Two and eight-tenths percent of the member's
5 average final compensation for all creditable years after
6 December 31, 1991, and before January 1, 1993; and
7 h. Three percent of the member's average final
8 compensation for all creditable years after December 31, 1992;
9 and
10 i. Three percent of the member's average final
11 compensation for all creditable years of service after
12 September 30, 1978, and before January 1, 1993, for any
13 special risk member who retires after July 1, 2000.
14 3. For creditable years of Senior Management Service
15 Class service after January 31, 1987, A is 2 percent;
16 4. For creditable years of Elected Officers' Class
17 service as a Supreme Court Justice, district court of appeal
18 judge, circuit judge, or county court judge, A is 3 1/3
19 percent of the member's average final compensation, and for
20 all other creditable service in such class, A is 3 percent of
21 average final compensation;
22 Section 16. It is the intent of the Legislature that
23 costs attributable to increases in the retirement accrual
24 rates for October 1978 through December 1992 for members of
25 the Special Risk Class shall be funded by recognition of a
26 lump sum from the excess actuarial assets of the Florida
27 Retirement System Trust Fund as follows:
28 (1) For fiscal year 2000-2001, the lump sum to be
29 recognized shall be the greater of:
30 (a) $350 million; or
31
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1 (b) the amount available under the rate stabilization
2 mechanism described in s. 121.031, Florida Statutes, after any
3 other recognition of excess actuarial assets pursuant to this
4 act.
5 (2)(a) For fiscal years 2001-2002 and 2002-2003, the
6 lump sums to be recognized shall be the lesser of:
7 1. the amount available under the rate stabilization
8 mechanism described in s. 121.031, Florida Statutes, after any
9 other recognition of excess actuarial assets pursuant to this
10 act; or
11 2. the remaining amount needed to fully fund the
12 benefit accrual rate.
13 (b) If, after the recognition of excess actuarial
14 assets pursuant to subsection (2) and paragraph (a), there
15 remains an unfunded actuarial liability attributable to the
16 increase in the retirement accrual rates for the Special Risk
17 Class, the contribution rate applicable to the Special Risk
18 Class of the Florida Retirement System shall be increased by
19 1.85 percentage points, effective July 1, 2002, unless the
20 Legislature provides an alternative funding mechanism.
21 Section 17. Effective July 1, 2001, paragraph (a) of
22 subsection (4) of section 121.091, Florida Statutes, is
23 amended to read:
24 121.091 Benefits payable under the system.--Benefits
25 may not be paid under this section unless the member has
26 terminated employment as provided in s. 121.021(39)(a) or
27 begun participation in the Deferred Retirement Option Program
28 as provided in subsection (13), and a proper application has
29 been filed in the manner prescribed by the department. The
30 department may cancel an application for retirement benefits
31 when the member or beneficiary fails to timely provide the
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1 information and documents required by this chapter and the
2 department's rules. The department shall adopt rules
3 establishing procedures for application for retirement
4 benefits and for the cancellation of such application when the
5 required information or documents are not received.
6 (4) DISABILITY RETIREMENT BENEFIT.--
7 (a) Disability retirement; entitlement and effective
8 date.--
9 1.a. A member who becomes totally and permanently
10 disabled, as defined in paragraph (b), after completing 5
11 years of creditable service, or a member who becomes totally
12 and permanently disabled in the line of duty regardless of
13 service, shall be entitled to a monthly disability benefit;
14 except that any member with less than 5 years of creditable
15 service on July 1, 1980, or any person who becomes a member of
16 the Florida Retirement System on or after such date must have
17 completed 10 years of creditable service prior to becoming
18 totally and permanently disabled in order to receive
19 disability retirement benefits for any disability which occurs
20 other than in the line of duty. However, if a member employed
21 on July 1, 1980, with less than 5 years of creditable service
22 as of that date, becomes totally and permanently disabled
23 after completing 5 years of creditable service and is found
24 not to have attained fully insured status for benefits under
25 the federal Social Security Act, such member shall be entitled
26 to a monthly disability benefit.
