Senate Bill sb1446c1

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    Florida Senate - 2005                           CS for SB 1446

    By the Committee on Governmental Oversight and Productivity;
    and Senator Argenziano




    585-1745-05

  1                      A bill to be entitled

  2         An act relating to state financial matters;

  3         amending s. 121.021, F.S.; clarifying that the

  4         State Board of Administration may require that

  5         a member of the Florida Retirement System

  6         provide evidence of termination; amending s.

  7         121.091, F.S.; providing that a member of the

  8         Public Employee Optional Retirement Program may

  9         not return to employment with an employer under

10         the Florida Retirement System until after being

11         terminated for 3 calendar months; providing an

12         exception for those members who have reached

13         the normal retirement requirements of the

14         defined benefit plan; amending s. 121.4501,

15         F.S.; redefining the terms "eligible employee"

16         and "participant" for purposes of the Public

17         Employee Optional Retirement Program;

18         prescribing certain conditions on participation

19         in the program; deleting references to the

20         program's advisory committees; prescribing

21         procedures for, and certain presumptions

22         relating to, designation of beneficiaries;

23         providing for participation by terminated DROP

24         participants; amending s. 121.591, F.S.;

25         providing for cancellation of certain payment

26         instruments under the program when not

27         presented for payment; providing for payment

28         upon subsequent application and for forfeiture

29         when not claimed within a certain period;

30         providing that members of the Public Employee

31         Optional Retirement Program may not receive a

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 1         distribution from their account until after

 2         being terminated for 3 calendar months;

 3         providing an exception; providing for

 4         designation of beneficiaries for death

 5         benefits; amending s. 215.47, F.S.; authorizing

 6         investments in asset-backed securities;

 7         providing an effective date.

 8  

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

10  

11         Section 1.  Subsection (39) of section 121.021, Florida

12  Statutes, is amended to read:

13         121.021  Definitions.--The following words and phrases

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

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

16         (39)(a)  "Termination" occurs, except as provided in

17  paragraph (b), when a member ceases all employment

18  relationships with employers under this system, as defined in

19  subsection (10), but in the event a member should be employed

20  by any such employer within the next calendar month,

21  termination shall be deemed not to have occurred. A leave of

22  absence shall constitute a continuation of the employment

23  relationship, except that a leave of absence without pay due

24  to disability may constitute termination for a member, if such

25  member makes application for and is approved for disability

26  retirement in accordance with s. 121.091(4). The department or

27  board may require other evidence of termination as it deems

28  necessary.

29         (b)  "Termination" for a member electing to participate

30  under the Deferred Retirement Option Program occurs when the

31  Deferred Retirement Option Program participant ceases all

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 1  employment relationships with employers under this system in

 2  accordance with s. 121.091(13), but in the event the Deferred

 3  Retirement Option Program participant should be employed by

 4  any such employer within the next calendar month, termination

 5  will be deemed not to have occurred, except as provided in s.

 6  121.091(13)(b)4.c. A leave of absence shall constitute a

 7  continuation of the employment relationship.

 8         Section 2.  Subsection (9) of section 121.091, Florida

 9  Statutes, is amended to read:

10         121.091  Benefits payable under the system.--Benefits

11  may not be paid under this section unless the member has

12  terminated employment as provided in s. 121.021(39)(a) or

13  begun participation in the Deferred Retirement Option Program

14  as provided in subsection (13), and a proper application has

15  been filed in the manner prescribed by the department. The

16  department may cancel an application for retirement benefits

17  when the member or beneficiary fails to timely provide the

18  information and documents required by this chapter and the

19  department's rules. The department shall adopt rules

20  establishing procedures for application for retirement

21  benefits and for the cancellation of such application when the

22  required information or documents are not received.

23         (9)  EMPLOYMENT AFTER RETIREMENT; LIMITATION.--

24         (a)  Any person who is retired under this chapter,

25  except under the disability retirement provisions of

26  subsection (4), may be employed by an employer that does not

27  participate in a state-administered retirement system and may

28  receive compensation from that employment without limiting or

29  restricting in any way the retirement benefits payable to that

30  person.

31  

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 1         (b)1.  Any person who is retired under this chapter,

 2  except under the disability retirement provisions of

 3  subsection (4), may be reemployed by any private or public

 4  employer after retirement and receive retirement benefits and

 5  compensation from his or her employer without any limitations,

 6  except that a person may not receive both a salary from

 7  reemployment with any agency participating in the Florida

 8  Retirement System and retirement benefits under this chapter

 9  for a period of 12 months immediately subsequent to the date

10  of retirement. However, a DROP participant shall continue

11  employment and receive a salary during the period of

12  participation in the Deferred Retirement Option Program, as

13  provided in subsection (13).

14         2.  Any person to whom the limitation in subparagraph

15  1. applies who violates such reemployment limitation and who

16  is reemployed with any agency participating in the Florida

17  Retirement System before completion of the 12-month limitation

18  period shall give timely notice of this fact in writing to the

19  employer and to the division and shall have his or her

20  retirement benefits suspended for the balance of the 12-month

21  limitation period.  Any person employed in violation of this

22  paragraph and any employing agency which knowingly employs or

23  appoints such person without notifying the Division of

24  Retirement to suspend retirement benefits shall be jointly and

25  severally liable for reimbursement to the retirement trust

26  fund of any benefits paid during the reemployment limitation

27  period.  To avoid liability, such employing agency shall have

28  a written statement from the retiree that he or she is not

29  retired from a state-administered retirement system.  Any

30  retirement benefits received while reemployed during this

31  reemployment limitation period shall be repaid to the

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 1  retirement trust fund, and retirement benefits shall remain

 2  suspended until such repayment has been made.  Benefits

 3  suspended beyond the reemployment limitation shall apply

 4  toward repayment of benefits received in violation of the

 5  reemployment limitation.

 6         3.  A district school board may reemploy a retired

 7  member as a substitute or hourly teacher, education

 8  paraprofessional, transportation assistant, bus driver, or

 9  food service worker on a noncontractual basis after he or she

10  has been retired for 1 calendar month, in accordance with s.

