Florida Senate - 2008 (Reformatted) SB 396

By Senator Fasano

11-00274-08 2008396__

A bill to be entitled

An act relating to the defined contribution retirement

program; amending s. 121.4501, F.S.; changing the name of

the Public Employee Optional Retirement Program to the

Public Employee Retirement Investment Program; limiting

the option of enrolling in the State Retirement System's

defined benefit program or defined contribution program to

public employees employed prior to January 1, 2009;

requiring public employees employed on or after January 1,

2009, to enroll in the defined contribution program;

deleting obsolete provisions relating to the 2002 optional

transfer of public employees from the defined benefit

program to the defined contribution program; deleting

requirements for an educational program that compares

retirement programs; amending s. 121.4502, F.S.; changing

the name of the Public Employee Optional Retirement

Program Trust Fund to the Public Employee Retirement

Investment Program Trust Fund; amending ss. 110.123,

112.0801, 112.363, 112.65, 121.021, 121.051, 121.35,

121.71, 121.72, 121.73, 121.74, 121.77, and 121.78, F.S.;

conforming cross-references; substituting references to

the defined contribution program for references to the

Public Employee Optional Retirement Program; amending ss.

121.091, 121.4503, 121.571, 121.591, and 121.5911, F.S.;

conforming cross-references; substituting the name of the

Public Employee Retirement Investment Program and the

Public Employee Retirement Investment Program Trust Fund;

amending s. 121.055, F.S.; conforming changes relating to

the name of the Florida Employee Retirement Investment

Program and deleting obsolete provisions; amending s.

121.70, F.S.; changing the name of the Public Employee

Optional Retirement Program to the defined contribution

program; deleting provisions relating to having a choice

in retirement plans; providing a directive to the Division

of Statutory Revision; providing an effective date.

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

Section 1. Section 121.4501, Florida Statutes, is amended

to read:

121.4501 Public Employee Optional Retirement Investment

Program.--

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

establish a an optional defined contribution retirement program

called the Public Employee Retirement Investment Program for

members of the Florida Retirement System under which retirement

benefits will be provided for eligible employees employed prior

to January 1, 2009, who elect to participate in the program, and

for all eligible employees employed on or after January 1, 2009.

The retirement benefits to be provided for or on behalf of

participants in such optional retirement program shall be

provided through employee-directed investments, in accordance

with s. 401(a) of the Internal Revenue Code and its related

regulations. The employers shall contribute, as provided in this

section and, ss. 121.571, and 121.71 to the Public Employee

Optional Retirement Investment Program Trust Fund toward the

funding of the such optional benefits.

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

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

sector company that is selected and approved by the state board

to offer one or more investment products or services to the

investment Public Employee Optional Retirement program. The term

includes a bundled provider that offers participants a range of

individually allocated or unallocated investment products and may

offer a range of administrative and customer services, which may

include accounting and administration of individual participant

benefits and contributions; individual participant recordkeeping;

asset purchase, control, and safekeeping; direct execution of the

participant's instructions as to asset and contribution

allocation; calculation of daily net asset values; direct access

to participant account information; periodic reporting to

participants, at least quarterly, on account balances and

transactions; guidance, advice, and allocation services directly

relating to the provider's its own investment options or

products, but only if the bundled provider complies with the

standard of care of s. 404(a)(1)(A-B) of the Employee Retirement

Income Security Act of 1974 (ERISA) and if providing such

guidance, advice, or allocation services does not constitute a

prohibited transaction under s. 4975(c)(1) of the Internal

Revenue Code or s. 406 of ERISA, notwithstanding that such

prohibited transaction provisions do not apply to the optional

retirement program; a broad array of distribution options; asset

allocation; and retirement counseling and education. Private

sector companies include investment management companies,

insurance companies, depositories, and mutual fund companies.

(b) "Average monthly compensation" means one-twelfth of

average final compensation as defined in s. 121.021(24).

established position as defined in s. 121.021(52).

(d) "Defined benefit program" means the defined benefit

program of the Florida Retirement System as administered under

part I of this chapter "Department" means the Department of

Management Services.

(e) "District school board employer" means a district

school board that participates in the Florida Retirement System

for the benefit of certain employees, or a charter school or

charter technical career center that participates in the Florida

Retirement System as provided under s. 121.051(2)(d).

(f)(e) "Division" means the Division of Retirement within

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the department of Management Services.

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(g)(f) "Eligible employee" means an officer or employee, as

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defined in s. 121.021(11), who:

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

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Florida Retirement System, including any renewed member of the

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Florida Retirement System; or

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

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Senior Management Service Optional Annuity Program as established

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under s. 121.055(6), the State Community College Optional

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Retirement Program as established under s. 121.051(2)(c), or the

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State University System Optional Retirement Program established

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under s. 121.35.

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The term does not include any member participating in the

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Deferred Retirement Option Program established under s.

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121.091(13) or a mandatory participant of the State University

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System Optional Retirement Program established under s. 121.35.

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(h)(g) "Employer" means an employer, as defined in s.

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121.021(10), of an eligible employee.

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(i) "Investment program" means the Public Employee

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Retirement Investment Program established under this part.

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(j) "Local employer" means an employer who is not a state

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employer or a district school board employer.

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(k)(h) "Participant" means an eligible employee who is

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enrolled elects to participate in the investment Public Employee

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Optional Retirement program and enrolls in such optional program

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

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Option Program participant as described in subsection (22) (21).

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(i) "Public Employee Optional Retirement Program,"

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"optional program," or "optional retirement program" means the

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alternative defined contribution retirement program established

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under this section.

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(l)(j) "Retiree" means a former participant of the

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investment Florida Retirement System Public Employee Optional

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Retirement program who has terminated employment and has taken a

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distribution as provided in s. 121.591, except for a mandatory

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distribution of a de minimis account authorized by the state

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board.

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(m)(k) "State board" or "board" means the State Board of

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Administration.

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(l) "Trustees" means Trustees of the State Board of

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Administration.

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(n) "State employer" means an agency, board, branch,

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commission, community college, department, institution,

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institution of higher education, or water management district of

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the state that participates in the Florida Retirement System for

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the benefit of certain employees.

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(o)(m) "Vested" or "vesting" means the guarantee that a

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participant is eligible to receive a retirement benefit upon

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completion of the required years of service under the Public

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Employee Optional Retirement Program.

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(3) ELIGIBILITY; RETIREMENT SERVICE CREDIT; TRANSFER OF

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BENEFITS.--

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(a) Participation in the Public Employee Optional

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Retirement Program is limited to eligible employees.

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Participation in the optional retirement program is in lieu of

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participation in the defined benefit program of the Florida

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Retirement System.

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(a)(b) An eligible employee who is employed in a regularly

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established position by a state employer on June 1, 2002; by a

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district school board employer on September 1, 2002; or by a

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local employer on December 1, 2002, and who is a member of the

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defined benefit retirement program of the Florida Retirement

163

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

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investment Public Employee Optional Retirement program shall

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retain all retirement service credit earned under the defined

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benefit retirement program of the Florida Retirement System as

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

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benefit upon termination, if eligible under the system. However,

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election to participate in the investment Public Employee

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Optional Retirement program terminates the active membership of

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the employee in the defined benefit program of the Florida

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Retirement System, and the service of a participant in the

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investment Public Employee Optional Retirement program is shall

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not be creditable under the defined benefit retirement program of

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the Florida Retirement System for purposes of benefit accrual but

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is credible shall be credited for purposes of vesting.

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(b)(c)1. Notwithstanding paragraph (a), an (b), each

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eligible employee who elects to participate in the investment

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Public Employee Optional Retirement program and establishes one

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or more individual participant accounts under the optional

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program may elect to transfer to the investment optional program

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a sum representing the present value of the employee's

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accumulated benefit obligation under the defined benefit

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retirement program of the Florida Retirement System. Upon such

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transfer, all service credit previously earned under the defined

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benefit program is of the Florida Retirement System shall be

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nullified for purposes of entitlement to a future benefit under

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the defined benefit program of the Florida Retirement System. A

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participant may not transfer is precluded from transferring the

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accumulated benefit obligation balance from the defined benefit

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program after the time upon the expiration of the period for

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enrolling afforded to enroll in the investment optional program.

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1.2. For purposes of this subsection, the present value of

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the member's accumulated benefit obligation is based upon the

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member's estimated creditable service and estimated average final

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compensation under the defined benefit program, subject to

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recomputation under subparagraph 2. 3. For state employees

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enrolling under subparagraph (4)(a)1., initial estimates shall

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will be based upon creditable service and average final

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compensation as of midnight on June 30, 2002; for district school

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board employees enrolling under subparagraph (4)(b)1., initial

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estimates shall will be based upon creditable service and average

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final compensation as of midnight on September 30, 2002; and for

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local government employees enrolling under subparagraph (4)(c)1.,

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initial estimates shall will be based upon creditable service and

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average final compensation as of midnight on December 31, 2002.

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The dates respectively specified are above shall be construed as

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the "estimate date" for these employees. The actuarial present

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value of the employee's accumulated benefit obligation shall be

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based on the following:

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a. The discount rate and other relevant actuarial

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assumptions used to value the Florida Retirement System Trust

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

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

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

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estimated creditable service as of the estimate date. The benefit

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commencement age is shall be the younger of the following, but

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may shall not be younger than the member's age as of the estimate

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date:

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(I) Age 62; or

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

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completed 30 years of service with an employer, assuming the

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member worked continuously from the estimate date, and

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disregarding any vesting requirement that would otherwise apply

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under the defined benefit program of the Florida Retirement

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System.

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

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the Special Risk Administrative Support Class entitled to retain

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special risk normal retirement date, the benefit commencement age

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is shall be the younger of the following, but may shall not be

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younger than the member's age as of the estimate date:

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(I) Age 55; or

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

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completed 25 years of service with an employer, assuming the

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member worked continuously from the estimate date, and

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disregarding any vesting requirement that would otherwise apply

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under the defined benefit program of the Florida Retirement

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System.

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d. The calculation must shall disregard vesting

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requirements and early retirement reduction factors that would

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otherwise apply under the defined benefit retirement program.

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2.3. For each participant who elects to transfer moneys

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

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investment optional program, the division shall recompute the

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amount transferred under subparagraph 1. 2. not later than 60

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days after the actual transfer of funds based upon the

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participant's actual creditable service and actual final average

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compensation as of the initial date of participation in the

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investment optional program. If the recomputed amount differs

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

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the division shall:

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

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Retirement System Trust Fund to the participant's account in the

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optional program the excess, if any, of the recomputed amount

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over the previously transferred amount together with interest

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from the initial date of transfer to the date of transfer under

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this subparagraph, based upon the effective annual interest equal

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to the assumed return on the actuarial investment which was used

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in the most recent actuarial valuation of the system, compounded

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annually.

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

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participant's account to the Florida Retirement System Trust Fund

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the excess, if any, of the previously transferred amount over the

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recomputed amount, together with interest from the initial date

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of transfer to the date of transfer under this subparagraph,

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based upon 6 percent effective annual interest, compounded

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annually, pro rata based on the participant's allocation plan.

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3.4. As directed by the participant, the state board shall

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transfer or cause to be transferred the appropriate amounts to

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the designated accounts no. The board shall establish transfer

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

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

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participation in the investment optional program unless the major

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financial markets for securities available for a transfer are

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seriously disrupted by an unforeseen event that which also causes

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the suspension of trading on any national securities exchange in

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the country where the securities are were issued. In that event,

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the such 30-day period of time may be extended by a resolution of

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the state board trustees. The state board shall establish

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transfer procedures by rule. Transfers are not commissionable or

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subject to other fees and may be in the form of securities or

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cash as determined by the state board. Such securities are shall

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be valued as of the date of receipt in the participant's account.

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4.5. If the state board or the division receives

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notification from the United States Internal Revenue Service that

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this paragraph or any portion of this paragraph will cause the

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

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tax purposes under the Internal Revenue Code, then the portion

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that will cause the disqualification does not apply. Upon such

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notice, the state board and the division shall notify the

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presiding officers of the Legislature.

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(4) OPTIONAL PARTICIPATION; ENROLLMENT.--

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

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in a regularly established position by a state employer after on

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June 1, 2002; by a district school board employer after September

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1, 2002; or by a local employer after December 1, 2002, but prior

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to January 1, 2009, the, by a state employer:

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

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Employee Optional Retirement Program in lieu of retaining his or

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her membership in the defined benefit program of the Florida

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Retirement System. The election must be made in writing or by

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electronic means and must be filed with the third-party

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administrator by August 31, 2002, or, in the case of an active

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employee who is on a leave of absence on April 1, 2002, by the

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last business day of the 5th month following the month the leave

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of absence concludes. This election is irrevocable, except as

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provided in paragraph (e). Upon making such election, the

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employee shall be enrolled as a participant of the Public

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Employee Optional Retirement Program, the employee's membership

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in the Florida Retirement System shall be governed by the

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provisions of this part, and the employee's membership in the

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defined benefit program of the Florida Retirement System shall

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terminate. The employee's enrollment in the Public Employee

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Optional Retirement Program shall be effective the first day of

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the month for which a full month's employer contribution is made

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to the optional program.

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

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the Public Employee Optional Retirement Program within the

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prescribed time period is deemed to have elected to retain

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membership in the defined benefit program of the Florida

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

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participate in the optional program is forfeited.

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2. With respect to employees who become eligible to

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participate in the Public Employee Optional Retirement Program by

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reason of employment in a regularly established position with a

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state employer commencing after April 1, 2002:

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

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defined benefit retirement program of the Florida Retirement

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System at the commencement of employment, and may, by the last

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business day of the 5th month following the employee's month of

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hire, elect to participate in the investment Public Employee

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Optional Retirement program. The employee's election must be made

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

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third-party administrator. The election to participate in the

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investment optional program is irrevocable, except as provided in

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paragraph (c) (e).

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1.b. If the employee files such election within the

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prescribed time period, enrollment in the investment optional

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program is shall be effective on the first day of employment. The

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employer retirement contributions paid through the month of the

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employee plan change shall be transferred to the investment

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optional program, and, effective the first day of the next month,

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the employer must shall pay the applicable contributions based on

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the employee membership class in the optional program.

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2.c. An Any such employee who fails to elect to participate

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in the investment Public Employee Optional Retirement program

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within the prescribed time period is deemed to have elected to

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retain membership in the defined benefit program of the Florida

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

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participate in the investment optional program is forfeited.