27 b. Effective July 1, 2001, a member of the defined
28 benefit retirement program who becomes totally and permanently
29 disabled, as defined in paragraph (b), after completing 8
30 years of creditable service, or a member who becomes totally
31
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1 and permanently disabled in the line of duty regardless of
2 service, shall be entitled to a monthly disability benefit.
3 2. If the division has received from the employer the
4 required documentation of the member's termination of
5 employment, the effective retirement date for a member who
6 applies and is approved for disability retirement shall be
7 established by rule of the division.
8 3. For a member who is receiving Workers' Compensation
9 payments, the effective disability retirement date may not
10 precede the date the member reaches Maximum Medical
11 Improvement (MMI), unless the member terminates employment
12 prior to reaching MMI.
13 Section 18. Effective July 1, 2001, subsections (2)
14 and (3) of section 112.363, Florida Statutes, are amended to
15 read:
16 112.363 Retiree health insurance subsidy.--
17 (2) ELIGIBILITY FOR RETIREE HEALTH INSURANCE
18 SUBSIDY.--
19 (a) A person who is retired under a state-administered
20 retirement system, or a beneficiary who is a spouse or
21 financial dependent entitled to receive benefits under a
22 state-administered retirement system, is eligible for health
23 insurance subsidy payments provided under this section; except
24 that pension recipients under ss. 121.40, 238.07(16)(a), and
25 250.22, recipients of health insurance coverage under s.
26 110.1232, or any other special pension or relief act shall not
27 be eligible for such payments.
28 (b) For purposes of this section, a person is deemed
29 retired from a state-administered retirement system when he or
30 she terminates employment with all employers participating in
31
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1 the Florida Retirement System as described in s. 121.021(39)
2 and:
3 1. For a participant of the Public Employee Optional
4 Retirement Program established under part II of chapter 121,
5 the participant meets the age or service requirements to
6 qualify for normal retirement as set forth in s. 121.021(29).
7 2. For a member of the Florida Retirement System
8 defined benefit program, or any employee who maintains
9 creditable service under both the defined benefit program and
10 the Public Employee Optional Retirement Program, the member
11 begins drawing retirement benefits from the defined benefit
12 program of the Florida Retirement System.
13 (c)1. Effective July 1, 2001, any person retiring on
14 or after such date as a member of the Florida Retirement
15 System, including any participant of the defined contribution
16 program administered pursuant to part II of chapter 121, must
17 have satisfied the vesting requirements for his or her
18 membership class under the Florida Retirement System defined
19 benefit program as administered under part I of chapter 121.
20 2. Notwithstanding the provisions of subparagraph 1.,
21 a person retiring due to disability must either qualify for a
22 regular or in-line-of-duty disability benefit as provided in
23 s. 121.091(4) or qualify for a disability benefit under a
24 disability plan established under part II of chapter 121, as
25 appropriate.
26 (d) Payment of the retiree health insurance subsidy
27 shall be made only after coverage for health insurance for the
28 retiree or beneficiary has been certified in writing to the
29 Department of Management Services. Participation in a former
30 employer's group health insurance program is not a requirement
31 for eligibility under this section.
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1 (e) However, Participants in the Senior Management
2 Service Optional Annuity Program as provided in s. 121.055(6)
3 and the State University System Optional Retirement Program as
4 provided in s. 121.35 shall not receive the retiree health
5 insurance subsidy provided in this section. The employer of
6 such participant shall pay the contributions required in
7 subsection (8) to the annuity program provided in s.
8 121.055(6)(d) or s. 121.35(4)(a), as applicable.
9 (3) RETIREE HEALTH INSURANCE SUBSIDY AMOUNT.--
10 (a) Beginning January 1, 1988, each eligible retiree
11 or a beneficiary who is a spouse or financial dependent
12 thereof shall receive a monthly retiree health insurance
13 subsidy payment equal to the number of years of creditable
14 service, as defined in s. 121.021(17), completed at the time
15 of retirement multiplied by $1; however, no retiree may
16 receive a subsidy payment of more than $30 or less than $10.