11  121.021(39). A district school board may reemploy a retired

12  member as instructional personnel, as defined in s.

13  1012.01(2)(a), on an annual contractual basis after he or she

14  has been retired for 1 calendar month, in accordance with s.

15  121.021(39). Any other retired member who is reemployed within

16  1 calendar month after retirement shall void his or her

17  application for retirement benefits. District school boards

18  reemploying such teachers, education paraprofessionals,

19  transportation assistants, bus drivers, or food service

20  workers are subject to the retirement contribution required by

21  subparagraph 7.

22         4.  A community college board of trustees may reemploy

23  a retired member as an adjunct instructor, that is, an

24  instructor who is noncontractual and part-time, or as a

25  participant in a phased retirement program within the Florida

26  Community College System, after he or she has been retired for

27  1 calendar month, in accordance with s. 121.021(39).  Any

28  retired member who is reemployed within 1 calendar month after

29  retirement shall void his or her application for retirement

30  benefits.  Boards of trustees reemploying such instructors are

31  subject to the retirement contribution required in

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 1  subparagraph 7.  A retired member may be reemployed as an

 2  adjunct instructor for no more than 780 hours during the first

 3  12 months of retirement.  Any retired member reemployed for

 4  more than 780 hours during the first 12 months of retirement

 5  shall give timely notice in writing to the employer and to the

 6  division of the date he or she will exceed the limitation.

 7  The division shall suspend his or her retirement benefits for

 8  the remainder of the first 12 months of retirement.  Any

 9  person employed in violation of this subparagraph and any

10  employing agency which knowingly employs or appoints such

11  person without notifying the Division of Retirement to suspend

12  retirement benefits shall be jointly and severally liable for

13  reimbursement to the retirement trust fund of any benefits

14  paid during the reemployment limitation period.  To avoid

15  liability, such employing agency shall have a written

16  statement from the retiree that he or she is not retired from

17  a state-administered retirement system. Any retirement

18  benefits received by a retired member while reemployed in

19  excess of 780 hours during the first 12 months of retirement

20  shall be repaid to the Retirement System Trust Fund, and

21  retirement benefits shall remain suspended until repayment is

22  made.  Benefits suspended beyond the end of the retired

23  member's first 12 months of retirement shall apply toward

24  repayment of benefits received in violation of the 780-hour

25  reemployment limitation.

26         5.  The State University System may reemploy a retired

27  member as an adjunct faculty member or as a participant in a

28  phased retirement program within the State University System

29  after the retired member has been retired for 1 calendar

30  month, in accordance with s. 121.021(39).  Any retired member

31  who is reemployed within 1 calendar month after retirement

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 1  shall void his or her application for retirement benefits.

 2  The State University System is subject to the retired

 3  contribution required in subparagraph 7., as appropriate. A

 4  retired member may be reemployed as an adjunct faculty member

 5  or a participant in a phased retirement program for no more

 6  than 780 hours during the first 12 months of his or her

 7  retirement.  Any retired member reemployed for more than 780

 8  hours during the first 12 months of retirement shall give

 9  timely notice in writing to the employer and to the division

10  of the date he or she will exceed the limitation.  The

11  division shall suspend his or her retirement benefits for the

12  remainder of the first 12 months of retirement. Any person

13  employed in violation of this subparagraph and any employing

14  agency which knowingly employs or appoints such person without

15  notifying the Division of Retirement to suspend retirement

16  benefits shall be jointly and severally liable for

17  reimbursement to the retirement trust fund of any benefits

18  paid during the reemployment limitation period.  To avoid

19  liability, such employing agency shall have a written

20  statement from the retiree that he or she is not retired from

21  a state-administered retirement system. Any retirement

22  benefits received by a retired member while reemployed in

23  excess of 780 hours during the first 12 months of retirement

24  shall be repaid to the Retirement System Trust Fund, and

25  retirement benefits shall remain suspended until repayment is

26  made.  Benefits suspended beyond the end of the retired

27  member's first 12 months of retirement shall apply toward

28  repayment of benefits received in violation of the 780-hour

29  reemployment limitation.

30         6.  The Board of Trustees of the Florida School for the

31  Deaf and the Blind may reemploy a retired member as a

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 1  substitute teacher, substitute residential instructor, or

 2  substitute nurse on a noncontractual basis after he or she has

 3  been retired for 1 calendar month, in accordance with s.

 4  121.021(39).  Any retired member who is reemployed within 1

 5  calendar month after retirement shall void his or her

 6  application for retirement benefits. The Board of Trustees of

 7  the Florida School for the Deaf and the Blind reemploying such

 8  teachers, residential instructors, or nurses is subject to the

 9  retirement contribution required by subparagraph 7.

10  Reemployment of a retired member as a substitute teacher,

11  substitute residential instructor, or substitute nurse is

12  limited to 780 hours during the first 12 months of his or her

13  retirement. Any retired member reemployed for more than 780

14  hours during the first 12 months of retirement shall give

15  timely notice in writing to the employer and to the division

16  of the date he or she will exceed the limitation. The division

17  shall suspend his or her retirement benefits for the remainder

18  of the first 12 months of retirement. Any person employed in

19  violation of this subparagraph and any employing agency which

20  knowingly employs or appoints such person without notifying

21  the Division of Retirement to suspend retirement benefits

22  shall be jointly and severally liable for reimbursement to the

23  retirement trust fund of any benefits paid during the

24  reemployment limitation period. To avoid liability, such

25  employing agency shall have a written statement from the

26  retiree that he or she is not retired from a

27  state-administered retirement system. Any retirement benefits

28  received by a retired member while reemployed in excess of 780

29  hours during the first 12 months of retirement shall be repaid

30  to the Retirement System Trust Fund, and his or her retirement

31  benefits shall remain suspended until payment is made.