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3. With respect to employees who become eligible to

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participate in the Public Employee Optional Retirement Investment

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Program pursuant to s. 121.051(2)(c)3. or s. 121.35(3)(i), the

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any such employee may elect to participate in the investment

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Public Employee Optional Retirement program in lieu of retaining

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his or her participation in the State Community College Optional

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Retirement Program or the State University System Optional

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Retirement Program. The election must be made in writing or by

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electronic means and must be filed with the third-party

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administrator. This election is irrevocable, except as provided

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in paragraph (c) (e). Upon making such election, the employee

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shall be enrolled as a participant of the investment Public

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Employee Optional Retirement program, the employee's membership

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in the Florida Retirement System shall be governed by the

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provisions of this part, and the employee's participation in the

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State Community College Optional Retirement Program or the State

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University System Optional Retirement Program shall terminate.

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The employee's enrollment in the investment Public Employee

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Optional Retirement program shall be effective the first day of

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the month for which a full month's employer contribution is made

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to the investment optional program.

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4. For purposes of this paragraph, "state employer" means

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any agency, board, branch, commission, community college,

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department, institution, institution of higher education, or

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water management district of the state, which participates in the

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Florida Retirement System for the benefit of certain employees.

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

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in a regularly established position on September 1, 2002, by a

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district school board employer:

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

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Employee Optional Retirement Program in lieu of retaining his or

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her membership in the defined benefit program of the Florida

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Retirement System. The election must be made in writing or by

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electronic means and must be filed with the third-party

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administrator by November 30, or, in the case of an active

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employee who is on a leave of absence on July 1, 2002, by the

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last business day of the 5th month following the month the leave

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of absence concludes. This election is irrevocable, except as

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provided in paragraph (e). Upon making such election, the

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employee shall be enrolled as a participant of the Public

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Employee Optional Retirement Program, the employee's membership

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in the Florida Retirement System shall be governed by the

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provisions of this part, and the employee's membership in the

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defined benefit program of the Florida Retirement System shall

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terminate. The employee's enrollment in the Public Employee

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Optional Retirement Program shall be effective the first day of

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the month for which a full month's employer contribution is made

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to the optional program.

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

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the Public Employee Optional Retirement Program within the

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prescribed time period is deemed to have elected to retain

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membership in the defined benefit program of the Florida

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

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participate in the optional program is forfeited.

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2. With respect to employees who become eligible to

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participate in the Public Employee Optional Retirement Program by

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reason of employment in a regularly established position with a

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district school board employer commencing after July 1, 2002:

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

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defined benefit retirement program of the Florida Retirement

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System at the commencement of employment, and may, by the last

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business day of the 5th month following the employee's month of

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hire, elect to participate in the Public Employee Optional

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Retirement Program. The employee's election must be made in

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writing or by electronic means and must be filed with the third-

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party administrator. The election to participate in the optional

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

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b. If the employee files such election within the

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prescribed time period, enrollment in the optional program shall

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be effective on the first day of employment. The employer

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retirement contributions paid through the month of the employee

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plan change shall be transferred to the optional program, and,

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effective the first day of the next month, the employer shall pay

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the applicable contributions based on the employee membership

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class in the optional program.

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c. Any such employee who fails to elect to participate in

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the Public Employee Optional Retirement Program within the

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prescribed time period is deemed to have elected to retain

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membership in the defined benefit program of the Florida

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

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participate in the optional program is forfeited.

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

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employer" means any district school board that participates in

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the Florida Retirement System for the benefit of certain

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employees, or a charter school or charter technical career center

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that participates in the Florida Retirement System as provided in

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s. 121.051(2)(d).

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in a regularly established position on December 1, 2002, by a

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local employer:

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

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Employee Optional Retirement Program in lieu of retaining his or

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her membership in the defined benefit program of the Florida

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Retirement System. The election must be made in writing or by

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electronic means and must be filed with the third-party

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administrator by February 28, 2003, or, in the case of an active

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employee who is on a leave of absence on October 1, 2002, by the

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last business day of the 5th month following the month the leave

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of absence concludes. This election is irrevocable, except as

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provided in paragraph (e). Upon making such election, the

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employee shall be enrolled as a participant of the Public

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Employee Optional Retirement Program, the employee's membership

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in the Florida Retirement System shall be governed by the

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provisions of this part, and the employee's membership in the

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defined benefit program of the Florida Retirement System shall

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terminate. The employee's enrollment in the Public Employee

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Optional Retirement Program shall be effective the first day of

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the month for which a full month's employer contribution is made

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to the optional program.

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

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the Public Employee Optional Retirement Program within the

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prescribed time period is deemed to have elected to retain

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membership in the defined benefit program of the Florida

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

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participate in the optional program is forfeited.

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2. With respect to employees who become eligible to

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participate in the Public Employee Optional Retirement Program by

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reason of employment in a regularly established position with a

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local employer commencing after October 1, 2002:

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

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defined benefit retirement program of the Florida Retirement

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System at the commencement of employment, and may, by the last

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business day of the 5th month following the employee's month of

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hire, elect to participate in the Public Employee Optional

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Retirement Program. The employee's election must be made in

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writing or by electronic means and must be filed with the third-

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party administrator. The election to participate in the optional

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

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b. If the employee files such election within the

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prescribed time period, enrollment in the optional program shall

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be effective on the first day of employment. The employer

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retirement contributions paid through the month of the employee

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plan change shall be transferred to the optional program, and,

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effective the first day of the next month, the employer shall pay

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the applicable contributions based on the employee membership

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class in the optional program.

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c. Any such employee who fails to elect to participate in

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the Public Employee Optional Retirement Program within the

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prescribed time period is deemed to have elected to retain

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membership in the defined benefit program of the Florida

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

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participate in the optional program is forfeited.

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

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any employer not included in paragraph (a) or paragraph (b).

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

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participant who has not selected one or more specific investment

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products shall be allocated as prescribed by the state board. The

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third-party administrator shall notify the any such participant

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at least quarterly that the participant should take an

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affirmative action to make an asset allocation among the optional

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program products.

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

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had the choice to elect the defined benefit program or the

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investment Public Employee Optional Retirement program, or the

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month following the receipt of the eligible employee's plan

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election, if sooner, the employee shall have one opportunity, at

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the employee's discretion, to choose to move from the defined

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benefit program to the investment Public Employee Optional

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Retirement program or from the investment Public Employee

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Optional Retirement program to the defined benefit program.

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Eligible employees may elect to move between Florida Retirement

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System programs only if they are earning service credit in an

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employer-employee relationship consistent with the requirements

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under s. 121.021(17)(b), excluding leaves of absence without pay.

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Effective July 1, 2005, such elections are shall be effective on

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the first day of the month following the receipt of the election

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by the third-party administrator and are not subject to the

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requirements regarding an employer-employee relationship or

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receipt of contributions for the eligible employee in the

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effective month, except that the employee must meet the

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conditions of the previous sentence when the election is received

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by the third-party administrator. This paragraph is shall be

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contingent upon approval by from the Internal Revenue Service for

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including the choice described herein within the programs offered

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by the Florida Retirement System.

527

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

528

Employee Optional Retirement program, the applicable provisions

529

of subsection (3) this section shall govern the transfer.

530

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

531

program, the employee must transfer from his or her investment

532

Public Employee Optional Retirement program account and from

533

other employee moneys as necessary, a sum representing the

534

present value of that employee's accumulated benefit obligation

535

immediately following the time of such movement, determined

536

assuming that attained service equals the sum of service in the

537

defined benefit program and service in the investment Public

538

Employee Optional Retirement program. Benefit commencement occurs

539

on the first date the employee is would become eligible for

540

unreduced benefits, using the discount rate and other relevant

541

actuarial assumptions that were used to value the Florida

542

Retirement System defined benefit program plan liabilities in the

543

most recent actuarial valuation. For any employee who, at the

544

time of the second election, already maintains an accrued benefit

545

amount in the defined benefit program plan, the then-present

546

value of the such accrued benefit shall be deemed part of the

547

required transfer amount described in this subparagraph. The

548

division shall ensure that the transfer sum is prepared using a

549

formula and methodology certified by an enrolled actuary.

550

3. Notwithstanding subparagraph 2., an employee who chooses

551

to move to the defined benefit program and who became eligible to

552

participate in the Public Employee Optional Retirement Program by

553

reason of employment in a regularly established position with a

554

state employer after June 1, 2002; a district school board

555

employer after September 1, 2002; or a local employer after

556

December 1, 2002, must transfer from his or her investment Public

557

Employee Optional Retirement program account and, from other

558

employee moneys as necessary, a sum representing that employee's

559

actuarial accrued liability.

560

4. An employee's Employees' ability to transfer from the

561

Florida Retirement System defined benefit program to the

562

investment Public Employee Optional Retirement program pursuant

563

to paragraphs (a) and (b) through (d), and the ability of a for

564

current employee employees to have an option to later transfer

565

back into the defined benefit program under subparagraph 2.,

566

shall be deemed a significant system amendment. Pursuant to s.

567

121.031(4), any such resulting unfunded liability arising from

568

actual original transfers from the defined benefit program to the

569

investment optional program must shall be amortized within 30

570

plan years as a separate unfunded actuarial base independent of

571

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

572

For the first 25 years, a no direct amortization payment may not

573

shall be calculated for this base. During this 25-year period,

574

the such separate base shall be used to offset the impact of

575

employees exercising their second program election under this

576

paragraph. It is the legislative intent of the Legislature that

577

the actuarial funded status of the Florida Retirement System

578

defined benefit program plan is not neither beneficially or nor

579

adversely impacted by such second program elections in any

580

significant manner, after due recognition of the separate

581

unfunded actuarial base. Following this initial 25-year period,

582

any remaining balance of the original separate base shall be

583

amortized over the remaining 5 years of the required 30-year

584

amortization period.

585

(5) COMPULSORY ENROLLMENT.--An eligible employee who is

586

employed in a regularly established position on or after January

587

1, 2009, shall be enrolled in the Public Employee Retirement

588

Investment Program in accordance with this part.

589

(6)(5) CONTRIBUTIONS.--

590

(a) Each employer shall contribute on behalf of each

591

participant in the investment Public Employee Optional Retirement

592

program, as provided in part III of this chapter. The state

593

board, acting as plan fiduciary, shall ensure that all plan

594

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

595

Revenue Code. The fiduciary shall ensure that said contributions

596

are allocated as follows:

597

1. The portion earmarked for participant accounts shall be

598

used to purchase interests in the appropriate investment vehicles

599

for the accounts of each participant as specified by the

600

participant, or in accordance with paragraph (4)(b) (4)(d).

601

2. The portion earmarked for administrative and educational

602

expenses shall be transferred to the state board.

603

3. The portion earmarked for disability benefits shall be

604

transferred to the department.

605

(b) Employers are responsible for notifying participants

606

regarding maximum contribution levels permitted under the

607

Internal Revenue Code. If a participant contributes to any other

608

tax-deferred plan, he or she is responsible for ensuring that

609

total contributions made to the investment optional program and

610

to any other such plan do not exceed federally permitted

611

maximums.

612

613

program may accept for deposit into participant accounts

614

contributions in the form of rollovers or direct trustee-to-

615

trustee transfers by or on behalf of participants, reasonably

616

determined by the state board to be eligible for rollover or

617

transfer to the investment optional retirement program pursuant

618

to the Internal Revenue Code, if such contributions are made in

619

accordance with rules as may be adopted by the state board. The

620

Such contributions must shall be accounted for in accordance with

621

any applicable Internal Revenue Code requirements and rules of

622

the state board.

623

(7)(6) VESTING REQUIREMENTS.--

624

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

625

of the participant to the investment Public Employee Optional

626

Retirement program, plus interest and earnings thereon and less

627

investment fees and administrative charges, a participant is

628

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

629

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

630

participant was a member of the defined benefit retirement

631

program or an optional retirement program authorized under s.

632

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

633

2. If the participant terminates employment prior to

634

satisfying the vesting requirements, the nonvested accumulation

635

must shall be transferred from the participant's accounts to the

636

state board for deposit and investment by the state board in the

637

board's suspense account of the Public Employee Optional

638

Retirement Investment Program Trust Fund of the board. If the

639

terminated participant is reemployed as an eligible employee

640

within 5 years, the state board shall transfer to the

641

participant's account any amount of the moneys previously

642

transferred from the participant's accounts to the suspense

643

account of the Public Employee Optional Retirement Program Trust

644

Fund, plus the actual earnings on such amount while in the

645

suspense account.

646

(b)1. With respect to amounts transferred from the defined

647

benefit program to the investment program, plus interest and

648

earnings, and less investment fees and administrative charges, a

649

participant shall be vested in the amount transferred from the

650

defined benefit program, plus interest and earnings thereon and

651

less administrative charges and investment fees, upon meeting the

652

service requirements for the participant's membership class as

653

set forth in s. 121.021(29). The third-party administrator shall

654

account for such amounts for each participant. The division shall

655

notify the participant and the third-party administrator when the

656

participant has satisfied the vesting period for Florida

657

Retirement System purposes.

658

2. If the participant terminates employment prior to

659

satisfying the vesting requirements, the nonvested accumulation

660

must shall be transferred from the participant's accounts to the

661

state board for deposit and investment by the board in the

662

board's suspense account of the Public Employee Optional

663

Retirement Investment Program Trust Fund of the board. If the

664

terminated participant is reemployed as an eligible employee

665

within 5 years, the state board shall transfer to the

666

participant's account any amount of the moneys previously

667

transferred from the participant's accounts to the suspense

668

account of the Public Employee Optional Retirement Program Trust

669

Fund, plus the actual earnings on such amount while in the

670

suspense account.

671

672

participant's account to the state board's suspense account shall

673

be forfeited by the participant if the participant is not

674

reemployed as an eligible employee within 5 years after

675

termination.

676

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

677

Retirement Investment Program:

678

(a) Benefits shall be provided in accordance with s. 401(a)

679

of the Internal Revenue Code.

680

(b) Benefits shall accrue in individual accounts that are

681

participant-directed, portable, and funded by employer

682

contributions and earnings thereon.

683

684

provisions of s. 121.591.

685

(9)(8) ADMINISTRATION OF PROGRAM.--

686

(a) The Public Employee Optional Retirement Investment

687

Program shall be administered by the state board and affected

688

employers. The state board is authorized to require oaths, by

689

affidavit or otherwise, and acknowledgments from persons in

690

connection with the administration of its duties and

691

responsibilities under this program chapter. An No oath, by

692

affidavit or otherwise, may not shall be required of an employee

693

participant at the time of enrollment election. Acknowledgment of

694

an employee's election to participate in the program shall be no

695

greater than necessary to confirm the employee's election. The

696

state board shall adopt rules establishing the roles role and

697

responsibilities of affected state, local government, and

698

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

699

third-party contractors in administering the investment Public

700

Employee Optional Retirement program. The department shall adopt

701

rules necessary to administer implement the investment optional

702

program in coordination with the defined benefit retirement

703

program and the disability benefits available under the

704

investment optional program.