17 (b) Beginning January 1, 1989, each eligible retiree
18 or a beneficiary who is a spouse or financial dependent shall
19 receive a monthly retiree health insurance subsidy payment
20 equal to the number of years of creditable service, as defined
21 in s. 121.021(17), completed at the time of retirement
22 multiplied by $2; however, no retiree may receive a subsidy
23 payment of more than $60 or less than $20.
24 (c) Beginning January 1, 1991, each eligible retiree
25 or a beneficiary who is a spouse or financial dependent shall
26 receive a monthly retiree health insurance subsidy payment
27 equal to the number of years of creditable service, as defined
28 in s. 121.021(17), completed at the time of retirement
29 multiplied by $3; however, no retiree may receive a subsidy
30 payment of more than $90 or less than $30.
31
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1 (d) Beginning January 1, 1999, each eligible retiree
2 or, if the retiree is deceased, his or her beneficiary who is
3 receiving a monthly benefit from such retiree's account and
4 who is a spouse, or a person who meets the definition of joint
5 annuitant in s. 121.021(28), shall receive a monthly retiree
6 health insurance subsidy payment equal to the number of years
7 of creditable service, as defined in s. 121.021(17), completed
8 at the time of retirement multiplied by $5; however, no
9 eligible retiree or such beneficiary may receive a subsidy
10 payment of more than $150 or less than $50. If there are
11 multiple beneficiaries, the total payment must not be greater
12 than the payment to which the retiree was entitled.
13 (e)1. Beginning July 1, 2001, each eligible retiree of
14 the defined benefit program of the Florida Retirement System,
15 or, if the retiree is deceased, his or her beneficiary who is
16 receiving a monthly benefit from such retiree's account and
17 who is a spouse, or a person who meets the definition of joint
18 annuitant in s. 121.021(28), shall receive a monthly retiree
19 health insurance subsidy payment equal to the number of years
20 of creditable service, as defined in s. 121.021(17), completed
21 at the time of retirement multiplied by $5; however, no
22 eligible retiree or beneficiary may receive a subsidy payment
23 of more than $150 or less than $40. If there are multiple
24 beneficiaries, the total payment must not be greater than the
25 payment to which the retiree was entitled. Notwithstanding
26 the provisions of this paragraph, the health insurance subsidy
27 amount payable to any person receiving the retiree health
28 insurance subsidy payment on July 1, 2001, shall not be
29 reduced.
30 2. Beginning July 1, 2002, each eligible participant
31 of the Public Employee Optional Retirement Program of the
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HB 2393, First Engrossed
1 Florida Retirement System who has met the requirements of this
2 section, or, if the participant is deceased, his or her spouse
3 who is the participant's designated beneficiary, shall receive
4 a monthly retiree health insurance subsidy payment equal to
5 the number of years of creditable service, as provided in this
6 subparagraph, completed at the time of retirement, multiplied
7 by $5; however, no eligible retiree or beneficiary may receive
8 a subsidy payment of more than $150 or less than $40. For
9 purposes of determining a participant's creditable service
10 used to calculate the health insurance subsidy, a
11 participant's years of service credit or fraction thereof
12 shall be based on the participant's work year as defined in s.
13 121.021(54). Credit shall be awarded for a full work year
14 whenever health insurance subsidy contributions have been made
15 as required by law for each month in the participant's work
16 year. In addition, all years of creditable service retained
17 under the Florida Retirement System defined benefit program
18 shall be included as creditable service for purposes of this
19 section.
20 Section 19. Paragraph (b) of subsection (1) and
21 paragraph (e) of subsection (6) of section 121.055, Florida
22 Statutes, are amended to read:
23 121.055 Senior Management Service Class.--There is
24 hereby established a separate class of membership within the
25 Florida Retirement System to be known as the "Senior
26 Management Service Class," which shall become effective
27 February 1, 1987.
28 (1)
29 (b)1. Except as provided in subparagraph 2., effective
30 January 1, 1990, participation in the Senior Management
31 Service Class shall be compulsory for the president of each
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1 community college, the manager of each participating city or
2 county, and all appointed district school superintendents.