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 1  Benefits suspended beyond the end of the retired member's

 2  first 12 months of retirement shall apply toward repayment of

 3  benefits received in violation of the 780-hour reemployment

 4  limitation.

 5         7.  The employment by an employer of any retiree or

 6  DROP participant of any state-administered retirement system

 7  shall have no effect on the average final compensation or

 8  years of creditable service of the retiree or DROP

 9  participant.  Prior to July 1, 1991, upon employment of any

10  person, other than an elected officer as provided in s.

11  121.053, who has been retired under any state-administered

12  retirement program, the employer shall pay retirement

13  contributions in an amount equal to the unfunded actuarial

14  liability portion of the employer contribution which would be

15  required for regular members of the Florida Retirement System.

16  Effective July 1, 1991, contributions shall be made as

17  provided in s. 121.122 for retirees with renewed membership or

18  subsection (13) with respect to DROP participants.

19         8.  Any person who has previously retired and who is

20  holding an elective public office or an appointment to an

21  elective public office eligible for the Elected Officers'

22  Class on or after July 1, 1990, shall be enrolled in the

23  Florida Retirement System as provided in s. 121.053(1)(b) or,

24  if holding an elective public office that does not qualify for

25  the Elected Officers' Class on or after July 1, 1991, shall be

26  enrolled in the Florida Retirement System as provided in s.

27  121.122, and shall continue to receive retirement benefits as

28  well as compensation for the elected officer's service for as

29  long as he or she remains in elective office. However, any

30  retired member who served in an elective office prior to July

31  1, 1990, suspended his or her retirement benefit, and had his

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 1  or her Florida Retirement System membership reinstated shall,

 2  upon retirement from such office, have his or her retirement

 3  benefit recalculated to include the additional service and

 4  compensation earned.

 5         9.  Any person who is holding an elective public office

 6  which is covered by the Florida Retirement System and who is

 7  concurrently employed in nonelected covered employment may

 8  elect to retire while continuing employment in the elective

 9  public office, provided that he or she shall be required to

10  terminate his or her nonelected covered employment.  Any

11  person who exercises this election shall receive his or her

12  retirement benefits in addition to the compensation of the

13  elective office without regard to the time limitations

14  otherwise provided in this subsection.  No person who seeks to

15  exercise the provisions of this subparagraph, as the same

16  existed prior to May 3, 1984, shall be deemed to be retired

17  under those provisions, unless such person is eligible to

18  retire under the provisions of this subparagraph, as amended

19  by chapter 84-11, Laws of Florida.

20         10.  The limitations of this paragraph apply to

21  reemployment in any capacity with an "employer" as defined in

22  s. 121.021(10), irrespective of the category of funds from

23  which the person is compensated.

24         11.  An employing agency may reemploy a retired member

25  as a firefighter or paramedic after the retired member has

26  been retired for 1 calendar month, in accordance with s.

27  121.021(39). Any retired member who is reemployed within 1

28  calendar month after retirement shall void his or her

29  application for retirement benefits. The employing agency

30  reemploying such firefighter or paramedic is subject to the

31  retired contribution required in subparagraph 8. Reemployment

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 1  of a retired firefighter or paramedic is limited to no more

 2  than 780 hours during the first 12 months of his or her

 3  retirement. Any retired member reemployed for more than 780

 4  hours during the first 12 months of retirement shall give

 5  timely notice in writing to the employer and to the division

 6  of the date he or she will exceed the limitation. The division

 7  shall suspend his or her retirement benefits for the remainder

 8  of the first 12 months of retirement. Any person employed in

 9  violation of this subparagraph and any employing agency which

10  knowingly employs or appoints such person without notifying

11  the Division of Retirement to suspend retirement benefits

12  shall be jointly and severally liable for reimbursement to the

13  Retirement System Trust Fund of any benefits paid during the

14  reemployment limitation period. To avoid liability, such

15  employing agency shall have a written statement from the

16  retiree that he or she is not retired from a

17  state-administered retirement system. Any retirement benefits

18  received by a retired member while reemployed in excess of 780

19  hours during the first 12 months of retirement shall be repaid

20  to the Retirement System Trust Fund, and retirement benefits

21  shall remain suspended until repayment is made. Benefits

22  suspended beyond the end of the retired member's first 12

23  months of retirement shall apply toward repayment of benefits

24  received in violation of the 780-hour reemployment limitation.

25         (c)  The provisions of this subsection apply to

26  retirees, as defined in s. 121.4501(2)(j), of the Public

27  Employee Optional Retirement Program created in part II,

28  subject to the following conditions:

29         1.  Such retirees may not be reemployed with an

30  employer participating in the Florida Retirement System as

31  provided in paragraph (b) until such person has been retired

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 1  for 3 calendar months, unless the participant has reached the

 2  normal retirement requirements of the defined benefit plan as

 3  provided in s. 121.021(29).

 4         2.  Such retiree employed in violation of this

 5  subsection and any employing agency that knowingly employs or

 6  appoints such person shall be jointly and severally liable for

 7  reimbursement of any benefits paid to the retirement trust

 8  fund from which the benefits were paid, including the

 9  Retirement System Trust Fund and the Public Employee Optional

10  Retirement Program Trust Fund, as appropriate. To avoid

11  liability, such employing agency must have a written statement

12  from the retiree that he or she is not retired from a

13  state-administered retirement system.

14         Section 3.  Paragraphs (f) and (h) of subsection (2),

15  paragraph (e) of subsection (4), paragraph (c) of subsection

16  (8), and subsection (12) of section 121.4501, Florida

17  Statutes, are amended, and subsections (20) and (21) are added

18  to that section, to read:

19         121.4501  Public Employee Optional Retirement

20  Program.--

21         (2)  DEFINITIONS.--As used in this part, the term:

22         (f)  "Eligible employee" means an officer or employee,

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

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

25  the Florida Retirement System, including any renewed member of

26  the Florida Retirement System;

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

28  the Senior Management Service Optional Annuity Program as

29  established under s. 121.055(6) or the State Community College

30  Optional Retirement Program as established under s.

31  121.051(2)(c); or

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

 2  participate in, the State University System Optional

 3  Retirement Program established under s. 121.35.

 4  

 5  The term does not include any member participating in the

 6  Deferred Retirement Option Program established under s.

 7  121.091(13) or any employee participating in an optional

 8  retirement program established under s. 121.051(2)(c) or s.