705

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

706

one third-party administrator to provide administrative services

707

if those services cannot be competitively and contractually

708

provided by the division of Retirement within the Department of

709

Management Services. With the approval of the state board, the

710

third-party administrator may subcontract with other

711

organizations or individuals to provide components of the

712

administrative services. As a cost of administration, the board

713

may compensate any such contractor for its services, in

714

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

715

or proper by the board. The third-party administrator may not be

716

an approved provider or be affiliated with an approved provider.

717

2. These administrative services may include, but are not

718

limited to, enrollment of eligible employees, collection of

719

employer contributions, disbursement of such contributions to

720

approved providers in accordance with the allocation directions

721

of participants; services relating to consolidated billing;

722

individual and collective recordkeeping and accounting; asset

723

purchase, control, and safekeeping; and direct disbursement of

724

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

725

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

726

beneficiaries. This section does not prevent or prohibit a

727

bundled provider from providing any administrative or customer

728

service, including accounting and administration of individual

729

participant benefits and contributions; individual participant

730

recordkeeping; asset purchase, control, and safekeeping; direct

731

execution of the participant's instructions as to asset and

732

contribution allocation; calculation of daily net asset values;

733

direct access to participant account information; or periodic

734

reporting to participants, at least quarterly, on account

735

balances and transactions, if these services are authorized by

736

the state board as part of the contract.

737

(b)1.3. The state board shall select and contract with one

738

or more organizations to provide educational services. With

739

approval of the state board, the organizations may subcontract

740

with other organizations or individuals to provide components of

741

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

742

board may compensate any such contractor for its services in

743

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

744

or proper by the board. The education organization may not be an

745

approved provider or be affiliated with an approved provider.

746

2.4. Educational services shall be designed by the state

747

board and department to assist employers, eligible employees,

748

participants, and beneficiaries in order to maintain compliance

749

with United States Department of Labor regulations under s.

750

404(c) of the Employee Retirement Income Security Act of 1974 and

751

to assist employees in understanding their choice of defined

752

benefit or defined contribution retirement program alternatives.

753

Educational services include, but are not limited to,

754

disseminating educational materials; providing retirement

755

planning education; explaining the differences between the

756

defined benefit retirement plan and the defined contribution

757

retirement programs plan; and offering financial planning

758

guidance on matters such as investment diversification,

759

investment risks, investment costs, and asset allocation. An

760

approved provider may also provide educational information,

761

including retirement planning and investment allocation

762

information concerning its products and services.

763

764

administrator, the state board shall establish criteria under

765

which it shall consider the relative capabilities and

766

qualifications of each proposed administrator. In developing such

767

criteria, the board shall consider:

768

a. The administrator's demonstrated experience in providing

769

administrative services to public or private sector retirement

770

systems.

771

b. The administrator's demonstrated experience in providing

772

daily valued recordkeeping to defined contribution programs

773

plans.

774

c. The administrator's ability and willingness to

775

coordinate its activities with the Florida Retirement System

776

employers, the state board, and the division, and to supply to

777

such employers, the board, and the division the information and

778

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

779

management reports, quarterly participant reports, and ad hoc

780

reports requested by the department or state board.

781

d. The cost-effectiveness and levels of the administrative

782

services provided.

783

e. The administrator's ability to interact with the

784

participants, the employers, the state board, the division, and

785

the providers; the means by which participants may access account

786

information, direct investment of contributions, make changes to

787

their accounts, transfer moneys between available investment

788

vehicles, and transfer moneys between investment products; and

789

any fees that apply to such activities.

790

f. Any other factor deemed necessary by the Trustees of the

791

state board of Administration.

792

2. In evaluating and selecting an educational provider, the

793

state board shall establish criteria under which it shall

794

consider the relative capabilities and qualifications of each

795

proposed educational provider. In developing such criteria, the

796

board shall consider:

797

a. Demonstrated experience in providing educational

798

services to public or private sector retirement systems.

799

b. Ability and willingness to coordinate its activities

800

with the Florida Retirement System employers, the state board,

801

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

802

the division the information and data they require, including,

803

but not limited to, reports on educational contacts.

804

c. The cost-effectiveness and levels of the educational

805

services provided.

806

d. Ability to provide educational services via different

807

media, including, but not limited to, the Internet, personal

808

contact, seminars, brochures, and newsletters.

809

e. Any other factor deemed necessary by the Trustees of the

810

state board of Administration.

811

3. The establishment of the criteria shall be solely within

812

the discretion of the state board.

813

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

814

any contracts to be offered under the investment Public Employee

815

Optional Retirement program. In developing the its contracts, the

816

board shall must consider:

817

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

818

afforded in relation to the required contributions required under

819

the program.

820

2. The suitability of the rights and benefits provided to

821

be afforded and the interests of employers in the recruitment and

822

retention of eligible employees.

823

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

824

professional services, including legal, consulting, accounting,

825

and actuarial services, deemed necessary to implement and

826

administer the investment optional program by the Trustees of the

827

state board of Administration. The board may enter into a

828

contract with one or more vendors to provide low-cost investment

829

advice to participants, supplemental to education provided by the

830

third-party administrator. All fees under any such contract shall

831

be paid by those participants who choose to use the services of

832

the vendor.

833

2. The department may contract with consultants for

834

professional services, including legal, consulting, accounting,

835

and actuarial services, deemed necessary to implement and

836

administer the investment optional program in coordination with

837

the defined benefit program of the Florida Retirement System. The

838

department, in coordination with the state board, may enter into

839

a contract with the third-party administrator in order to

840

coordinate services common to the various programs within the

841

Florida Retirement System.

842

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

843

direct or indirect compensation from an approved provider, except

844

as specifically provided for in the contract with the state

845

board.

846

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

847

third-party administrator and an approved provider when such

848

conflict threatens the implementation or administration of the

849

program or the quality of services to employees and may resolve

850

any other conflicts.

851

(10)(9) INVESTMENT OPTIONS OR PRODUCTS; PERFORMANCE

852

REVIEW.--

853

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

854

selecting, evaluating, and monitoring the performance of approved

855

providers and investment products to which employees may direct

856

retirement contributions under the investment program. In

857

accordance with such policy and procedures, the state board shall

858

designate and contract for a number of investment products as

859

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

860

bundled providers each of whom may offer multiple investment

861

options and related services when such an approach is determined

862

by the board to provide afford value to the participants

863

otherwise not available through individual investment products.

864

Each approved bundled provider may offer investment options that

865

provide participants with the opportunity to invest in each of

866

the following asset classes, to be composed of individual options

867

that represent either a single asset class or a combination

868

thereof: money markets, United States fixed income, United

869

States equities, and foreign stock. The state board shall review

870

and manage all educational materials, contract terms, fee

871

schedules, and other aspects of the approved provider

872

relationships to ensure that no provider is unduly favored or

873

penalized by virtue of its status within the investment program

874

plan.

875

(b) The state board shall consider investment options or

876

products it considers appropriate for providing to give

877

participants the opportunity to accumulate retirement benefits,

878

subject to the following:

879

1. The investment Public Employee Optional Retirement

880

program must offer a diversified mix of low-cost investment

881

products that span the risk-return spectrum and may include a

882

guaranteed account as well as investment products, such as

883

individually allocated guaranteed and variable annuities, which

884

meet the requirements of this subsection and combine the ability

885

to accumulate investment returns with the option of receiving

886

lifetime income consistent with the long-term retirement security

887

of a pension plan and similar to the lifetime-income benefit

888

provided by the Florida Retirement System.

889

2. Investment options or products offered by the group of

890

approved providers may include mutual funds, group annuity

891

contracts, individual retirement annuities, interests in trusts,

892

collective trusts, separate accounts, and other such financial

893

instruments, and may include products that give participants the

894

option of committing their contributions for an extended time

895

period in an effort to obtain returns higher than those that

896

could be obtained from investment products offering full

897

liquidity.

898

3. The state board may shall not contract with a any

899

provider that imposes a front-end, back-end, contingent, or

900

deferred sales charge, or any other fee that limits or restricts

901

the ability of participants to select any investment product

902

available in the investment optional program. This prohibition

903

does not apply to fees or charges that are imposed on withdrawals

904

from products that give participants the option of committing

905

their contributions for an extended time period in an effort to

906

obtain returns higher than those that could be obtained from

907

investment products offering full liquidity, provided that the

908

product in question, net of all fees and charges, produces

909

material benefits relative to other comparable products in the

910

program offering full liquidity.

911

4. Fees or charges for insurance features, such as

912

mortality and expense-risk charges, must be reasonable relative

913

to the benefits provided.

914

915

products, the state board shall establish criteria under which it

916

shall consider the relative capabilities and qualifications of

917

each proposed provider company and product. In developing such

918

criteria, the board shall consider the following to the extent

919

such factors may be applied in connection with investment

920

products, services, or providers:

921

1. Experience in the United States providing retirement

922

products and related financial services under defined

923

contribution retirement programs plans.

924

2. Financial strength and stability as which shall be

925

evidenced by the highest ratings assigned by nationally

926

recognized rating services when comparing proposed providers that

927

are so rated.

928

3. Intrastate and interstate portability of the product

929

offered, including early withdrawal options.

930

4. Compliance with the Internal Revenue Code.

931

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

932

levels of service supporting the product relative to its benefits

933

and its characteristics, including, without limitation, the level

934

of risk borne by the provider.

935

6. The provider company's ability and willingness to

936

coordinate its activities with Florida Retirement System

937

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

938

the such employers, the department, and the board with the

939

information and data they require.

940

7. The methods available to participants to interact with

941

the provider company; the means by which participants may access

942

account information, direct investment of contributions, make

943

changes to their accounts, transfer moneys between available

944

investment vehicles, and transfer moneys between provider

945

companies; and any fees that apply to such activities.

946

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

947

transfer of individual account balances, contributions, and

948

earnings thereon, both internally among investment products

949

offered by the provider company and externally between approved

950

providers, as well as any fees, charges, reductions, or penalties

951

that may be applied.

952

9. An evaluation of specific investment products, taking

953

into account each product's experience in meeting its investment

954

return objectives net of all related fees, expenses, and charges,

955

including, but not limited to, investment management fees, loads,

956

distribution and marketing fees, custody fees, recordkeeping

957

fees, education fees, annuity expenses, and consulting fees.

958

10. Organizational factors, including, but not limited to,

959

financial solvency, organizational depth, and experience in

960

providing institutional and retail investment services.

961

(d) As a condition of offering an any investment option or

962

product in the investment optional retirement program, the

963

approved provider must agree to make the investment product or

964

service available under the most beneficial terms offered to any

965

other customer, subject to approval by the Trustees of the state

966

board of Administration.

967

(e) The state board shall regularly review the performance

968

of each approved provider and product and related organizational

969

factors to ensure continued compliance with established selection

970

criteria and with board policy and procedures. Providers and

971

products may be terminated subject to contract provisions. The

972

state board shall adopt procedures to transfer account balances

973

from terminated products or providers to other products or

974

providers in the investment optional program.

975

(f)1. An approved provider shall comply with all applicable

976

federal and state securities and insurance laws and regulations

977

applicable to the provider, as well as with the applicable rules

978

and guidelines of the National Association of Securities Dealers

979

which govern the ethical marketing of investment products. In

980

furtherance of this mandate, an approved provider must agree in

981

its contract with the state board to establish and maintain a

982

compliance education and monitoring system to supervise the

983

activities of all personnel who directly communicate with

984

individual participants and recommend investment products, which

985

system is consistent with rules of the National Association of

986

Securities Dealers.

987

2. Approved provider personnel who directly communicate

988

with individual participants and who recommend investment

989

products shall make an independent and unbiased determination as

990

to whether an investment product is suitable for a particular

991

participant.

992

3. The state board shall develop procedures to receive and

993

resolve participant complaints against a provider or approved

994

provider personnel, and, when appropriate, refer such complaints

995

to the appropriate agency.

996

4. Approved providers may not sell or in any way distribute

997

any customer list or participant identification information

998

generated through their offering of products or services through

999

the investment optional retirement program.

1000

(11)(10) EDUCATION COMPONENT.--

1001

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

1002

provide for an education component for eligible employees system

1003

members in a manner consistent with the provisions of this

1004

section. The education component must be available to eligible

1005

employees at least 90 days prior to the beginning date of the

1006

election period for the employees of the respective types of

1007

employers.

1008

(b) The education component must provide system members

1009

with impartial and balanced information about plan choices. The

1010

education component must involve multimedia formats. Program

1011

comparisons must, to the greatest extent possible, be based upon

1012

the retirement income that different retirement programs may

1013

provide to the participant. The board shall monitor the

1014

performance of the contract to ensure that the program is

1015

conducted in accordance with the contract, applicable law, and

1016

the rules of the board.

1017

1018

provide for an initial and ongoing transfer education component

1019

to provide system members with information necessary to make

1020

informed plan choice decisions. The transfer education component

1021

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

1022

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

1023

the defined contribution program.

1024

2. The features of and differences between the defined

1025

benefit program and the defined contribution program, both

1026

generally and specifically, as those differences may affect the

1027

member.

1028

3. The expected benefit available if the member were to

1029

retire under each of the retirement programs, based on

1030

appropriate alternative sets of assumptions.

1031

4. The rate of return from investments in the defined

1032

contribution program and the period of time over which such rate

1033

of return must be achieved to equal or exceed the expected

1034

monthly benefit payable to the member under the defined benefit

1035

program.

1036

5. The historical rates of return for the investment

1037

alternatives available in the defined contribution programs.

1038

6. The benefits and historical rates of return on

1039

investments available in a typical deferred compensation plan or

1040

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

1041

which the employee may be eligible.

1042

7. The program choices available to employees of the State

1043

University System and the comparative benefits of each available

1044

program, if applicable.

1045

8. Payout options available in each of the retirement

1046

programs.

1047

(a)(d) An ongoing education and communication component

1048

must provide eligible employees system members with information

1049

necessary to make informed decisions about choices within their

1050

retirement program of membership and in preparation for

1051

retirement. The component must include, but is not limited to,

1052

information concerning:

1053

1. Rights and conditions of membership.

1054

2. Benefit features within the program, options, and

1055

effects of certain decisions.

1056

3. Coordination of contributions and benefits with a

1057

deferred compensation plan under s. 457 or a plan under s. 403(b)

1058

of the Internal Revenue Code.

1059

4. Significant program changes.

1060

5. Contribution rates and program funding status.

1061

6. Planning for retirement.

1062

(b)(e) Descriptive materials must be prepared under the

1063

assumption that the employee is an unsophisticated investor, and

1064

all materials used in the education component must be approved by

1065

the state board prior to dissemination.