3 Effective January 1, 1994, additional positions may be
4 designated for inclusion in the Senior Management Service
5 Class of the Florida Retirement System, provided that:
6 a. Positions to be included in the class shall be
7 designated by the local agency employer. Notice of intent to
8 designate positions for inclusion in the class shall be
9 published once a week for 2 consecutive weeks in a newspaper
10 of general circulation published in the county or counties
11 affected, as provided in chapter 50.
12 b. Up to 10 One nonelective full-time positions
13 position may be designated for each local agency employer
14 reporting to the Department of Management Services; for local
15 agencies with 100 or more regularly established positions,
16 additional nonelective full-time positions may be designated,
17 not to exceed 1 percent of the regularly established positions
18 within the agency.
19 c. Each position added to the class must be a
20 managerial or policymaking position filled by an employee who
21 is not subject to continuing contract and serves at the
22 pleasure of the local agency employer without civil service
23 protection, and who:
24 (I) Heads an organizational unit; or
25 (II) Has responsibility to effect or recommend
26 personnel, budget, expenditure, or policy decisions in his or
27 her areas of responsibility.
28 2. In lieu of participation in the Senior Management
29 Service Class, members of the Senior Management Service Class
30 pursuant to the provisions of subparagraph 1. may withdraw
31 from the Florida Retirement System altogether. The decision to
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1 withdraw from the Florida Retirement System shall be
2 irrevocable for as long as the employee holds such a position.
3 Any service creditable under the Senior Management Service
4 Class shall be retained after the member withdraws from the
5 Florida Retirement System; however, additional service credit
6 in the Senior Management Service Class shall not be earned
7 after such withdrawal. Such members shall not be eligible to
8 participate in the Senior Management Service Optional Annuity
9 Program.
10 (6)
11 (e) Benefits.--
12 1. Benefits shall be payable under the Senior
13 Management Service Optional Annuity Program only to
14 participants in the program, or their beneficiaries as
15 designated by the participant in the contract with a provider
16 company, and such benefits shall be paid by the designated
17 company in accordance with the terms of the annuity contract
18 or contracts applicable to the participant. A participant must
19 be terminated from all employment with all Florida Retirement
20 System employers as provided in s. 121.021(39) to begin
21 receiving the employer-funded benefit. Benefits funded by
22 employer contributions shall be payable only as a lifetime
23 annuity to the participant, his or her beneficiary, or his or
24 her estate, except for:
25 a. A lump-sum payment to the beneficiary upon the
26 death of the participant; or
27 b. A cash-out of a de minimis account upon the request
28 of a former participant who has been terminated for a minimum
29 of 6 months from the employment that entitled him or her to
30 optional annuity program participation. A de minimis account
31 is an account with a provider company containing employer
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1 contributions and accumulated earnings of not more than $5,000
2 made under the provisions of this chapter. Such cash-out must
3 be a complete liquidation of the account balance with that
4 company and is subject to the provisions of the Internal
5 Revenue Code; or
6 c. A lump-sum direct rollover distribution whereby all
7 accrued benefits, plus interest and investment earnings, are
8 paid from the participant's account directly to the custodian
9 of an eligible retirement plan, as defined in s. 402(c)(8)(B)
10 of the Internal Revenue Code, on behalf of the participant.
11 2. The benefits payable to any person under the Senior
12 Management Service Optional Annuity Program, and any
13 contribution accumulated under such program, shall not be
14 subject to assignment, execution, or attachment or to any
15 legal process whatsoever.
16 3. A participant who receives optional annuity program
17 benefits funded by employer contributions shall be deemed to
18 be retired from a state-administered retirement system in the
19 event of subsequent employment with any employer that
20 participates in the Florida Retirement System.
21 Section 20. Effective July 1, 2001, in order to fund
22 the normal cost for changes in the vesting requirements under
23 the Florida Retirement System, as provided in this act:
24 (1) The contribution rate that applies to the Regular
25 Class of the Florida Retirement System shall be increased by
26 0.20 percentage point.