 9  121.35.

10         (h)  "Participant" means an eligible employee who

11  elects to participate in the Public Employee Optional

12  Retirement Program and enrolls in such optional program as

13  provided in subsection (4) or a terminated Deferred Retirement

14  Option Program participant as described in subsection (21).

15         (4)  PARTICIPATION; ENROLLMENT.--

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

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

18  Public Employee Optional Retirement Program, or the month

19  following the receipt of the eligible employee's plan election

20  selection effective date, if sooner, the employee shall have

21  one opportunity, at the employee's discretion, to choose to

22  move from the defined benefit program to the Public Employee

23  Optional Retirement Program or from the Public Employee

24  Optional Retirement Program to the defined benefit program.

25  Eligible employees may elect to move between Florida

26  Retirement System programs only if they are earning service

27  credit in an employer-employee relationship consistent with

28  the requirements under s. 121.021(17)(b), excluding leaves of

29  absence without pay. Effective July 1, 2005, such elections

30  shall be effective on the first day of the month following the

31  receipt of the election by the third-party administrator and

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 1  are not subject to the requirements regarding an

 2  employer-employee relationship or receipt of contributions for

 3  the eligible employee in the effective month, except that the

 4  employee must meet the conditions of the previous sentence

 5  when the election is received by the third-party

 6  administrator. This paragraph shall be contingent upon

 7  approval from the Internal Revenue Service for including the

 8  choice described herein within the programs offered by the

 9  Florida Retirement System.

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

11  Employee Optional Retirement Program, the applicable

12  provisions of this section shall govern the transfer.

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

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

15  Public Employee Optional Retirement Program account and from

16  other employee moneys as necessary, a sum representing the

17  present value of that employee's accumulated benefit

18  obligation immediately following the time of such movement,

19  determined assuming that attained service equals the sum of

20  service in the defined benefit program and service in the

21  Public Employee Optional Retirement Program. Benefit

22  commencement occurs on the first date the employee would

23  become eligible for unreduced benefits, using the discount

24  rate and other relevant actuarial assumptions that were used

25  to value the Florida Retirement System defined benefit plan

26  liabilities in the most recent actuarial valuation. For any

27  employee who, at the time of the second election, already

28  maintains an accrued benefit amount in the defined benefit

29  plan, the then-present value of such accrued benefit shall be

30  deemed part of the required transfer amount described in this

31  subparagraph. The division shall ensure that the transfer sum

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 1  is prepared using a formula and methodology certified by an

 2  enrolled actuary.

 3         3.  Notwithstanding subparagraph 2., an employee who

 4  chooses to move to the defined benefit program and who became

 5  eligible to participate in the Public Employee Optional

 6  Retirement Program by reason of employment in a regularly

 7  established position with a state employer after June 1, 2002;

 8  a district school board employer after September 1, 2002; or a

 9  local employer after December 1, 2002, must transfer from his

10  or her Public Employee Optional Retirement Program account

11  and, from other employee moneys as necessary, a sum

12  representing that employee's actuarial accrued liability.

13         4.  Employees' ability to transfer from the Florida

14  Retirement System defined benefit program to the Public

15  Employee Optional Retirement Program pursuant to paragraphs

16  (a) through (d), and the ability for current employees to have

17  an option to later transfer back into the defined benefit

18  program under subparagraph 2., shall be deemed a significant

19  system amendment. Pursuant to s. 121.031(4), any such

20  resulting unfunded liability arising from actual original

21  transfers from the defined benefit program to the optional

22  program shall be amortized within 30 plan years as a separate

23  unfunded actuarial base independent of the reserve

24  stabilization mechanism defined in s. 121.031(3)(f). For the

25  first 25 years, no direct amortization payment shall be

26  calculated for this base. During this 25-year period, such

27  separate base shall be used to offset the impact of employees

28  exercising their second program election under this paragraph.

29  It is the legislative intent that the actuarial funded status

30  of the Florida Retirement System defined benefit plan is

31  neither beneficially nor adversely impacted by such second

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 1  program elections in any significant manner, after due

 2  recognition of the separate unfunded actuarial base. Following

 3  this initial 25-year period, any remaining balance of the

 4  original separate base shall be amortized over the remaining 5

 5  years of the required 30-year amortization period.

 6         (8)  ADMINISTRATION OF PROGRAM.--

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

 8  administrator, the board shall establish criteria under which

 9  it shall consider the relative capabilities and qualifications

10  of each proposed administrator. In developing such criteria,

11  the board shall consider:

12         a.  The administrator's demonstrated experience in

13  providing administrative services to public or private sector

14  retirement systems.

15         b.  The administrator's demonstrated experience in

16  providing daily valued recordkeeping to defined contribution

17  plans.

18         c.  The administrator's ability and willingness to

19  coordinate its activities with the Florida Retirement System

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

21  employers, the board, and the division the information and

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

23  management reports, quarterly participant reports, and ad hoc

24  reports requested by the department or board.

25         d.  The cost-effectiveness and levels of the

26  administrative services provided.

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

28  participants, the employers, the board, the division, and the

29  providers; the means by which participants may access account

30  information, direct investment of contributions, make changes

31  to their accounts, transfer moneys between available

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 1  investment vehicles, and transfer moneys between investment

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

 3         f.  Any other factor deemed necessary by the Trustees

 4  of the State Board of Administration.

 5         g.  The recommendations of the Public Employee Optional

 6  Retirement Program Advisory Committee established in

 7  subsection (12).