1066

(c)(f) The state board and the department shall also

1067

establish a communication component to provide program

1068

information to participating employers and the employers'

1069

personnel and payroll officers and to explain their respective

1070

responsibilities in conjunction with the retirement programs.

1071

(d)(g) Funding for education of new employees may reflect

1072

administrative costs to the investment optional program and the

1073

defined benefit program.

1074

(h) Pursuant to paragraph (8)(a), all Florida Retirement

1075

System employers have an obligation to regularly communicate the

1076

existence of the two Florida Retirement System plans and the plan

1077

choice in the natural course of administering their personnel

1078

functions, using the educational materials supplied by the state

1079

board and the Department of Management Services.

1080

(12)(11) PARTICIPANT INFORMATION REQUIREMENTS.--The state

1081

board shall ensure that each participant is provided a quarterly

1082

statement that accounts for the contributions made on behalf of

1083

the such participant; the interest and investment earnings

1084

thereon; and any fees, penalties, or other deductions that apply

1085

thereto. At a minimum, such statements must:

1086

(a) Indicate the participant's investment options.

1087

(b) State the market value of the account at the close of

1088

the current quarter and previous quarter.

1089

1090

changes in account accumulation unit values for the quarter

1091

period.

1092

(d) Itemize account contributions for the quarter.

1093

(e) Indicate any account changes due to adjustment of

1094

contribution levels, reallocation of contributions, balance

1095

transfers, or withdrawals.

1096

(f) Set forth any fees, charges, penalties, and deductions

1097

that apply to the account.

1098

(g) Indicate the amount of the account in which the

1099

participant is fully vested and the amount of the account in

1100

which the participant is not vested.

1101

(h) Indicate each investment product's performance relative

1102

to an appropriate market benchmark.

1103

1104

The third-party administrator shall provide quarterly and annual

1105

summary reports to the state board and any other reports

1106

requested by the department or the board. In any solicitation or

1107

offer of coverage under the defined contribution an optional

1108

retirement program, a provider company shall be governed by the

1109

contract readability provisions of s. 627.4145, notwithstanding

1110

s. 627.4145(6)(c). In addition, all descriptive materials must be

1111

prepared under the assumption that the participant is an

1112

unsophisticated investor. Provider companies must maintain an

1113

internal system of quality assurance, have proven functional

1114

systems that are date-calculation compliant, and be subject to a

1115

due-diligence inquiry that proves their capacity and fitness to

1116

undertake service responsibilities.

1117

(13)(12) ADVISORY COUNCIL TO PROVIDE ADVICE AND

1118

ASSISTANCE.--The Investment Advisory Council, created pursuant to

1119

s. 215.444, shall assist the state board in implementing and

1120

administering the Public Employee Optional Retirement Investment

1121

Program. The Investment Advisory council, created pursuant to s.

1122

215.444, shall review the state board's initial recommendations

1123

regarding the criteria to be used in selecting and evaluating

1124

approved providers and investment products. The council may

1125

provide comments on the recommendations to the board within 45

1126

days after receiving the initial recommendations. The state board

1127

shall make the final determination as to whether any investment

1128

provider or product, any contractor, or any and all contract

1129

provisions are shall be approved for the investment program.

1130

(14)(13) FEDERAL REQUIREMENTS.--

1131

(a) Provisions of This section shall be construed, and the

1132

investment Public Employee Optional Retirement program shall be

1133

administered, so as to comply with the Internal Revenue Code, 26

1134

U.S.C., and specifically with plan qualification requirements

1135

imposed on governmental plans under s. 401(a) of the Internal

1136

Revenue Code. The state board may shall have the power and

1137

authority to adopt rules reasonably necessary to establish or

1138

maintain the qualified status of the investment Optional

1139

Retirement program under the Internal Revenue Code and to

1140

implement and administer the Optional Retirement program in

1141

compliance with the Internal Revenue Code and as designed under

1142

this part; provided however, that the board shall not have the

1143

authority to adopt any rule which makes a substantive change to

1144

the Optional Retirement Program as designed by this part.

1145

(b) Any section or provision of this chapter which is

1146

susceptible to more than one construction shall must be

1147

interpreted in favor of the construction most likely to satisfy

1148

requirements imposed by s. 401(a) of the Internal Revenue Code.

1149

1150

limitation year may not exceed the maximum amount allowable for

1151

qualified defined contribution pension plans under applicable

1152

provisions of the Internal Revenue Code. If an employee enrolled

1153

who has elected to participate in the Public Employee Optional

1154

Retirement Investment Program participates in any other plan that

1155

is maintained by the participating employer, benefits that accrue

1156

under the investment Public Employee Optional Retirement program

1157

shall be considered primary for any aggregate limitation

1158

applicable under s. 415 of the Internal Revenue Code.

1159

(15)(14) INVESTMENT POLICY STATEMENT.--

1160

(a) Investment products and approved providers selected for

1161

the investment Public Employee Optional Retirement program must

1162

shall conform with the Public Employee Optional Retirement

1163

Investment Program Investment Policy Statement, herein referred

1164

to as the "statement," as developed and approved by the Trustees

1165

of the state board of Administration. The statement must include,

1166

among other items, the investment objectives of the investment

1167

Public Employee Optional Retirement program, manager selection

1168

and monitoring guidelines, and performance measurement criteria.

1169

As required from time to time, the executive director of the

1170

state board may present recommended changes in the statement to

1171

the board for approval.

1172

(b) Prior to presenting the statement, or any recommended

1173

changes thereto, to the state board, the executive director of

1174

the board shall present such statement or changes to the

1175

Investment Advisory Council for review. The council shall present

1176

the results of its review to the board prior to the board's final

1177

approval of the statement or changes in the statement.

1178

(16)(15) STATEMENT OF FIDUCIARY STANDARDS AND

1179

RESPONSIBILITIES.--

1180

(a) Investment of optional defined contribution program

1181

retirement plan assets shall be made for the sole interest and

1182

exclusive purpose of providing benefits to plan participants and

1183

beneficiaries and defraying reasonable expenses of administering

1184

the program plan. The program's assets are to be invested, on

1185

behalf of the program participants, with the care, skill, and

1186

diligence that a prudent person acting in a like manner would

1187

undertake. The performance of the investment duties set forth in

1188

this paragraph shall comply with the fiduciary standards set

1189

forth in the Employee Retirement Income Security Act of 1974 at

1190

29 U.S.C. s. 1104(a)(1)(A)-(C). In case of conflict with other

1191

provisions of law authorizing investments, the investment and

1192

fiduciary standards set forth in this subsection shall prevail.

1193

(b) If a participant or beneficiary of the defined

1194

contribution Public Employee Optional Retirement program

1195

exercises control over the assets in his or her account, as

1196

determined by reference to regulations of the United States

1197

Department of Labor under s. 404(c) of the Employee Retirement

1198

Income Security Act of 1974 and all applicable laws governing the

1199

operation of the program, a no program fiduciary is not shall be

1200

liable for any loss to a participant's or beneficiary's account

1201

which results from the such participant's or beneficiary's

1202

exercise of control.

1203

1204

(15)(b) incorporate the federal law concept of participant

1205

control, established by regulations of the United States

1206

Department of Labor under s. 404(c) of the Employee Retirement

1207

Income Security Act of 1974 (ERISA). The purpose of this

1208

paragraph is to assist employers and the state board of

1209

Administration in maintaining compliance with s. 404(c), while

1210

avoiding unnecessary costs and eroding participant benefits under

1211

the defined contribution Public Employee Optional Retirement

1212

program. Pursuant to 29 C.F.R. s. 2550.404c-

1213

1(b)(2)(i)(B)(1)(viii), the state board of Administration or its

1214

designated agents shall deliver to participants of the Public

1215

Employee Optional Retirement Program a copy of the prospectus

1216

most recently provided to the plan, and, pursuant to 29 C.F.R. s.

1217

2550.404c-1(b)(2)(i)(B)(2)(ii), shall provide such participants

1218

an opportunity to obtain this information, except that:

1219

1. The requirement to deliver a prospectus is shall be

1220

deemed to be satisfied by delivery of a fund profile that

1221

contains the information that would be included in a summary

1222

prospectus as described by Rule 498 under the Securities Act of

1223

1933, 17 C.F.R. s. 230.498. When the transaction fees, expense

1224

information or other information provided by a mutual fund in the

1225

prospectus does not reflect terms negotiated by the state board

1226

of Administration or its designated agents, the aforementioned

1227

retirement is deemed to be satisfied by delivery of a separate

1228

document described by Rule 498 substituting accurate information;

1229

and

1230

2. Delivery is shall be deemed to have been effected if

1231

delivery is through electronic means and the following standards

1232

are satisfied:

1233

a. Electronically-delivered documents are prepared and

1234

provided consistent with style, format, and content requirements

1235

applicable to printed documents;

1236

b. Each participant is provided timely and adequate notice

1237

of the documents that are to be delivered and their significance

1238

thereof, and of the participant's right to obtain a paper copy of

1239

such documents free of charge;

1240

c.(I) Participants have adequate access to the electronic

1241

documents, at locations such as their worksites or public

1242

facilities, and have the ability to convert the documents to

1243

paper free of charge by the state board of Administration, and

1244

the board or its designated agents take appropriate and

1245

reasonable measures to ensure that the system for furnishing

1246

electronic documents results in actual receipt., or

1247

(II) Participants must provide have provided consent to

1248

receive information in electronic format, which consent may be

1249

revoked; and

1250

d. The state board of Administration, or its designated

1251

agent, actually provides paper copies of the documents free of

1252

charge, upon request.

1253

(17)(16) DISABILITY BENEFITS.--For any participant of the

1254

investment optional retirement program who becomes totally and

1255

permanently disabled, benefits must shall be paid in accordance

1256

with the provisions of s. 121.591.

1257

(18)(17) SOCIAL SECURITY COVERAGE.--Social security

1258

coverage shall be provided for all officers and employees who

1259

become participants of the investment optional program. Any

1260

modification of the present agreement with the Social Security

1261

Administration, or referendum required under the Social Security

1262

Act, for the purpose of providing social security coverage for

1263

any member shall be requested by the state agency in compliance

1264

with the applicable provisions of the Social Security Act

1265

governing such coverage. However, retroactive social security

1266

coverage for service prior to December 1, 1970, with the employer

1267

shall not be provided for any member who was not covered under

1268

the agreement as of November 30, 1970.

1269

(19)(18) RETIREE HEALTH INSURANCE SUBSIDY.--All officers

1270

and employees who are participants of the investment optional

1271

program are shall be eligible to receive the retiree health

1272

insurance subsidy, subject to the provisions of s. 112.363.

1273

(20)(19) PARTICIPANT RECORDS.--Personal identifying

1274

information of a participant in the investment Public Employee

1275

Optional Retirement program contained in Florida Retirement

1276

System records held by the state board of Administration or the

1277

department of Management Services is exempt from s. 119.07(1) and

1278

s. 24(a), Art. I of the State Constitution.

1279

(21)(20) DESIGNATION OF BENEFICIARIES.--

1280

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

1281

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

1282

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

1283

jointly, as his or her beneficiary for receiving who shall

1284

receive the benefits, if any, which may be payable pursuant to

1285

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

1286

beneficiary is named in this manner, or if no beneficiary

1287

designated by the participant survives the participant, the

1288

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

1289

the participant's spouse is not alive at the time of the

1290

beneficiary's his or her death, the beneficiary shall be the

1291

living children of the participant. If no children survive, the

1292

beneficiary shall be the participant's father or mother, if

1293

living; otherwise, the beneficiary shall be the participant's

1294

estate. The beneficiary most recently designated by a participant

1295

on a form or letter filed with the third-party administrator

1296

shall be the beneficiary entitled to any benefits payable at the

1297

time of the participant's death. However Notwithstanding any

1298

other provision in this subsection to the contrary, for a

1299

participant who dies prior to his or her effective date of

1300

retirement, the spouse at the time of death shall be the

1301

participant's beneficiary unless the such participant designates

1302

a different beneficiary as provided in this subsection subsequent

1303

to the participant's most recent marriage.

1304

(b) If a participant designates a primary beneficiary other

1305

than the participant's spouse, the participant's spouse must also

1306

sign the beneficiary designation form to acknowledge the

1307

designation. This requirement does not apply to the designation

1308

of one or more contingent beneficiaries to receive benefits

1309

remaining upon the death of the primary beneficiary or

1310

beneficiaries.

1311

1312

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

1313

natural person, and notwithstanding the provisions of the trust,

1314

benefits must shall be paid directly to the beneficiary if the

1315

person is no longer a minor or an incapacitated person as defined

1316

in s. 744.102.

1317

(22)(21) PARTICIPATION BY TERMINATED DEFERRED RETIREMENT

1318

OPTION PROGRAM PARTICIPANTS.--Notwithstanding any other provision

1319

of law to the contrary, participants in the Deferred Retirement

1320

Option Program offered under part I may, after conclusion of

1321

their participation in the program, elect to roll over or

1322

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

1323

under the Public Employee Optional Retirement Investment Program

1324

of their Deferred Retirement Option Program proceeds distributed

1325

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

1326

constitute an "eligible rollover distribution" within the meaning

1327

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

1328

(a) The investment Public Employee Optional Retirement

1329

program may accept such amounts for deposit into participant

1330

accounts as provided in paragraph (6)(c) (5)(c).

1331

(b) The affected participant shall direct the investment of

1332

his or her investment account; however, unless he or she becomes

1333

a renewed member of the Florida Retirement System under s.

1334

121.122 and elects to participate in the investment Public

1335

Employee Optional Retirement program, employer contributions may

1336

not be made to the participant's account as provided under

1337

paragraph (6)(a) (5)(a).

1338

1339

for locating those persons who may be eligible to participate in

1340

the investment Public Employee Optional Retirement program under

1341

this subsection.

1342

(23)(22) CREDIT FOR MILITARY SERVICE.--Creditable service

1343

of any member of the Public Employee Optional Retirement

1344

Investment Program includes shall include military service in the

1345

Armed Forces of the United States as provided in the conditions

1346

outlined in s. 121.111(1).

1347

Section 2. Section 121.4502, Florida Statutes, is amended

1348

to read:

1349

121.4502 Public Employee Optional Retirement Investment

1350

Program Trust Fund.--

1351

(1) The Public Employee Optional Retirement Investment

1352

Program Trust Fund is created to hold the assets of the Public

1353

Employee Optional Retirement Investment Program in trust for the

1354

exclusive benefit of the such program's participants and

1355

beneficiaries, and for the payment of reasonable administrative

1356

expenses of the program, in accordance with s. 401 of the

1357

Internal Revenue Code, and shall be administered by the State

1358

Board of Administration as trustee. Funds shall be credited to

1359

the trust fund as provided in this part, to be used for the

1360

purposes of this part. The trust fund is exempt from the service

1361

charges imposed by s. 215.20.