27 (2) The contribution rate that applies to the Special
28 Risk Class of the Florida Retirement System shall be increased
29 by 0.33 percentage point.
30
31
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1 (3) The contribution rate that applies to the Special
2 Risk Administrative Support Class of the Florida Retirement
3 System shall be increased by 0.18 percentage point.
4 (4) The contribution rate that applies to the Judicial
5 sub-class of the Elected Officers' Class of the Florida
6 Retirement System shall be increased by 0.15 percentage point.
7 (5) The contribution rate that applies to the
8 legislative-attorney-Cabinet sub-class of the Elected
9 Officers' Class of the Florida Retirement System shall be
10 increased by 0.04 percentage point.
11 (6) The contribution rate that applies to the County
12 Officers' sub-class of the Elected Officers' Class of the
13 Florida Retirement System shall be increased by 0.05
14 percentage point.
15 (7) The contribution rate that applies to the Senior
16 Management Service Class of the Florida Retirement System
17 shall be increased by 0.03 percentage point.
18
19 These increases shall be in addition to all other changes to
20 such contribution rates which may be enacted into law to take
21 effect on that date. The Division of Statutory Revision is
22 directed to adjust the contribution rates set forth in ss.
23 121.052, 121.055, and 121.071, Florida Statutes.
24 Section 21. (1) Effective July 1, 2001, in order to
25 fund the normal cost increases attributable to the 1999
26 actuarial experience study:
27 (a) The contribution rate that applies to the Regular
28 Class of the Florida Retirement System shall be increased by
29 0.28 percentage point.
30
31
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1 (b) The contribution rate that applies to the Special
2 Risk Class of the Florida Retirement System shall be increased
3 by 1.13 percentage points.
4 (c) The contribution rate that applies to the Special
5 Risk Administrative Support Class of the Florida Retirement
6 System shall be increased by 0.65 percentage point.
7 (d) The contribution rate that applies to the Judicial
8 sub-class of the Elected Officers' Class of the Florida
9 Retirement System shall be increased by 0.00 percentage
10 points.
11 (e) The contribution rate that applies to the
12 legislative-attorney-Cabinet sub-class of the Elected
13 Officers' Class of the Florida Retirement System shall be
14 increased by 0.00 percentage points.
15 (f) The contribution rate that applies to the County
16 Officers' sub-class of the Elected Officers' Class of the
17 Florida Retirement System shall be increased by 0.11
18 percentage point.
19 (g) The contribution rate that applies to the Senior
20 Management Service Class of the Florida Retirement System
21 shall be increased by 0.36 percentage point.
22
23 These increases shall be in addition to all other changes to
24 such contribution rates which may be enacted into law to take
25 effect on that date. The Division of Statutory Revision is
26 directed to adjust the contribution rates set forth in ss.
27 121.052, 121.055, and 121.071, Florida Statutes.
28 (2) It is the intent of the Legislature that the
29 increased costs attributable to the 1999 actuarial experience
30 study for the 2000-2001 fiscal year shall be funded by a
31
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1 one-time recognition of a lump sum from the excess actuarial
2 assets of the Florida Retirement System Trust Fund.
3 Section 22. Effective July 1, 2002, in order to fund
4 the changes in normal cost for the defined benefit retirement
5 program resulting from the implementation of the Public
6 Employee Optional Retirement Program, as created by this act:
7 (1) The contribution rate that applies to the Regular
8 Class of the Florida Retirement System shall be increased by
9 0.21 percentage point.
10 (2) The contribution rate that applies to the Special
11 Risk Class of the Florida Retirement System shall be increased
12 by 0.01 percentage point.
13 (3) The contribution rate that applies to the Special
14 Risk Administrative Support Class of the Florida Retirement
15 System shall be decreased by 0.02 percentage point.
16 (4) The contribution rate that applies to the Judicial
17 sub-class of the Elected Officers' Class of the Florida
18 Retirement System shall be increased by 0.00 percentage
19 points.