 8         2.  In evaluating and selecting an educational

 9  provider, the board shall establish criteria under which it

10  shall consider the relative capabilities and qualifications of

11  each proposed educational provider. In developing such

12  criteria, the board shall consider:

13         a.  Demonstrated experience in providing educational

14  services to public or private sector retirement systems.

15         b.  Ability and willingness to coordinate its

16  activities with the Florida Retirement System employers, the

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

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

19  including, but not limited to, reports on educational

20  contacts.

21         c.  The cost-effectiveness and levels of the

22  educational services provided.

23         d.  Ability to provide educational services via

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

25  personal contact, seminars, brochures, and newsletters.

26         e.  Any other factor deemed necessary by the Trustees

27  of the State Board of Administration.

28         f.  The recommendations of the Public Employee Optional

29  Retirement Program Advisory Committee established in

30  subsection (12).

31  

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 1         3.  The establishment of the criteria shall be solely

 2  within the discretion of the board.

 3         (12)  ADVISORY COUNCIL COMMITTEES TO PROVIDE ADVICE AND

 4  ASSISTANCE.--The Investment Advisory Council shall assist the

 5  board in implementing and administering the Public Employee

 6  Optional Retirement Program. The Investment Advisory Council,

 7  created pursuant to s. 215.444, shall review the board's

 8  initial recommendations regarding the criteria to be used in

 9  selecting and evaluating approved providers and investment

10  products. The council may provide comments on the

11  recommendations to the board within 45 days after receiving

12  the initial recommendations. The board shall make the final

13  determination as to whether any investment provider or

14  product, any contractor, or any and all contract provisions

15  shall be approved for the program.

16         (20)  DESIGNATION OF BENEFICIARIES.--

17         (a)  Each participant may, on a form provided for that

18  purpose, signed and filed with the third-party administrator,

19  designate a choice of one or more persons, named sequentially

20  or jointly, as his or her beneficiary who shall receive the

21  benefits, if any, which may be payable pursuant to this

22  chapter in the event of the participant's death. If no

23  beneficiary is named in this manner, or if no beneficiary

24  designated by the participant survives the participant, the

25  beneficiary shall be the spouse of the deceased, if living. If

26  the participant's spouse is not alive at his or her death, the

27  beneficiary shall be the living children of the participant.

28  If no children survive, the beneficiary shall be the

29  participant's father or mother, if living; otherwise, the

30  beneficiary shall be the participant's estate. The beneficiary

31  most recently designated by a participant on a form or letter

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 1  filed with the third-party administrator shall be the

 2  beneficiary entitled to any benefits payable at the time of

 3  the participant's death. Notwithstanding any other provision

 4  in this subsection to the contrary, for a participant who dies

 5  prior to his or her effective date of retirement, the spouse

 6  at the time of death shall be the participant's beneficiary

 7  unless such participant designates a different beneficiary as

 8  provided in this subsection subsequent to the participant's

 9  most recent marriage.

10         (b)  If a participant designates a primary beneficiary

11  other than the participant's spouse, the participant's spouse

12  must sign the beneficiary designation form to acknowledge the

13  designation. This requirement does not apply to the

14  designation of one or more contingent beneficiaries to receive

15  benefits remaining upon the death of the primary beneficiary

16  or beneficiaries.

17         (c)  Notwithstanding the participant's designation of

18  benefits to be paid through a trust to a beneficiary that is a

19  natural person, and notwithstanding the provisions of the

20  trust, benefits shall be paid directly to the beneficiary if

21  such person is no longer a minor or incapacitated as defined

22  in s. 744.102(11) and (12).

23         (21)  PARTICIPATION BY TERMINATED DEFERRED RETIREMENT

24  OPTION PROGRAM PARTICIPANTS.--Notwithstanding any provision of

25  law to the contrary, participants in the Deferred Retirement

26  Option Program offered under part I may, after conclusion of

27  their participation in the program, elect to roll over or

28  authorize a direct trustee-to-trustee transfer to an account

29  under the Public Employee Optional Retirement Program of their

30  Deferred Retirement Option Program proceeds distributed as

31  provided under s. 121.091(13)(c)5. The transaction must

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 1  constitute an "eligible rollover distribution" within the

 2  meaning of s. 402(c)(4) of the Internal Revenue Code.

 3         (a)  The Public Employee Optional Retirement Program

 4  may accept such amounts for deposit into participant accounts

 5  as provided in paragraph (5)(c).

 6         (b)  The affected participant shall direct the

 7  investment of his or her investment account; however, unless

 8  he or she becomes a renewed member of the Florida Retirement

 9  System under s. 121.122 and elects to participate in the

10  Public Employee Optional Retirement Program, employer

11  contributions may not be made to the participant's account as

12  provided under paragraph (5)(a).

13         (c)  The state board or the department is not

14  responsible for locating those persons who may be eligible to

15  participate in the Public Employee Optional Retirement Program

16  under this subsection.

17         Section 4.  Section 121.591, Florida Statutes, is

18  amended to read:

19         121.591  Benefits payable under the Public Employee

20  Optional Retirement Program of the Florida Retirement

21  System.--Benefits may not be paid under this section unless

22  the member has terminated employment as provided in s.

23  121.021(39)(a) or is deceased and a proper application has

24  been filed in the manner prescribed by the state board or the

25  department. The state board or department, as appropriate, may

26  cancel an application for retirement benefits when the member

27  or beneficiary fails to timely provide the information and

28  documents required by this chapter and the rules of the state

29  board and department. In accordance with their respective

30  responsibilities as provided herein, the State Board of

31  Administration and the Department of Management Services shall

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 1  adopt rules establishing procedures for application for