1362

(2) The Public Employee Optional Retirement Investment

1363

Program Trust Fund is a retirement trust fund of the Florida

1364

Retirement System that accounts for retirement plan assets held

1365

by the state in a trustee capacity as a fiduciary for individual

1366

participants in the Public Employee Optional Retirement

1367

Investment Program and, pursuant to s. 19(f), Art. III of the

1368

State Constitution, is not subject to termination.

1369

Section 3. Paragraphs (g) of subsection (2) of section

1370

110.123, Florida Statutes, is amended to read:

1371

110.123 State group insurance program.--

1372

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

1373

(g) "Retired state officer or employee" or "retiree" means

1374

any state or state university officer or employee who retires

1375

under a state retirement system or a state optional annuity or

1376

retirement program or is placed on disability retirement, and who

1377

was insured under the state group insurance program at the time

1378

of retirement, and who begins receiving retirement benefits

1379

immediately after retirement from state or state university

1380

office or employment. In addition to these requirements, the term

1381

includes any state officer or state employee who retires under

1382

the defined contribution Public Employee Optional Retirement

1383

program established under part II of chapter 121 shall be

1384

considered a "retired state officer or employee" or "retiree" as

1385

used in this section if he or she:

1386

1. Meets the age and service requirements to qualify for

1387

normal retirement as set forth in s. 121.021(29); or

1388

2. Has attained the age specified by s. 72(t)(2)(A)(i) of

1389

the Internal Revenue Code and has 6 years of creditable service.

1390

Section 4. Section 112.0801, Florida Statutes, is amended

1391

to read:

1392

112.0801 Group insurance; participation by retired

1393

employees.--

1394

(1) Any state agency, county, municipality, special

1395

district, community college, or district school board that which

1396

provides life, health, accident, hospitalization, or annuity

1397

insurance, or all of any kinds of such insurance, for its

1398

officers and employees and their dependents upon a group

1399

insurance plan or self-insurance plan shall allow all former

1400

personnel who have retired prior to October 1, 1987, as well as

1401

those who retire on or after such date, and their eligible

1402

dependents, the option of continuing to participate in the such

1403

group insurance plan or self-insurance plan. Retirees and their

1404

eligible dependents shall be offered the same health and

1405

hospitalization insurance coverage as is offered to active

1406

employees at a premium cost of no more than the premium cost

1407

applicable to active employees. For the retired employees and

1408

their eligible dependents, the cost of any such continued

1409

participation in any type of plan or any of the cost thereof may

1410

be paid by the employer or by the retired employees. To determine

1411

health and hospitalization plan costs, the employer shall

1412

commingle the claims experience of the retiree group with the

1413

claims experience of the active employees; and, for other types

1414

of coverage, the employer may commingle the claims experience of

1415

the retiree group with the claims experience of active employees.

1416

Retirees covered under Medicare may be experience-rated

1417

separately from the retirees not covered by Medicare and from

1418

active employees if, provided that the total premium does not

1419

exceed that of the active group and coverage is basically the

1420

same as for the active group.

1421

(2) For purposes of this section, "retiree" has the same

1422

meaning as in s. 110.123(2). means any officer or employee who

1423

retires under a state retirement system or a state optional

1424

annuity or retirement program or is placed on disability

1425

retirement and who begins receiving retirement benefits

1426

immediately after retirement from employment. In addition to

1427

these requirements, any officer or employee who retires under the

1428

Public Employee Optional Retirement Program established under

1429

part II of chapter 121 shall be considered a "retired officer or

1430

employee" or "retiree" as used in this section if he or she:

1431

(a) Meets the age and service requirements to qualify for

1432

normal retirement as set forth in s. 121.021(29); or

1433

(b) Has attained the age specified by s. 72(t)(2)(A)(i) of

1434

the Internal Revenue Code and has 6 years of creditable service.

1435

Section 5. Paragraph (b) of subsection (2) and paragraph

1436

(e) of subsection (3) of section 112.363, Florida Statutes, are

1437

amended to read:

1438

112.363 Retiree health insurance subsidy.--

1439

(2) ELIGIBILITY FOR RETIREE HEALTH INSURANCE SUBSIDY.--

1440

(b) For purposes of this section, a person is deemed

1441

retired from a state-administered retirement system when he or

1442

she terminates employment with all employers participating in the

1443

Florida Retirement System as described in s. 121.021(39) and:

1444

1. For a participant of the defined contribution Public

1445

Employee Optional Retirement program established under part II of

1446

chapter 121, the participant meets the age or service

1447

requirements to qualify for normal retirement as set forth in s.

1448

121.021(29).

1449

2. For a member of the Florida Retirement System defined

1450

benefit program, or any employee who maintains creditable service

1451

under both the defined benefit program and the defined

1452

contribution Public Employee Optional Retirement program, the

1453

member begins drawing retirement benefits from the defined

1454

benefit program of the Florida Retirement System.

1455

(3) RETIREE HEALTH INSURANCE SUBSIDY AMOUNT.--

1456

(e)1. Beginning July 1, 2001, each eligible retiree of the

1457

defined benefit program of the Florida Retirement System, or, if

1458

the retiree is deceased, his or her beneficiary who is receiving

1459

a monthly benefit from such retiree's account and who is a

1460

spouse, or a person who meets the definition of joint annuitant

1461

in s. 121.021(28), shall receive a monthly retiree health

1462

insurance subsidy payment equal to the number of years of

1463

creditable service, as defined in s. 121.021(17), completed at

1464

the time of retirement multiplied by $5; however, no eligible

1465

retiree or beneficiary may receive a subsidy payment of more than

1466

$150 or less than $30. If there are multiple beneficiaries, the

1467

total payment may must not be greater than the payment to which

1468

the retiree was entitled. The health insurance subsidy amount

1469

payable to any person receiving the retiree health insurance

1470

subsidy payment on July 1, 2001, may shall not be reduced solely

1471

by operation of this subparagraph.

1472

2. Beginning July 1, 2002, each eligible participant of the

1473

defined contribution Public Employee Optional Retirement program

1474

of the Florida Retirement System who has met the requirements of

1475

this section, or, if the participant is deceased, his or her

1476

spouse who is the participant's designated beneficiary, shall

1477

receive a monthly retiree health insurance subsidy payment equal

1478

to the number of years of creditable service, as provided in this

1479

subparagraph, completed at the time of retirement, multiplied by

1480

$5; however, no eligible retiree or beneficiary may receive a

1481

subsidy payment of more than $150 or less than $30. For purposes

1482

of determining a participant's creditable service used to

1483

calculate the health insurance subsidy, a participant's years of

1484

service credit or fraction thereof shall be based on the

1485

participant's work year as defined in s. 121.021(54). Credit

1486

must shall be awarded for a full work year whenever health

1487

insurance subsidy contributions have been made as required by law

1488

for each month in the participant's work year. In addition, all

1489

years of creditable service retained under the Florida Retirement

1490

System defined benefit program must shall be included as

1491

creditable service for purposes of this section. Notwithstanding

1492

any other provision in this section to the contrary, the spouse

1493

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

1494

unless such participant has designated a different beneficiary

1495

subsequent to the participant's most recent marriage.

1496

Section 6. Subsection (1) of section 112.65, Florida

1497

Statutes, is amended to read:

1498

112.65 Limitation of benefits.--

1499

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

1500

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

1501

any retirement system or plan and who has not previously

1502

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

1503

not exceed 100 percent of his or her average final compensation.

1504

However, nothing contained in this section does not shall apply

1505

to supplemental retirement benefits or to pension increases

1506

attributable to cost-of-living increases or adjustments. For the

1507

purposes of this section, benefits accruing in individual

1508

participant accounts established under the defined contribution

1509

Public Employee Optional Retirement program established in part

1510

II of chapter 121 are considered supplemental benefits. As used

1511

in this section, the term "average final compensation" means the

1512

average of the member's earnings over a period of time which the

1513

governmental entity has established by statute, charter, or

1514

ordinance.

1515

Section 7. Subsection (3) of section 121.021, Florida

1516

Statutes, is amended to read:

1517

121.021 Definitions.--The following words and phrases as

1518

used in this chapter have the respective meanings set forth

1519

unless a different meaning is plainly required by the context:

1520

(3) "System" means the general retirement system

1521

established by this chapter to be known and cited as the "Florida

1522

Retirement System," including, but not limited to, the defined

1523

benefit retirement program administered under the provisions of

1524

part I of this part chapter and the defined contribution

1525

retirement program known as the Public Employee Optional

1526

Retirement Program and administered under the provisions of part

1527

II of this chapter.

1528

Section 8. Paragraph (c) of subsection (2) of section

1529

121.051, Florida Statutes, is amended to read:

1530

121.051 Participation in the system.--

1531

(2) OPTIONAL PARTICIPATION.--

1532

1533

technical career centers sponsored by public community colleges,

1534

as designated in s. 1000.21(3), who are members of the Regular

1535

Class of the Florida Retirement System and who comply with the

1536

criteria set forth in this paragraph and in s. 1012.875 may

1537

elect, in lieu of participating in the Florida Retirement System,

1538

to withdraw from the Florida Retirement System altogether and

1539

participate in an optional retirement program provided by the

1540

employing agency under s. 1012.875, to be known as the State

1541

Community College System Optional Retirement Program. Pursuant

1542

thereto:

1543

1. Through June 30, 2001, the cost to the employer for an

1544

such annuity under the optional retirement program shall equal

1545

the normal cost portion of the employer retirement contribution

1546

which would be required if the employee were a member of the

1547

Regular Class defined benefit program, plus the portion of the

1548

contribution rate required by s. 112.363(8) that would otherwise

1549

be assigned to the Retiree Health Insurance Subsidy Trust Fund.

1550

Effective July 1, 2001, each employer shall contribute on behalf

1551

of each participant in the optional program an amount equal to

1552

10.43 percent of the participant's gross monthly compensation.

1553

The employer shall deduct an amount to provide for the

1554

administration of the optional retirement program. The employer

1555

providing the optional program shall contribute an additional

1556

amount to the Florida Retirement System Trust Fund equal to the

1557

unfunded actuarial accrued liability portion of the Regular Class

1558

contribution rate.

1559

2. The decision to participate in the such an optional

1560

retirement program is shall be irrevocable for as long as the

1561

employee holds a position eligible for participation, except as

1562

provided in subparagraph 3. Any service creditable under the

1563

Florida Retirement System is shall be retained after the member

1564

withdraws from the Florida Retirement System; however, additional

1565

service credit in the Florida Retirement System may shall not be

1566

earned while a member of the optional retirement program.

1567

3. An employee who has elected to participate in the

1568

optional retirement program shall have one opportunity, at the

1569

employee's discretion, to choose to transfer from the optional

1570

retirement program to the defined benefit program of the Florida

1571

Retirement System or to the defined contribution Public Employee

1572

Optional Retirement program established under part II of this

1573

chapter, subject to the terms of the applicable optional

1574

retirement program contracts.

1575

a. If the employee chooses to move to the defined

1576

contribution Public Employee Optional Retirement program, any

1577

contributions, interest, and earnings creditable to the employee

1578

under the State Community College System Optional Retirement

1579

Program shall be retained by the employee in the State Community

1580

College System Optional Retirement Program, and the applicable

1581

provisions of s. 121.4501(4) shall govern the election.

1582

b. If the employee chooses to move to the defined benefit

1583

program of the Florida Retirement System, the employee shall

1584

receive service credit equal to his or her years of service under

1585

the State Community College Optional Retirement Program.

1586

(I) The cost for such credit must shall be an amount

1587

representing the present value of that employee's accumulated

1588

benefit obligation for the affected period of service. The cost

1589

shall be calculated as if the benefit commencement occurs on the

1590

first date the employee would become eligible for unreduced

1591

benefits, using the discount rate and other relevant actuarial

1592

assumptions that were used to value the Florida Retirement System

1593

defined benefit program plan liabilities in the most recent

1594

actuarial valuation. The calculation must shall include any

1595

service already maintained under the defined benefit program plan

1596

in addition to the years under the State Community College

1597

Optional Retirement Program. The present value of any service

1598

already maintained under the defined benefit program plan shall

1599

be applied as a credit to total cost resulting from the

1600

calculation. The division shall ensure that the transfer sum is

1601

prepared using a formula and methodology certified by an enrolled

1602

actuary.

1603

(II) The employee must transfer from his or her State

1604

Community College System Optional Retirement Program account and

1605

from other employee moneys as necessary, a sum representing the

1606

present value of that employee's accumulated benefit obligation

1607

immediately following the time of such movement, determined

1608

assuming that attained service equals the sum of service in the

1609

defined benefit program and service in the State Community

1610

College System Optional Retirement Program.

1611

4. Participation in the optional retirement program is

1612

shall be limited to those employees who satisfy the following

1613

eligibility criteria:

1614

a. The employee is must be otherwise eligible for

1615

membership or renewed membership in the Regular Class of the

1616

Florida Retirement System, as provided in s. 121.021(11) and (12)

1617

or s. 121.122.

1618

b. The employee is must be employed in a full-time position

1619

classified in the Accounting Manual for Florida's Public

1620

Community Colleges as:

1621

(I) Instructional; or

1622

(II) Executive Management, Instructional Management, or

1623

Institutional Management, if a community college determines that

1624

recruiting to fill a vacancy in the position is to be conducted

1625

in the national or regional market, and the duties and

1626

responsibilities of the position include:

1627

(A) The duties and responsibilities of the position include

1628

either The formulation, interpretation, or implementation of

1629

policies; or

1630

(B) The duties and responsibilities of the position include

1631

The performance of functions that are unique or specialized

1632

within higher education and that frequently involve the support

1633

of the mission of the community college.

1634

c. The employee is must be employed in a position not

1635

included in the Senior Management Service Class of the Florida

1636

Retirement System, as described in s. 121.055.

1637

5. Participants in the program are subject to the same

1638

reemployment limitations, renewed membership provisions, and

1639

forfeiture provisions as are applicable to regular members of the

1640

Florida Retirement System under ss. 121.091(9), 121.122, and

1641

121.091(5), respectively.

1642

6. Eligible community college employees are shall be

1643

compulsory members of the Florida Retirement System until,

1644

pursuant to the procedures set forth in s. 1012.875, a written

1645

election to withdraw from the Florida Retirement System and to

1646

participate in the State Community College Optional Retirement

1647

Program is filed with the program administrator and received by

1648

the division.