20 (5) The contribution rate that applies to the
21 legislative-attorney-Cabinet sub-class of the Elected
22 Officers' Class of the Florida Retirement System shall be
23 increased by 0.07 percentage point.
24 (6) The contribution rate that applies to the County
25 Officers' sub-class of the Elected Officers' Class of the
26 Florida Retirement System shall be increased by 0.00
27 percentage points.
28 (7) The contribution rate that applies to the Senior
29 Management Service Class of the Florida Retirement System
30 shall be increased by 0.00 percentage points.
31
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1 These increases shall be in addition to all other changes to
2 such contribution rates which may be enacted into law to take
3 effect on that date. The Division of Statutory Revision is
4 directed to adjust the contribution rates set forth in ss.
5 121.052, 121.055, and 121.071, Florida Statutes.
6 Section 23. (1) Effective July 1, 2000, for fiscal
7 years 2000-2001 and 2001-2002, the contribution rates for the
8 Regular Class, Special Risk Class, Special Risk Administrative
9 Support Class, each sub-class of the Elected Officers' Class,
10 and the Senior Management Service Class each shall be reduced
11 by 0.1 percentage point. These reductions shall be in addition
12 to all other changes to such contribution rates which may be
13 enacted into law to take effect on that date.
14 (2) It is the intent of the Legislature that the costs
15 attributable to the reduction of contribution rates pursuant
16 to subsection (1) shall be funded by a recognition of a lump
17 sum from the excess actuarial assets of the Florida Retirement
18 System Trust Fund for fiscal years 2000-2001 and 2001-2002.
19 Section 24. (1) In order to implement the provisions
20 of this act, the State Board of Administration, the Department
21 of Management Services and the employers participating in the
22 Florida Retirement System shall coordinate efforts to the
23 greatest extent practicable.
24 (2)(a) For fiscal years 2000-2001 and 2001-2002, each
25 employer participating in the Florida Retirement System
26 administered pursuant to chapter 121, Florida Statutes, shall
27 pay an additional contribution to the Division of Retirement
28 equal to 0.1 percent of each member's gross compensation for
29 deposit in the division's Operating Trust Fund. The
30 contributions shall be made for each pay period and are in
31 addition to all contributions required for the Florida
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1 Retirement System, social security, and the Retiree Health
2 Insurance Subsidy Trust Fund.
3 (b) Such contributions shall be transferred
4 immediately from the division's Operating Trust Fund to the
5 State Board of Administration's Administrative Expense Trust
6 Fund to offset the costs of implementing the Public Employee
7 Optional Retirement Program as created by this act. Such
8 funds are appropriated to the State Board of Administration to
9 offset reasonable expenses incurred by the board and the
10 Public Employee Optional Retirement Program Advisory
11 Committee. The board may transfer such funds as are necessary
12 to the Division of Retirement in order to carry out the
13 provisions of this act.
14 (3) There are hereby authorized 20 FTEs in the State
15 Board of Administration for the trustees to establish a
16 separate staff to implement the Public Employee Optional
17 Retirement Program.
18 Section 25. Paragraph (a) of subsection (3) of section
19 121.031, F.S., is amended to read:
20 121.031 Administration of system; appropriation;
21 oaths; actuarial studies; public records.--
22 (3) The administrator shall cause an actuarial study
23 of the system to be made at least annually once every 2 years
24 and shall report the results of such study to the Legislature
25 by December 31 February 1 prior to the next legislative
26 session.
27 (a) The study shall, at a minimum, conform to the
28 requirements of s. 112.63, with the following exceptions and
29 additions:
30 1. The valuation of plan assets shall be based on a
31 5-year averaging methodology such as that specified in the
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HB 2393, First Engrossed
1 United States Department of Treasury Regulations, 26 C.F.R. s.
2 1.412(c)(2)-1, or a similar accepted approach designed to
3 attenuate fluctuations in asset values.