 2  retirement benefits and for the cancellation of such

 3  application when the required information or documents are not

 4  received. The State Board of Administration and the Department

 5  of Management Services, as appropriate, are authorized to cash

 6  out a de minimis account of a participant who has been

 7  terminated from Florida Retirement System covered employment

 8  for a minimum of 6 calendar months. A de minimis account is an

 9  account containing employer contributions and accumulated

10  earnings of not more than $5,000 made under the provisions of

11  this chapter. Such cash-out must either be a complete lump-sum

12  liquidation of the account balance, subject to the provisions

13  of the Internal Revenue Code, or a lump-sum direct rollover

14  distribution paid directly to the custodian of an eligible

15  retirement plan, as defined by the Internal Revenue Code, on

16  behalf of the participant. If any financial instrument issued

17  for the payment of retirement benefits under this section is

18  not presented for payment within 180 days after the last day

19  of the month in which it was originally issued, the

20  third-party administrator or other duly authorized agent of

21  the State Board of Administration shall cancel the instrument

22  and credit the amount of the instrument to the suspense

23  account of the Public Employee Optional Retirement Program

24  Trust Fund authorized under s. 121.4501(6). Any such amounts

25  transferred to the suspense account are payable upon a proper

26  application, not to include earnings thereon, as provided in

27  this section, within 5 years after the last day of the month

28  in which the instrument was originally issued, after which

29  time such amounts and any earnings thereon shall be forfeited.

30  Any such forfeited amounts are assets of the Public Employee

31  

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 1  Optional Retirement Program Trust Fund and are not subject to

 2  the provisions of chapter 717.

 3         (1)  NORMAL BENEFITS.--Under the Public Employee

 4  Optional Retirement Program:

 5         (a)  Benefits in the form of vested accumulations as

 6  described in s. 121.4501(6) shall be payable under this

 7  subsection in accordance with the following terms and

 8  conditions:

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

10  only to a 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 receive benefits under this subsection, the

16  participant must be terminated from all employment with all

17  Florida Retirement System employers, as provided in s.

18  121.021(39).

19         4.  Benefit payments may not be made until the

20  participant has been terminated for 3 calendar months, except

21  that the board may authorize by rule for the distribution of

22  up to 10 percent of the participant's account after being

23  terminated for 1 calendar month if a participant has reached

24  the normal retirement requirements of the defined benefit

25  plan, as provided in s. 121.021(29).

26         (b)  If a participant elects to receive his or her

27  benefits upon termination of employment, the participant must

28  submit a written application or an equivalent form to the

29  third-party administrator indicating his or her preferred

30  distribution date and selecting an authorized method of

31  distribution as provided in paragraph (c). The participant may

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

 2  application, subject to federal requirements.

 3         (c)  Upon receipt by the third-party administrator of a

 4  properly executed application for distribution of benefits,

 5  the total accumulated benefit shall be payable to the

 6  participant, as:

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

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

 9  accrued benefits, plus interest and investment earnings, are

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

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

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

13         3.  Periodic distributions, as authorized by the state

14  board.

15         (2)  DISABILITY RETIREMENT BENEFITS.--Benefits provided

16  under this subsection are payable in lieu of the benefits

17  which would otherwise be payable under the provisions of

18  subsection (1). Such benefits shall be funded entirely from

19  employer contributions made under s. 121.571, transferred

20  participant funds accumulated pursuant to paragraph (a), and

21  interest and earnings thereon. Pursuant thereto:

22         (a)  Transfer of funds.--To qualify to receive monthly

23  disability benefits under this subsection:

24         1.  All moneys accumulated in the participant's Public

25  Employee Optional Retirement Program accounts, including

26  vested and nonvested accumulations as described in s.

27  121.4501(6), shall be transferred from such individual

28  accounts to the Division of Retirement for deposit in the

29  disability account of the Florida Retirement System Trust

30  Fund. Such moneys shall be separately accounted for. Earnings

31  shall be credited on an annual basis for amounts held in the

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 1  disability accounts of the Florida Retirement System Trust

 2  Fund based on actual earnings of the Florida Retirement System

 3  Trust Fund.

 4         2.  If the participant has retained retirement credit

 5  he or she had earned under the defined benefit program of the

 6  Florida Retirement System as provided in s. 121.4501(3)(b), a

 7  sum representing the actuarial present value of such credit

 8  within the Florida Retirement System Trust Fund shall be

 9  reassigned by the Division of Retirement from the defined

10  benefit program to the disability program as implemented under

11  this subsection and shall be deposited in the disability

12  account of the Florida Retirement System Trust Fund. Such

13  moneys shall be separately accounted for.

14         (b)  Disability retirement; entitlement.--

15         1.  A participant of the Public Employee Optional

16  Retirement Program who becomes totally and permanently

17  disabled, as defined in s. 121.091(4)(b), after completing 8

18  years of creditable service, or a participant who becomes

19  totally and permanently disabled in the line of duty

20  regardless of his or her length of service, shall be entitled

21  to a monthly disability benefit as provided herein.

22         2.  In order for service to apply toward the 8 years of

23  service required to vest for regular disability benefits, or

24  toward the creditable service used in calculating a

25  service-based benefit as provided for under paragraph (g), the

26  service must be creditable service as described below:

27         a.  The participant's period of service under the

28  Public Employee Optional Retirement Program will be considered

29  creditable service, except as provided in subparagraph d.

30         b.  If the participant has elected to retain credit for

31  his or her service under the defined benefit program of the

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 1  Florida Retirement System as provided under s. 121.4501(3)(b),

 2  all such service will be considered creditable service.

 3         c.  If the participant has elected to transfer to his

 4  or her participant accounts a sum representing the present

 5  value of his or her retirement credit under the defined

 6  benefit program as provided under s. 121.4501(3)(c), the

 7  period of service under the defined benefit program

 8  represented in the present value amounts transferred will be

 9  considered creditable service for purposes of vesting for

10  disability benefits, except as provided in subparagraph d.

11         d.  Whenever a participant has terminated employment

12  and has taken distribution of his or her funds as provided in

13  subsection (1), all creditable service represented by such

14  distributed funds is forfeited for purposes of this

15  subsection.

16         (c)  Disability retirement effective date.--The

17  effective retirement date for a participant who applies and is

18  approved for disability retirement shall be established as

19  provided under s. 121.091(4)(a)2. and 3.