1649

a. Any community college employee whose program eligibility

1650

results from initial employment shall be enrolled in the State

1651

Community College Optional Retirement Program retroactive to the

1652

first day of eligible employment. The employer retirement

1653

contributions paid through the month of the employee plan change

1654

must shall be transferred to the community college for the

1655

employee's optional program account, and, effective the first day

1656

of the next month, the employer shall pay the applicable

1657

contributions based upon subparagraph 1.

1658

b. Any community college employee whose program eligibility

1659

results from a change in status due to the subsequent designation

1660

of the employee's position as one of those specified in

1661

subparagraph 4. or due to the employee's appointment, promotion,

1662

transfer, or reclassification to a position specified in

1663

subparagraph 4. shall be enrolled in the program upon the first

1664

day of the first full calendar month that such change in status

1665

becomes effective. The employer retirement contributions paid

1666

from the effective date through the month of the employee plan

1667

change must shall be transferred to the community college for the

1668

employee's optional program account, and, effective the first day

1669

of the next month, the employer shall pay the applicable

1670

contributions based upon subparagraph 1.

1671

7. Effective July 1, 2003, through December 31, 2008, any

1672

participant of the State Community College Optional Retirement

1673

Program who has service credit in the defined benefit plan of the

1674

Florida Retirement System for the period between his or her first

1675

eligibility to transfer from the defined benefit plan to the

1676

optional retirement program and the actual date of transfer may,

1677

during his or her employment, elect to transfer to the optional

1678

retirement program a sum representing the present value of the

1679

accumulated benefit obligation under the defined benefit

1680

retirement program for such period of service credit. Upon such

1681

transfer, all such service credit previously earned under the

1682

defined benefit program of the Florida Retirement System during

1683

this period is shall be nullified for purposes of entitlement to

1684

a future benefit under the defined benefit program of the Florida

1685

Retirement System.

1686

Section 9. Paragraph (b) of subsection (1) of section

1687

121.055, Florida Statutes, is amended to read:

1688

121.055 Senior Management Service Class.--There is hereby

1689

established a separate class of membership within the Florida

1690

Retirement System to be known as the "Senior Management Service

1691

Class," which shall become effective February 1, 1987.

1692

(1)

1693

(b)1. Except as provided in subparagraph 2., effective

1694

January 1, 1990, participation in the Senior Management Service

1695

Class is shall be compulsory for the president of each community

1696

college, the manager of each participating city or county, and

1697

all appointed district school superintendents. Effective January

1698

1, 1994, additional positions may be designated for inclusion in

1699

the Senior Management Service Class of the Florida Retirement

1700

System, provided that:

1701

a. Positions to be included in the class shall be

1702

designated by the local agency employer. Notice of intent to

1703

designate positions for inclusion in the class must shall be

1704

published once a week for 2 consecutive weeks in a newspaper of

1705

general circulation published in the county or counties affected,

1706

as provided in chapter 50.

1707

b. Up to 10 nonelective full-time positions may be

1708

designated for each local agency employer reporting to the

1709

department of Management Services; for local agencies with 100 or

1710

more regularly established positions, additional nonelective

1711

full-time positions may be designated, not to exceed 1 percent of

1712

the regularly established positions within the agency.

1713

c. Each position added to the class must be a managerial or

1714

policymaking position filled by an employee who is not subject to

1715

continuing contract and serves at the pleasure of the local

1716

agency employer without civil service protection, and who:

1717

(I) Heads an organizational unit; or

1718

(II) Has responsibility to effect or recommend personnel,

1719

budget, expenditure, or policy decisions in his or her areas of

1720

responsibility.

1721

2. In lieu of participation in the Senior Management

1722

Service Class, members of the Senior Management Service Class,

1723

pursuant to the provisions of subparagraph 1., may withdraw from

1724

the Florida Retirement System altogether. The decision to

1725

withdraw from the Florida Retirement System is shall be

1726

irrevocable for as long as the employee holds the such a

1727

position. Any service creditable under the Senior Management

1728

Service Class shall be retained after the member withdraws from

1729

the Florida Retirement System; however, additional service credit

1730

in the Senior Management Service Class shall not be earned after

1731

such withdrawal. Such members shall not be eligible to

1732

participate in the Senior Management Service Optional Annuity

1733

Program.

1734

3. Effective January 1, 2006, through June 30, 2006, an

1735

employee who has withdrawn from the Florida Retirement System

1736

under subparagraph 2. has one opportunity to elect to participate

1737

in either the defined benefit program or the Public Employee

1738

Optional Retirement Program of the Florida Retirement System.

1739

a. If the employee elects to participate in the Public

1740

Employee Optional Retirement Program, membership shall be

1741

prospective, and the applicable provisions of s. 121.4501(4)

1742

shall govern the election.

1743

b. If the employee elects to participate in the defined

1744

benefit program of the Florida Retirement System, the employee

1745

shall, upon payment to the system trust fund of the amount

1746

calculated under sub-sub-subparagraph (I), receive service credit

1747

for prior service based upon the time during which the employee

1748

had withdrawn from the system.

1749

(I) The cost for such credit shall be an amount

1750

representing the actuarial accrued liability for the affected

1751

period of service. The cost shall be calculated using the

1752

discount rate and other relevant actuarial assumptions that were

1753

used to value the Florida Retirement System defined benefit plan

1754

liabilities in the most recent actuarial valuation. The

1755

calculation shall include any service already maintained under

1756

the defined benefit plan in addition to the period of withdrawal.

1757

The actuarial accrued liability attributable to any service

1758

already maintained under the defined benefit plan shall be

1759

applied as a credit to the total cost resulting from the

1760

calculation. The division shall ensure that the transfer sum is

1761

prepared using a formula and methodology certified by an actuary.

1762

(II) The employee must transfer a sum representing the net

1763

cost owed for the actuarial accrued liability in sub-sub-

1764

subparagraph (I) immediately following the time of such movement,

1765

determined assuming that attained service equals the sum of

1766

service in the defined benefit program and the period of

1767

withdrawal.

1768

Section 10. Paragraph (c) of subsection (9) of section

1769

121.091, Florida Statutes, is amended to read:

1770

121.091 Benefits payable under the system.--Benefits may

1771

not be paid under this section unless the member has terminated

1772

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

1773

participation in the Deferred Retirement Option Program as

1774

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

1775

filed in the manner prescribed by the department. The department

1776

may cancel an application for retirement benefits when the member

1777

or beneficiary fails to timely provide the information and

1778

documents required by this chapter and the department's rules.

1779

The department shall adopt rules establishing procedures for

1780

application for retirement benefits and for the cancellation of

1781

such application when the required information or documents are

1782

not received.

1783

(9) EMPLOYMENT AFTER RETIREMENT; LIMITATION.--

1784

1785

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

1786

Public Employee Optional Retirement Program created in part II,

1787

subject to the following conditions:

1788

1. The retiree Such retirees may not be reemployed with an

1789

employer participating in the Florida Retirement System as

1790

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

1791

3 calendar months, unless the participant has reached the normal

1792

retirement requirements of the defined benefit plan as provided

1793

in s. 121.021(29).

1794

2. A Such retiree employed in violation of this subsection

1795

and any employing agency that knowingly employs or appoints such

1796

person are shall be jointly and severally liable for

1797

reimbursement of any benefits paid to the retirement trust fund

1798

from which the benefits were paid, including the Retirement

1799

System Trust Fund and the Public Employee Optional Retirement

1800

Investment Program Trust Fund, as appropriate. To avoid

1801

liability, the such employing agency must have a written

1802

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

1803

state-administered retirement system.

1804

Section 11. Paragraphs (g) and (i) of subsection (3) of

1805

section 121.35, Florida Statutes, are amended to read:

1806

121.35 Optional retirement program for the State University

1807

System.--

1808

(3) ELECTION OF OPTIONAL PROGRAM.--

1809

(g) An eligible employee who is a member of the Florida

1810

Retirement System at the time of election to participate in the

1811

optional retirement program shall retain all retirement service

1812

credit earned under the Florida Retirement System, at the rate

1813

earned. No Additional service credit in the Florida Retirement

1814

System may not shall be earned while the employee participates in

1815

the optional program, and nor shall the employee is not be

1816

eligible for disability retirement under the Florida Retirement

1817

System. An eligible employee may transfer from the Florida

1818

Retirement System to his or her accounts under the State

1819

University System Optional Retirement Program a sum representing

1820

the present value of the employee's accumulated benefit

1821

obligation under the defined benefit program of the Florida

1822

Retirement System for any service credit accrued from the

1823

employee's first eligible transfer date to the optional

1824

retirement program through the actual date of such transfer, if

1825

such service credit was earned in the period from July 1, 1984,

1826

through December 31, 1992. The present value of the employee's

1827

accumulated benefit obligation must shall be calculated as

1828

described in s. 121.4501(3) s. 121.4501(3)(c)2. Upon such

1829

transfer, all such service credit previously earned under the

1830

defined benefit program of the Florida Retirement System during

1831

this period is shall be nullified for purposes of entitlement to

1832

a future benefit under the defined benefit program of the Florida

1833

Retirement System.

1834

(i) Effective January 1, 2008, through December 31, 2008,

1835

except for an employee who is a mandatory participant of the

1836

State University System Optional Retirement Program, an employee

1837

who has elected to participate in the State University System

1838

Optional Retirement Program shall have one opportunity, at the

1839

employee's discretion, to choose to transfer from this program to

1840

the defined benefit program of the Florida Retirement System or

1841

to the defined contribution Public Employee Optional Retirement

1842

program established under part II of this chapter, subject to the

1843

terms of the applicable contracts of the State University System

1844

Optional Retirement Program.

1845

1. If the employee chooses to move to the defined

1846

contribution Public Employee Optional Retirement program, any

1847

contributions, interest, and earnings creditable to the employee

1848

under the State University System Optional Retirement Program

1849

must shall be retained by the employee in the State University

1850

System Optional Retirement Program, and the applicable provisions

1851

of s. 121.4501(4) shall govern the election.

1852

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

1853

program of the Florida Retirement System, the employee shall

1854

receive service credit equal to his or her years of service under

1855

the State University System Optional Retirement Program.

1856

a. The cost for such credit must be in shall be an amount

1857

representing the actuarial accrued liability for the affected

1858

period of service. The cost must shall be calculated using the

1859

discount rate and other relevant actuarial assumptions that were

1860

used to value the Florida Retirement System defined benefit plan

1861

liabilities in the most recent actuarial valuation. The

1862

calculation must shall include any service already maintained

1863

under the defined benefit program plan in addition to the years

1864

under the State University System Optional Retirement Program.

1865

The actuarial accrued liability of any service already maintained

1866

under the defined benefit program must plan shall be applied as a

1867

credit to total cost resulting from the calculation. The division

1868

shall ensure that the transfer sum is prepared using a formula

1869

and methodology certified by an enrolled actuary.

1870

b. The employee must transfer from his or her State

1871

University System Optional Retirement Program account, and from

1872

other employee moneys as necessary, a sum representing the

1873

actuarial accrued liability immediately following the time of

1874

such movement, determined assuming that attained service equals

1875

the sum of service in the defined benefit program and service in

1876

the State University System Optional Retirement Program.

1877

Section 12. Subsection (1) of section 121.4503, Florida

1878

Statutes, is amended to read:

1879

121.4503 Florida Retirement System Contributions Clearing

1880

Trust Fund.--

1881

(1) The Florida Retirement System Contributions Clearing

1882

Trust Fund is created as a clearing fund for disbursing employer

1883

contributions to the component plans of the Florida Retirement

1884

System and shall be administered by the department of Management

1885

Services. Funds shall be credited to the trust fund as provided

1886

in this chapter and shall be held in trust for the contributing

1887

employers until such time as the assets are transferred by the

1888

department to the Florida Retirement System Trust Fund, the

1889

Public Employee Optional Retirement Investment Program Trust

1890

Fund, or other trust funds as authorized by law, to be used for

1891

the purposes of this chapter. The trust fund is exempt from the

1892

service charges imposed by s. 215.20.

1893

Section 13. Section 121.571, Florida Statutes, is amended

1894

to read:

1895

121.571 Contributions.--Contributions to the Public

1896

Employee Optional Retirement Investment Program shall be made as

1897

follows:

1898

(1) NONCONTRIBUTORY PLAN.--Each employer shall make

1899

accomplish the monthly contributions required under by s. 121.71

1900

without reducing an by a procedure in which no employee's gross

1901

salary shall be reduced.

1902

(2) CONTRIBUTION RATES GENERALLY.--Contributions to fund

1903

the retirement and disability benefits provided under this part

1904

must shall be based on the uniform contribution rates established

1905

by s. 121.71 and on the membership class or subclass of the

1906

participant. Such contributions must shall be allocated as

1907

provided in ss. 121.72 and 121.73.

1908

(3) CONTRIBUTIONS FOR SOCIAL SECURITY COVERAGE AND FOR

1909

RETIREE HEALTH INSURANCE SUBSIDY.--Contributions required under

1910

s. 121.71 are this section shall be in addition to employer and

1911

member contributions required for social security and the Retiree

1912

Health Insurance Subsidy Trust Fund as required under provided in

1913

ss. 112.363, 121.052, 121.055, and 121.071, as appropriate.

1914

Section 14. Section 121.591, Florida Statutes, is amended

1915

to read:

1916

121.591 Payment of benefits payable under the Public

1917

Employee Optional Retirement Program of the Florida Retirement

1918

System.--Benefits may not be paid under the Public Employee

1919

Retirement Investment Program this section unless the member has

1920

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

1921

deceased and a proper application has been filed as in the manner

1922

prescribed by the state board or the department. The state board

1923

or department, as appropriate, may cancel an application for

1924

retirement benefits when the member or beneficiary fails to

1925

timely provide the information and documents required by this

1926

chapter and the rules of the state board and department. In

1927

accordance with their respective responsibilities as provided

1928

herein, the state board of Administration and the department of

1929

Management Services shall adopt rules establishing procedures for

1930

application for retirement benefits and for the cancellation of

1931

such application when the required information or documents are

1932

not received. The state board of Administration and the

1933

department of Management Services, as appropriate, are authorized

1934

to cash out a de minimis account of not more than $5,000 of a

1935

participant who has been terminated from Florida Retirement

1936

System covered employment for a minimum of 6 calendar months. A

1937

de minimis account is an account containing employer

1938

contributions and accumulated earnings of not more than $5,000

1939

made under the provisions of this chapter. Such cash-out must

1940

either be a complete lump-sum liquidation of the account balance,

1941

subject to the provisions of the Internal Revenue Code, or a

1942

lump-sum direct rollover distribution paid directly to the

1943

custodian of an eligible retirement plan, as defined by the

1944

Internal Revenue Code, on behalf of the participant. If any

1945

financial instrument issued for the payment of retirement

1946

benefits under this section is not presented for payment within

1947

180 days after the last day of the month in which it was

1948

originally issued, the third-party administrator or other duly

1949

authorized agent of the state board of Administration shall

1950

cancel the instrument and credit the amount of the instrument to

1951

the suspense account of the Public Employee Optional Retirement

1952

Investment Program Trust Fund authorized under s. 121.450(7) s.