4 2. The study shall include a narrative explaining the
5 changes in the covered group over the period between actuarial
6 valuations and the impact of those changes on actuarial
7 results.
8 3. When substantial changes in actuarial assumptions
9 have been made, the study shall reflect the results of an
10 actuarial assumption as of the current date based on the
11 assumptions utilized in the prior actuarial report.
12 4. The study shall include an analysis of the changes
13 in actuarial valuation results by the factors generating those
14 changes. Such analysis shall reconcile the current actuarial
15 valuation results with those results from the prior valuation.
16 5. The study shall include measures of funding status
17 and funding progress designed to facilitate the assessment of
18 trends over several actuarial valuations with respect to the
19 overall solvency of the system. Such measures shall be adopted
20 by the division and shall be used consistently in all
21 actuarial valuations performed on the system.
22 6. The actuarial model used to determine the adequate
23 level of funding for the Florida Retirement System shall
24 include a specific rate stabilization mechanism, as prescribed
25 herein. It is the intent of the Legislature to maintain as a
26 reserve a specific portion of any actuarial surplus, and to
27 use such reserve for the purpose of offsetting future unfunded
28 liabilities caused by experience losses, thereby minimizing
29 the risk of future increases in contribution rates. It is
30 further the intent of the Legislature that the use of any
31 excess above the reserve to offset retirement system normal
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HB 2393, First Engrossed
1 cost will be in a manner that will allow system employers to
2 plan appropriately for resulting cost reductions and
3 subsequent cost increases. The rate stabilization mechanism
4 shall operate as follows:
5 a. The actuarial surplus shall be the value of
6 actuarial assets over actuarial liabilities, as is determined
7 on the preceding June 30 or as may be estimated on the
8 preceding December 31.
9 b. The full amount of any experience loss shall be
10 offset, to the extent possible, by any actuarial surplus.
11 c. If the actuarial surplus exceeds 5 percent of
12 actuarial liabilities, one-half of the excess may be used to
13 offset total retirement system costs. In addition, if the
14 actuarial surplus exceeds 10 percent of actuarial liabilities,
15 an additional one-fourth of the excess above 10 percent may be
16 used to offset total retirement system costs. In addition, if
17 the actuarial surplus exceeds 15 percent of actuarial
18 liabilities, an additional one-fourth of the excess above 15
19 percent may be used to offset total retirement system costs.
20 d. Any surplus amounts available to offset total
21 retirement system costs pursuant to sub-subparagraph c. should
22 be amortized each year over a 10 year rolling period on a
23 level dollar basis.
24 Section 26. The Legislature finds that a proper and
25 legitimate state purpose is served when employees and retirees
26 of the state and of its political subdivisions, and the
27 dependents, survivors, and beneficiaries of such employees and
28 retirees, are extended the basic protections afforded by
29 governmental retirement systems that provide fair and adequate
30 benefits that are managed, administered, and funded in an
31 actuarially sound manner, as required by s. 14, Art. X of the
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1 State Constitution and part VII of chapter 112, Florida
2 Statutes. Therefore, the Legislature determines and declares
3 that this act fulfills an important state interest.
4 Section 27. Except as otherwise provided herein, this
5 act shall take effect July 1, 2000, and the Public Employee
6 Optional Retirement Program created by this act shall be
7 contingent upon:
8 1. The State Board of Administration receiving a
9 favorable determination letter and a favorable private letter
10 ruling from the Internal Revenue Service by May 1, 2002. If
11 the Internal Revenue Service refuses to act upon a request for
12 a private letter ruling, then a favorable legal opinion from a
13 qualified tax attorney or firm may be substituted for such
14 private-letter ruling.
15 2. The State Board of Administration having selected
16 and contracted with the third-party administrator.
17 3. The third-party administrator having successfully
18 established data links with the employers participating in the
19 Florida Retirement System.
20 4. The education component of the Public Employee
21 Optional Retirement Program having been available for at least
22 90 days.
23 5. A diversified portfolio of financial instruments
24 having become available to participants of the Public Employee
25 Optional Retirement Program.
26
27
28
29
30
31
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