20         (d)  Total and permanent disability.--A participant

21  shall be considered totally and permanently disabled if, in

22  the opinion of the division, he or she is prevented, by reason

23  of a medically determinable physical or mental impairment,

24  from rendering useful and efficient service as an officer or

25  employee.

26         (e)  Proof of disability.--The division, before

27  approving payment of any disability retirement benefit, shall

28  require proof that the participant is totally and permanently

29  disabled in the same manner as provided for members of the

30  defined benefit program of the Florida Retirement System under

31  s. 121.091(4)(c).

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 1         (f)  Disability retirement benefit.--Upon the

 2  disability retirement of a participant under this subsection,

 3  the participant shall receive a monthly benefit that shall

 4  begin to accrue on the first day of the month of disability

 5  retirement, as approved by the division, and shall be payable

 6  on the last day of that month and each month thereafter during

 7  his or her lifetime and continued disability. All disability

 8  benefits payable to such member shall be paid out of the

 9  disability account of the Florida Retirement System Trust Fund

10  established under this subsection.

11         (g)  Computation of disability retirement benefit.--The

12  amount of each monthly payment shall be calculated in the same

13  manner as provided for members of the defined benefit program

14  of the Florida Retirement System under s. 121.091(4)(f). For

15  such purpose, creditable service under both the defined

16  benefit program and the Public Employee Optional Retirement

17  Program of the Florida Retirement System shall be applicable

18  as provided under paragraph (b).

19         (h)  Reapplication.--A participant whose initial

20  application for disability retirement has been denied may

21  reapply for disability benefits in the same manner, and under

22  the same conditions, as provided for members of the defined

23  benefit program of the Florida Retirement System under s.

24  121.091(4)(g).

25         (i)  Membership.--Upon approval of an application for

26  disability benefits under this subsection, the applicant shall

27  be transferred to the defined benefit program of the Florida

28  Retirement System, effective upon his or her disability

29  retirement effective date.

30         (j)  Option to cancel.--Any participant whose

31  application for disability benefits is approved may cancel his

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 1  or her application for disability benefits, provided that the

 2  cancellation request is received by the division before a

 3  disability retirement warrant has been deposited, cashed, or

 4  received by direct deposit. Upon such cancellation:

 5         1.  The participant's transfer to the defined benefit

 6  program under paragraph (i) shall be nullified;

 7         2.  The participant shall be retroactively reinstated

 8  in the Public Employee Optional Retirement Program without

 9  hiatus;

10         3.  All funds transferred to the Florida Retirement

11  System Trust Fund under paragraph (a) shall be returned to the

12  participant accounts from which such funds were drawn; and

13         4.  The participant may elect to receive the benefit

14  payable under the provisions of subsection (1) in lieu of

15  disability benefits as provided under this subsection.

16         (k)  Recovery from disability.--

17         1.  The division may require periodic reexaminations at

18  the expense of the disability program account of the Florida

19  Retirement System Trust Fund. Except as otherwise provided in

20  subparagraph 2., the requirements, procedures, and

21  restrictions relating to the conduct and review of such

22  reexaminations, discontinuation or termination of benefits,

23  reentry into employment, disability retirement after reentry

24  into covered employment, and all other matters relating to

25  recovery from disability shall be the same as are set forth

26  under s. 121.091(4)(h).

27         2.  Upon recovery from disability, any recipient of

28  disability retirement benefits under this subsection shall be

29  a compulsory member of the Public Employee Optional Retirement

30  Program of the Florida Retirement System. The net difference

31  between the recipient's original account balance transferred

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 1  to the Florida Retirement System Trust Fund, including

 2  earnings, under paragraph (a) and total disability benefits

 3  paid to such recipient, if any, shall be determined as

 4  provided in sub-subparagraph a.

 5         a.  An amount equal to the total benefits paid shall be

 6  subtracted from that portion of the transferred account

 7  balance consisting of vested accumulations as described under

 8  s. 121.4501(6), if any, and an amount equal to the remainder

 9  of benefit amounts paid, if any, shall then be subtracted from

10  any remaining portion consisting of nonvested accumulations as

11  described under s. 121.4501(6).

12         b.  Amounts subtracted under sub-subparagraph a. shall

13  be retained within the disability account of the Florida

14  Retirement System Trust Fund. Any remaining account balance

15  shall be transferred to the third-party administrator for

16  disposition as provided under sub-subparagraph c. or

17  sub-subparagraph d., as appropriate.

18         c.  If the recipient returns to covered employment,

19  transferred amounts shall be deposited in individual accounts

20  under the Public Employee Optional Retirement Program, as

21  directed by the participant. Vested and nonvested amounts

22  shall be separately accounted for as provided in s.

23  121.4501(6).

24         d.  If the recipient fails to return to covered

25  employment upon recovery from disability:

26         (I)  Any remaining vested amount shall be deposited in

27  individual accounts under the Public Employee Optional

28  Retirement Program, as directed by the participant, and shall

29  be payable as provided in subsection (1).

30  

31  

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 1         (II)  Any remaining nonvested amount shall be held in a

 2  suspense account and shall be forfeitable after 5 years as

 3  provided in s. 121.4501(6).

 4         3.  If present value was reassigned from the defined

 5  benefit program to the disability program of the Florida

 6  Retirement System as provided under subparagraph (a)2., the

 7  full present value amount shall be returned to the defined

 8  benefit account within the Florida Retirement System Trust

 9  Fund and the affected individual's associated retirement

10  credit under the defined benefit program shall be reinstated

11  in full. Any benefit based upon such credit shall be

12  calculated as provided in s. 121.091(4)(h)1.

13         (l)  Nonadmissible causes of disability.--A participant

14  shall not be entitled to receive a disability retirement

15  benefit if the disability results from any injury or disease

16  sustained or inflicted as described in s. 121.091(4)(i).