1953

121.4501(6). Any such amounts transferred to the suspense account

1954

are payable upon a proper application, not to include earnings

1955

thereon, as provided in this section, within 10 years after the

1956

last day of the month in which the instrument was originally

1957

issued, after which time such amounts and any earnings are

1958

thereon shall be forfeited. Any such forfeited amounts are assets

1959

of the Public Employee Optional Retirement Program trust fund and

1960

are not subject to the provisions of chapter 717.

1961

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

1962

Retirement Investment Program:

1963

(a) Benefits in the form of vested accumulations as

1964

described in s. 121.4501(7) are s. 121.4501(6) shall be payable

1965

under this subsection in accordance with the following terms and

1966

conditions:

1967

1. To the extent vested, Benefits shall be paid payable

1968

only to a participant.

1969

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

1970

or designated approved providers in accordance with the law, the

1971

contracts, and any applicable board rule or policy.

1972

3. To receive benefits under this subsection, The

1973

participant must be terminated from all employment with all

1974

Florida Retirement System employers, as provided in s.

1975

121.021(39).

1976

4. Benefit payments may not be made until the participant

1977

has been terminated for 3 calendar months, except that the state

1978

board may authorize by rule for the distribution of up to 10

1979

percent of the participant's account after being terminated for 1

1980

calendar month if a participant has reached the normal retirement

1981

requirements of the defined benefit plan, as provided in s.

1982

121.021(29).

1983

5. If a member or former member of the Florida Retirement

1984

System receives an invalid distribution from the Public Employee

1985

Optional Retirement Program Trust Fund, such person must shall

1986

repay the full amount invalid distribution to the trust fund

1987

within 90 days after receipt of final notification by the state

1988

board of Administration or the third-party administrator that the

1989

distribution was invalid. If such person fails to repay the full

1990

invalid distribution within 90 days after receipt of final

1991

notification, the person may be deemed retired from the

1992

investment Public Employee Optional Retirement program by the

1993

state board , as provided pursuant to s. 121.4501(2)(j), and

1994

shall be subject to the provisions of s. 121.122. If such person

1995

is deemed retired by the state board, any joint and several

1996

liability set out in s. 121.091(9)(c)2. is becomes null and void,

1997

and the state board, the department of Management Services, or

1998

the employing agency is not liable for gains on payroll

1999

contributions that have not been deposited to the person's

2000

account in the investment Public Employee Optional Retirement

2001

program, pending resolution of the invalid distribution. The

2002

member or former member who has been deemed retired or who has

2003

been determined by the board to have taken an invalid

2004

distribution may appeal the agency decision through the complaint

2005

process as provided under s. 121.4501(10)(f)3 s. 121.4501(9)(f)3.

2006

As used in this subparagraph, the term "invalid distribution"

2007

means any distribution from an account in the investment Public

2008

Employee Optional Retirement program which is taken in violation

2009

of the provisions of this section, s. 121.091(9), or s. 121.4501.

2010

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

2011

upon termination of employment, the participant must submit a

2012

written application or an equivalent form to the third-party

2013

administrator indicating his or her preferred distribution date

2014

and selecting an authorized method of distribution as provided in

2015

paragraph (c). The participant may defer receipt of benefits

2016

until he or she chooses to make such application, subject to

2017

federal requirements.

2018

2019

properly executed application for distribution of benefits, the

2020

total accumulated benefit shall be payable to the participant,

2021

as:

2022

1. A lump-sum distribution to the participant;

2023

2. A lump-sum direct rollover distribution whereby all

2024

accrued benefits, plus interest and investment earnings, are paid

2025

from the participant's account directly to the custodian of an

2026

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

2027

Internal Revenue Code, on behalf of the participant; or

2028

3. Periodic distributions, as authorized by the state

2029

board.

2030

(2) DISABILITY RETIREMENT BENEFITS.--Benefits provided

2031

under this subsection are payable in lieu of the benefits that

2032

which would otherwise be payable under the provisions of

2033

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

2034

employer contributions made under s. 121.571, transferred

2035

participant funds accumulated pursuant to paragraph (a), and

2036

interest and earnings thereon. Pursuant thereto:

2037

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

2038

disability benefits under this subsection:

2039

1. All moneys accumulated in the participant's Public

2040

Employee Optional Retirement Program accounts, including vested

2041

and nonvested accumulations as described in s. 121.4501(7) s.

2042

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

2043

accounts to the division of Retirement for deposit in the

2044

disability account of the Florida Retirement System Trust Fund.

2045

Such moneys must shall be separately accounted for separately.

2046

Earnings must shall be credited on an annual basis for amounts

2047

held in the disability accounts of the Florida Retirement System

2048

Trust Fund based on actual earnings of the Florida Retirement

2049

System trust fund.

2050

2. If the participant has retained retirement credit he or

2051

she had earned under the defined benefit program of the Florida

2052

Retirement System as provided in s. 121.4501(3) s.

2053

121.4501(3)(b), a sum representing the actuarial present value of

2054

such credit within the Florida Retirement System Trust Fund shall

2055

be reassigned by the division of Retirement from the defined

2056

benefit program to the disability program as implemented under

2057

this subsection and shall be deposited in the disability account

2058

of the Florida Retirement System trust fund. Such moneys must

2059

shall be separately accounted for separately.

2060

(b) Disability retirement; entitlement.--

2061

1. A participant of the investment Public Employee Optional

2062

Retirement program who becomes totally and permanently disabled,

2063

as defined in paragraph (d) s. 121.091(4)(b), after completing 8

2064

years of creditable service, or a participant who becomes totally

2065

and permanently disabled in the line of duty regardless of his or

2066

her length of service, is shall be entitled to a monthly

2067

disability benefit as provided herein.

2068

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

2069

creditable service required to vest for regular disability

2070

benefits, or toward the creditable service used in calculating a

2071

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

2072

service must be creditable service as described below:

2073

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

2074

Public Employee Optional Retirement program shall will be

2075

considered creditable service, except as provided in subparagraph

2076

2077

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

2078

or her service under the defined benefit program of the Florida

2079

Retirement System as provided under s. 121.4501(3) s.

2080

121.4501(3)(b), all such service shall will be considered

2081

creditable service.

2082

c. If the participant has elected to transfer to his or her

2083

participant accounts a sum representing the present value of his

2084

or her retirement credit under the defined benefit program as

2085

provided under s. 121.4501(3) s. 121.4501(3)(c), the period of

2086

service under the defined benefit program represented in the

2087

present value amounts transferred shall will be considered

2088

creditable service for purposes of vesting for disability

2089

benefits, except as provided in subparagraph d.

2090

d. Whenever a participant has terminated employment and has

2091

taken distribution of his or her funds as provided in subsection

2092

(1), all creditable service represented by such distributed funds

2093

is forfeited for purposes of this subsection.

2094

2095

retirement date for a participant who applies and is approved for

2096

disability retirement shall be established as provided under s.

2097

121.091(4)(a)2. and 3.

2098

(d) Total and permanent disability.--A participant shall be

2099

considered totally and permanently disabled if, in the opinion of

2100

the division, he or she is prevented, by reason of a medically

2101

determinable physical or mental impairment, from rendering useful

2102

and efficient service as an officer or employee.

2103

(e) Proof of disability.--The division, Before approving

2104

payment of any disability retirement benefit, the division shall

2105

require proof that the participant is totally and permanently

2106

disabled in the same manner as provided for members of the

2107

defined benefit program of the Florida Retirement System under s.

2108

121.091(4)(c).

2109

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

2110

retirement of a participant under this subsection, the

2111

participant shall receive a monthly benefit that begins accruing

2112

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

2113

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

2114

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

2115

his or her lifetime and continued disability. All disability

2116

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

2117

disability account of the Florida Retirement System Trust Fund

2118

established under this subsection.

2119

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

2120

amount of each monthly payment must shall be calculated in the

2121

same manner as provided for members of the defined benefit

2122

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

2123

For such purpose, Creditable service under both the defined

2124

benefit program and the investment Public Employee Optional

2125

Retirement program of the Florida Retirement System shall be

2126

applicable as provided under paragraph (b).

2127

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

2128

for disability retirement is has been denied may reapply for

2129

disability benefits in the same manner, and under the same

2130

conditions, as provided for members of the defined benefit

2131

program of the Florida Retirement System under s. 121.091(4)(g).

2132

(i) Membership.--Upon approval of a participant's an

2133

application for disability benefits under this subsection, the

2134

applicant shall be transferred to the defined benefit program of

2135

the Florida Retirement System, effective upon his or her

2136

disability retirement effective date.

2137

(j) Option to cancel.--A Any participant whose application

2138

for disability benefits is approved may cancel the his or her

2139

application if for disability benefits, provided that the

2140

cancellation request is received by the division before a

2141

disability retirement warrant has been deposited, cashed, or

2142

received by direct deposit. Upon such cancellation:

2143

1. The participant's transfer to the defined benefit

2144

program under paragraph (i) shall be nullified;

2145

2. The participant shall be retroactively reinstated in the

2146

investment Public Employee Optional Retirement program without

2147

hiatus;

2148

3. All funds transferred to the Florida Retirement System

2149

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

2150

participant accounts from which the such funds were drawn; and

2151

4. The participant may elect to receive the benefit payable

2152

under the provisions of subsection (1) in lieu of disability

2153

benefits as provided under this subsection.

2154

(k) Recovery from disability.--

2155

1. The division may require periodic reexaminations at the

2156

expense of the disability program account of the Florida

2157

Retirement System Trust Fund. Except as otherwise provided in

2158

subparagraph 2., the requirements, procedures, and restrictions

2159

relating to the conduct and review of such reexaminations,

2160

discontinuation or termination of benefits, reentry into

2161

employment, disability retirement after reentry into covered

2162

employment, and all other matters relating to recovery from

2163

disability shall be the same as provided are set forth under s.

2164

121.091(4)(h).

2165

2. Upon recovery from disability, the any recipient of

2166

disability retirement benefits under this subsection shall be

2167

transferred back to the investment program a compulsory member of

2168

the Public Employee Optional Retirement Program of the Florida

2169

Retirement System. The net difference between the recipient's

2170

original account balance transferred to the Florida Retirement

2171

System Trust Fund, including earnings, under paragraph (a) and

2172

total disability benefits paid to such recipient, if any, shall

2173

be determined as provided in sub-subparagraph a.

2174

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

2175

subtracted from that portion of the transferred account balance

2176

consisting of vested accumulations as described under s.

2177

121.4501(7) s. 121.4501(6), if any, and an amount equal to the

2178

remainder of benefit amounts paid, if any, shall then be

2179

subtracted from any remaining portion consisting of nonvested

2180

accumulations as described under s. 121.4501(6).

2181

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

2182

be retained within the disability account of the Florida

2183

Retirement System Trust Fund. Any remaining account balance shall

2184

be transferred to the third-party administrator for disposition

2185

as provided under sub-subparagraph c. or sub-subparagraph d., as

2186

appropriate.

2187

c. If the recipient returns to covered employment,

2188

transferred amounts must shall be deposited in individual

2189

accounts under the investment Public Employee Optional Retirement

2190

program, as directed by the participant. Vested and nonvested

2191

amounts shall be separately accounted for as provided in s.

2192

121.4501(7) s. 121.4501(6).

2193

d. If the recipient fails to return to covered employment

2194

upon recovery from disability:

2195

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

2196

individual accounts under the investment Public Employee Optional

2197

Retirement program, as directed by the participant, and is shall

2198

be payable as provided in subsection (1).

2199

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

2200

suspense account and is shall be forfeitable after 5 years as

2201

provided in s. 121.4501(7) s. 121.4501(6).

2202

3. If present value was reassigned from the defined benefit

2203

program to the disability program of the Florida Retirement

2204

System as provided under subparagraph (a)2., the full present

2205

value amount must shall be returned to the defined benefit

2206

account within the Florida Retirement System Trust Fund and the

2207

recipient's affected individual's associated retirement credit

2208

under the defined benefit program must shall be reinstated in

2209

full. Any benefit based upon such credit must shall be calculated

2210

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

2211

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

2212

shall not be entitled to receive a disability retirement benefit

2213

if the disability results from any injury or disease sustained or

2214

inflicted as described in s. 121.091(4)(i).

2215

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

2216

Supreme Court.--

2217

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

2218

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

2219

county court who has served for 6 years or more as an elected

2220

constitutional judicial officer, including service as a judicial

2221

officer in any court abolished pursuant to Art. V of the State

2222

Constitution, and who is retired for disability by order of the

2223

Supreme Court upon recommendation of the Judicial Qualifications

2224

Commission pursuant to s. 12, the provisions of Art. V of the

2225

State Constitution, the participant's Option 1 monthly disability

2226

benefit amount as provided in s. 121.091(6)(a)1. shall be two-

2227

thirds of his or her monthly compensation as of the participant's

2228

disability retirement date. The Such a participant may

2229

alternatively elect to receive an actuarially adjusted disability

2230

retirement benefit under any other option as provided in s.

2231

121.091(6)(a), or to receive the normal benefit payable under the

2232

Public Employee Optional Retirement Program as set forth in

2233

subsection (1).

2234

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

2235

investment Public Employee Optional Retirement program of the

2236

Florida Retirement System is retired for disability by order of

2237

the Supreme Court upon recommendation of the Judicial

2238

Qualifications Commission pursuant to s. 12, the provisions of

2239

Art. V of the State Constitution and elects to receive a monthly

2240

disability benefit under the provisions of this paragraph:

2241

a. Any present value amount that was transferred to his or

2242

her program account and all employer contributions made to such

2243

account on his or her behalf, plus interest and earnings thereon,

2244

must shall be transferred to and deposited in the disability

2245

account of the Florida Retirement System Trust Fund; and

2246

b. The monthly disability benefits payable under this

2247

paragraph for any affected justice or judge retired from the

2248

Florida Retirement System pursuant to Art. V of the State

2249

Constitution shall be paid from the disability account of the

2250

Florida Retirement System Trust Fund.

2251

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

2252

disabled retiree or beneficiary of the retiree thereof who is

2253

receiving monthly disability benefits under this subsection, the

2254

monthly benefits shall be paid through the last day of the month

2255

of death and shall terminate, or be adjusted, if applicable, as

2256

of that date in accordance with the optional form of benefit

2257

selected at the time of retirement. The department of Management

2258

Services may adopt rules necessary to administer this paragraph.

2259

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

2260

Retirement Investment Program:

2261

(a) Survivor benefits are shall be payable in accordance

2262

with the following terms and conditions:

2263

1. To the extent vested, benefits are shall be payable only

2264

to a participant's beneficiary or beneficiaries as designated by

2265

the participant as provided in s. 121.4501(21) s. 121.4501(20).

2266

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

2267

administrator or designated approved providers in accordance with

2268

the law, the contracts, and any applicable board rule or policy.

2269

3. To receive benefits under this subsection, the

2270

participant must be deceased.

2271

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

2272

accumulations as described in s. 121.4501(7) s. 121.4501(6), less

2273

withholding taxes remitted to the Internal Revenue Service, shall

2274

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

2275

s. 121.4501(21) s. 121.4501(20), as if the participant retired on

2276

the date of death. No other death benefits are shall be available

2277

for survivors of participants under the Public Employee Optional

2278

Retirement Program, except for such benefits, or coverage for

2279

such benefits, as are otherwise provided by law or are separately

2280

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

2281

2282

properly executed application for distribution of benefits, the

2283

total accumulated benefit are shall be payable by the third-party

2284

administrator to the participant's surviving beneficiary or

2285

beneficiaries, as:

2286

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

2287

beneficiaries, or to the deceased participant's estate;

2288

2. An eligible rollover distribution on behalf of the

2289

surviving spouse of a deceased participant, whereby all accrued

2290

benefits, plus interest and investment earnings, are paid from

2291

the deceased participant's account directly to the custodian of

2292

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

2293

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

2294

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

2295

accrued benefit is paid to the deceased participant's surviving

2296

spouse or other designated beneficiaries, less withholding taxes

2297

remitted to the Internal Revenue Service, and the remaining

2298

amount is transferred directly to the custodian of an eligible

2299

retirement plan, as described in s. 402(c)(8)(B) of the Internal

2300

Revenue Code, on behalf of the surviving spouse. The proportions

2301

must be specified by the participant or the surviving

2302

beneficiary.

2303

2304

This paragraph does not abrogate other applicable provisions of

2305

state or federal law providing for payment of death benefits.

2306

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

2307

any person under the Public Employee Optional Retirement

2308

Investment Program, and any contributions accumulated under such

2309

program, are not subject to assignment, execution, attachment, or

2310

any legal process, except for qualified domestic relations orders

2311

by a court of competent jurisdiction, income deduction orders as

2312

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

2313

Section 15. Section 121.5911, Florida Statutes, is amended

2314

to read:

2315

121.5911 Disability retirement program; qualified status;

2316

rulemaking authority.--It is the intent of the Legislature that

2317

the disability retirement program for participants of the Public

2318

Employee Optional Retirement Investment Program as created in

2319

this act must meet all applicable requirements of federal law for

2320

a qualified plan. The department of Management Services shall

2321

seek a private letter ruling from the Internal Revenue Service on

2322

the disability retirement program for participants of the Public

2323

Employee Optional Retirement Program. Consistent with the private

2324

letter ruling, the department of Management Services shall adopt

2325

any necessary rules necessary required to maintain the qualified

2326

status of the disability retirement program and the Florida

2327

Retirement System defined benefit plan.

2328

Section 16. Section 121.70, Florida Statutes, is amended to

2329

read:

2330

121.70 Legislative purpose and intent.--

2331

(1) This part provides for a uniform system for funding

2332

benefits provided under the Florida Retirement System defined

2333

benefit program established under part I of this chapter

2334

(referred to in this part as the defined benefit program) and

2335

under the Public Employee Optional Retirement Investment Program

2336

established under part II of this chapter (referred to in this

2337

part as the defined contribution optional retirement program).

2338

The Legislature recognizes and declares that the Florida

2339

Retirement System is a single retirement system, consisting of

2340

two retirement plans and other nonintegrated programs. Employers

2341

participating in the Florida Retirement System collectively shall

2342

be responsible for making contributions to support the benefits

2343

provided afforded under both programs plans. The As provided in

2344

this part, employers participating in the Florida Retirement

2345

System shall make contributions based upon uniform contribution

2346

rates determined as a percentage of the total payroll for each

2347

class or subclass of Florida Retirement System membership,

2348

irrespective of which retirement program the plan individual

2349

employee is enrolled in employees may elect. This shall be known

2350

as a uniform or blended contribution rate system.

2351

(2) In establishing a uniform contribution rate system, it

2352

is the intent of the Legislature to:

2353

(a) Provide greater stability and certainty in financial

2354

planning and budgeting for Florida Retirement System employers by

2355

eliminating the fiscal instability that would be caused by dual

2356

rates coupled with employee-selected plan participation; and

2357

(b) Provide greater fiscal equity and uniformity for system

2358

employers by effectively distributing the financial burden and

2359

benefit of short-term system deficits and surpluses,

2360

respectively, in proportion to total system payroll.; and

2361

2362

decisions free of circumstances that may cause employers to favor

2363

one plan choice over another.

2364

Section 17. Subsection (1) of section 121.71, Florida

2365

Statutes, is amended to read:

2366

121.71 Uniform rates; process; calculations; levy.--

2367

(1) In conducting the system actuarial study required under

2368

s. 121.031, the actuary shall follow all requirements specified

2369

thereunder to determine, by Florida Retirement System employee

2370

membership class, the dollar contribution amounts necessary for

2371

the forthcoming fiscal year for the defined benefit program. In

2372

addition, the actuary shall determine, by Florida Retirement

2373

System membership class, based on an estimate for the forthcoming

2374

fiscal year of the gross compensation of employees participating

2375

in the defined contribution optional retirement program, the

2376

dollar contribution amounts necessary to make the allocations

2377

required under ss. 121.72 and 121.73. For each employee

2378

membership class and subclass, the actuarial study must shall

2379

establish a uniform rate necessary to fund the benefit

2380

obligations under both Florida Retirement System retirement

2381

plans, by dividing the sum of total dollars required by the

2382

estimated gross compensation of members in both plans.

2383

Section 18. Section 121.72, Florida Statutes, is amended to

2384

read:

2385

121.72 Allocations to optional retirement program

2386

participant accounts; percentage amounts.--

2387

(1) The allocations established in subsection (4) shall

2388

fund retirement benefits under the defined contribution optional

2389

retirement program and shall be transferred monthly by the

2390

Division of Retirement from the Florida Retirement System

2391

Contributions Clearing Trust Fund to the third-party

2392

administrator for deposit in each participating employee's

2393

individual account based on the membership class of the

2394

participant.

2395

(2) The allocations are stated as a percentage of each

2396

defined contribution optional retirement program participant's

2397

gross compensation for the calendar month. A change in a

2398

contribution percentage is effective the first day of the month

2399

for which a full month's employer contribution may be made on or

2400

after the beginning date of the change. Contribution percentages

2401

may be modified by general law.

2402

(3) Employer and participant contributions to participant

2403

accounts shall be accounted for separately. Participant

2404

contributions may be made only if expressly authorized by law.

2405

Interest and investment earnings on contributions shall accrue on

2406

a tax-deferred basis until proceeds are distributed.

2407

(4) Effective July 1, 2002, allocations from the Florida

2408

Retirement System Contributions Clearing Trust Fund to defined

2409

contribution optional retirement program participant accounts

2410

shall be as follows:

2411

Membership Class

Percentage of Gross Compensation

2412

Regular Class

9.00%

2413

Special Risk Class

20.00%

2414

Special Risk Administrative Support Class

11.35%

2415

Elected Officers' Class - Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders

13.40%

2416

Elected Officers' Class - Justices, Judges

18.90%

2417

Elected Officers' Class - County Elected Officers

16.20%

2418

Senior Management Service Class

10.95%

2419

2420

Section 19. Section 121.73, Florida Statutes, is amended to

2421

read:

2422

121.73 Allocations for optional retirement program

2423

participant disability coverage; percentage amounts.--

2424

(1) The allocations established in subsection (3) shall be

2425

used to provide disability coverage for participants in the

2426

defined contribution optional retirement program and shall be

2427

transferred monthly by the Division of Retirement from the

2428

Florida Retirement System Contributions Clearing Trust Fund to

2429

the disability account of the Florida Retirement System Trust

2430

Fund.

2431

(2) The allocations are stated as a percentage of each

2432

defined contribution optional retirement program participant's

2433

gross compensation for the calendar month. A change in a

2434

contribution percentage is effective the first day of the month

2435

for which a full month's employer contribution may be made on or

2436

after the beginning date of the change. Contribution percentages

2437

may be modified by general law.

2438

(3) Effective July 1, 2002, allocations from the Florida

2439

Retirement System FRS Contribution Clearing Fund to provide

2440

disability coverage for participants in the defined contribution

2441

optional retirement program, and to offset the costs of

2442

administering said coverage, shall be as follows:

2443

Membership Class

Percentage of Gross Compensation

2444

Regular Class

0.25%

2445

Special Risk Class

1.33%

2446

Special Risk Administrative Support Class

0.45%

2447

Elected Officers' Class - Legislators, Governor, Lt. Governor, Cabinet Officers, State Attorneys, Public Defenders

0.41%

2448

Elected Officers' Class - Justices, Judges

0.73%

2449

Elected Officers' Class - County Elected Officers

0.41%

2450

Senior Management Service Class

0.26%

2451

2452

Section 20. Section 121.74, Florida Statutes, is amended to

2453

read:

2454

121.74 Administrative and educational expenses.--In

2455

addition to contributions required under s. 121.71, employers

2456

participating in the Florida Retirement System shall contribute

2457

an amount equal to 0.05 percent of the payroll reported for each

2458

class or subclass of Florida Retirement System membership, which

2459

amount shall be transferred by the Division of Retirement from

2460

the Florida Retirement System Contributions Clearing Trust Fund

2461

to the State Board of Administration's Administrative Trust Fund

2462

to offset the costs of administering the defined contribution

2463

optional retirement program and the costs of providing

2464

educational services to participants in the defined benefit

2465

program and the defined contribution optional retirement program.

2466

Approval of the Trustees of the State Board of Administration is

2467

required prior to the expenditure of these funds. Payments for

2468

third-party administrative or educational expenses shall be made

2469

only pursuant to the terms of the approved contracts for such

2470

services.

2471

Section 21. Section 121.77, Florida Statutes, is amended to

2472

read:

2473

121.77 Deductions from participant accounts.--The State

2474

Board of Administration may authorize the third-party

2475

administrator to deduct reasonable fees and apply appropriate

2476

charges to defined contribution optional retirement program

2477

participant accounts. In no event may shall administrative and

2478

educational expenses exceed the portion of employer contributions

2479

earmarked for such expenses under this part, except for

2480

reasonable administrative charges assessed against participant

2481

accounts of persons for whom no employer contributions are made

2482

during the calendar quarter. Investment management fees shall be

2483

deducted from participant accounts, pursuant to the terms of the

2484

contract between the provider and the board.

2485

Section 22. Subsection (3) of section 121.78, Florida

2486

Statutes, is amended to read:

2487

121.78 Payment and distribution of contributions.--

2488

(3)(a) Employer contributions and accompanying payroll data

2489

received after the 5th working day of the month shall be

2490

considered late. The employer shall be assessed by the Division

2491

of Retirement a penalty of 1 percent of the contributions due for

2492

each calendar month or part thereof that the contributions or

2493

accompanying payroll data are late. Proceeds from the 1-percent

2494

assessment against contributions made on behalf of participants

2495

of the defined benefit program must shall be deposited in the

2496

Florida Retirement System Trust Fund, and proceeds from the 1-

2497

percent assessment against contributions made on behalf of

2498

participants of the defined contribution optional retirement

2499

program shall be transferred to the third-party administrator for

2500

deposit into participant accounts, as provided in paragraph (b).

2501

(b) If contributions made by an employer on behalf of

2502

participants of the defined contribution optional retirement

2503

program or accompanying payroll data are not received within the

2504

calendar month they are due, including, but not limited to,

2505

contribution adjustments as a result of employer errors or

2506

corrections, and if that delinquency results in market losses to

2507

participants, the employer shall reimburse each participant's

2508

account for market losses resulting from the late contributions.

2509

If a participant has terminated employment and taken a

2510

distribution, the participant is responsible for returning any

2511

excess contributions erroneously provided by employers, adjusted

2512

for any investment gain or loss incurred during the period such

2513

excess contributions were in the participant's Public Employee

2514

Optional Retirement Program account. The State Board of

2515

Administration or its designated agent shall communicate to

2516

terminated participants any obligation to repay such excess

2517

contribution amounts. However, the State Board of Administration,

2518

its designated agents, the Public Employee Optional Retirement

2519

Investment Program Trust Fund, the Department of Management

2520

Services, or the Florida Retirement System Trust Fund may shall

2521

not incur any loss or gain as a result of an employer's

2522

correction of such excess contributions. The third-party

2523

administrator, hired by the state board pursuant to s.

2524

121.4501(9) s. 121.4501(8), shall calculate the market losses for

2525

each affected participant. When contributions made on behalf of

2526

participants of the defined contribution optional retirement

2527

program or accompanying payroll data are not received within the

2528

calendar month due, the employer shall also pay the cost of the

2529

third-party administrator's calculation and reconciliation

2530

adjustments resulting from the late contributions. The third-

2531

party administrator shall notify the employer of the results of

2532

the calculations and the total amount due from the employer for

2533

such losses and the costs of calculation and reconciliation. The

2534

employer shall remit to the division the amount due within 10

2535

working days after the date of the penalty notice sent by the

2536

division. The Division of Retirement shall transfer said amount

2537

to the third-party administrator, who shall deposit proceeds from

2538

the 1-percent assessment and from individual market losses into

2539

participant accounts, as appropriate. The board is authorized to

2540

adopt rules to implement the provisions regarding late

2541

contributions, late submission of payroll data, the process for

2542

reimbursing participant accounts for resultant market losses, and

2543

the penalties charged to the employers.

2544

2545

Retirement, with regard to defined benefit program contributions,

2546

and by the State Board of Administration, with regard to defined

2547

contribution optional retirement program contributions, only

2548

when, in the opinion of the division or the board, as

2549

appropriate, exceptional circumstances beyond the employer's

2550

control prevented remittance by the prescribed due date

2551

notwithstanding the employer's good faith efforts to effect

2552

delivery. Such a waiver of delinquency may be granted an employer

2553

only one time each state fiscal year.

2554

Section 23. The Division of Statutory Revision is directed

2555

to redesignate the title of part II of chapter 121, Florida

2556

Statutes, as "Public Employee Retirement Investment Program."

2557

Section 24. This act shall take effect July 1, 2008.

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