17         (m)  Disability retirement of justice or judge by order

18  of Supreme Court.--

19         1.  If a participant is a justice of the Supreme Court,

20  judge of a district court of appeal, circuit judge, or judge

21  of a county court who has served for 6 years or more as an

22  elected constitutional judicial officer, including service as

23  a judicial officer in any court abolished pursuant to Art. V

24  of the State Constitution, and who is retired for disability

25  by order of the Supreme Court upon recommendation of the

26  Judicial Qualifications Commission pursuant to the provisions

27  of Art. V of the State Constitution, the participant's Option

28  1 monthly disability benefit amount as provided in s.

29  121.091(6)(a)1. shall be two-thirds of his or her monthly

30  compensation as of the participant's disability retirement

31  date.  Such a participant may alternatively elect to receive

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 1  an actuarially adjusted disability retirement benefit under

 2  any other option as provided in s. 121.091(6)(a), or to

 3  receive the normal benefit payable under the Public Employee

 4  Optional Retirement Program as set forth in subsection (1).

 5         2.  If any justice or judge who is a participant of the

 6  Public Employee Optional Retirement Program of the Florida

 7  Retirement System is retired for disability by order of the

 8  Supreme Court upon recommendation of the Judicial

 9  Qualifications Commission pursuant to the provisions of Art. V

10  of the State Constitution and elects to receive a monthly

11  disability benefit under the provisions of this paragraph:

12         a.  Any present value amount that was transferred to

13  his or her program account and all employer contributions made

14  to such account on his or her behalf, plus interest and

15  earnings thereon, shall be transferred to and deposited in the

16  disability account of the Florida Retirement System Trust

17  Fund; and

18         b.  The monthly benefits payable under this paragraph

19  for any affected justice or judge retired from the Florida

20  Retirement System pursuant to Art. V of the State Constitution

21  shall be paid from the disability account of the Florida

22  Retirement System Trust Fund.

23         (n)  Death of retiree or beneficiary.--Upon the death

24  of a disabled retiree or beneficiary thereof who is receiving

25  monthly benefits under this subsection, the monthly benefits

26  shall be paid through the last day of the month of death and

27  shall terminate, or be adjusted, if applicable, as of that

28  date in accordance with the optional form of benefit selected

29  at the time of retirement. The Department of Management

30  Services may adopt rules necessary to administer this

31  paragraph.

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 1         (3)  DEATH BENEFITS.--Under the Public Employee

 2  Optional Retirement Program:

 3         (a)  Survivor benefits shall be payable in accordance

 4  with the following terms and conditions:

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

 6  only to a participant's beneficiary or beneficiaries as

 7  designated by the participant as provided in s. 121.4501(20).

 8  If a participant designates a primary beneficiary other than

 9  the participant's spouse, the participant's spouse shall be

10  notified of the designation. This requirement shall not apply

11  to the designation of one or more contingent beneficiaries to

12  receive any benefits remaining upon the death of the primary

13  beneficiary or beneficiaries.

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

15  administrator or designated approved providers in accordance

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

17  policy.

18         3.  To receive benefits under this subsection, the

19  participant must be deceased.

20         (b)  In the event of a participant's death, all vested

21  accumulations as described in s. 121.4501(6), less withholding

22  taxes remitted to the Internal Revenue Service, shall be

23  distributed, as provided in paragraph (c) or as described in

24  s. 121.4501(20), to the participant's designated beneficiary

25  or beneficiaries, or to the participant's estate, as if the

26  participant retired on the date of death. No other death

27  benefits shall be available for survivors of participants

28  under the Public Employee Optional Retirement Program, except

29  for such benefits, or coverage for such benefits, as are

30  otherwise provided by law or are separately afforded by the

31  employer, at the employer's discretion.

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 1         (c)  Upon receipt by the third-party administrator of a

 2  properly executed application for distribution of benefits,

 3  the total accumulated benefit shall be payable by the

 4  third-party administrator to the participant's surviving

 5  beneficiary or beneficiaries, as:

 6         1.  A lump-sum distribution payable to the beneficiary

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

 8         2.  An eligible rollover distribution on behalf of the

 9  surviving spouse of a deceased participant, whereby all

10  accrued benefits, plus interest and investment earnings, are

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

12  custodian of an eligible retirement plan, as described in s.

13  402(c)(8)(B) of the Internal Revenue Code, on behalf of the

14  surviving spouse; or

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

16  accrued benefit is paid to the deceased participant's

17  surviving spouse or other designated beneficiaries, less

18  withholding taxes remitted to the Internal Revenue Service,

19  and the remaining amount is transferred directly to the

20  custodian of an eligible retirement plan, as described in s.

21  402(c)(8)(B) of the Internal Revenue Code, on behalf of the

22  surviving spouse. The proportions must be specified by the

23  participant or the surviving beneficiary.

24  

25  This paragraph does not abrogate other applicable provisions

26  of state or federal law providing for payment of death

27  benefits.

28         (4)  LIMITATION ON LEGAL PROCESS.--The benefits payable

29  to any person under the Public Employee Optional Retirement

30  Program, and any contributions accumulated under such program,

31  are not subject to assignment, execution, attachment, or any

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 1  legal process, except for qualified domestic relations orders

 2  by a court of competent jurisdiction, income deduction orders

 3  as provided in s. 61.1301, and federal income tax levies.

 4         Section 5.  Paragraph (k) is added to subsection (2) of

 5  section 215.47, Florida Statutes, to read:

 6         215.47  Investments; authorized securities; loan of

 7  securities.--Subject to the limitations and conditions of the

 8  State Constitution or of the trust agreement relating to a

 9  trust fund, moneys available for investments under ss.

10  215.44-215.53 may be invested as follows:

11         (2)  With no more than 25 percent of any fund in:

12         (k)  Asset-backed securities not otherwise authorized

13  by this section.

14         Section 6.  This act shall take effect July 1, 2005.

15  

16          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
17                         Senate Bill 1446

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19  The Committee Substitute provides additional conditions
    affecting the reemployment of retirees who have transferred to
20  the Investment Plan to effect compliance with the Internal
    Revenue Code's prohibitions against in-service pension
21  distributions.

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