Florida Senate - 2013 SB 534 By Senator Brandes 22-00447C-13 2013534__ 1 A bill to be entitled 2 An act relating to publicly-funded defined benefit 3 retirement plans; amending s. 112.66, F.S.; providing 4 that the state is not liable for shortfalls in local 5 government retirement systems or plans; creating s. 6 112.664, F.S.; requiring a defined benefit system or 7 plan to report certain information to the Department 8 of Management Services and specifying the assumptions 9 and methods to be used in determining the information 10 submitted; requiring the plan sponsor to make the 11 information available on certain websites; providing a 12 time certain for submission of the information; 13 providing consequences for failure to submit the 14 required information; providing an effective date. 15 16 WHEREAS, in 2012, there were 492 local government employee 17 defined benefit pension plans in Florida, providing pension 18 benefits to approximately 79,000 retirees. The interests of 19 participants in many of these plans may have property rights 20 implications under state law, and 21 WHEREAS, local government employee defined benefit pension 22 plans are becoming a large financial burden on certain local 23 governments and have already resulted in tax increases and the 24 reduction of services, and 25 WHEREAS, the 2012 Florida Local Government Retirement 26 Systems Annual Report published by the Department of Management 27 Services specifies the total unfunded actuarial accrued 28 liability of all local government defined benefit pension plans 29 at approximately $10 billion, and 30 WHEREAS, some economists and observers have stated that the 31 extent to which state or local government employee defined 32 benefit pension plans are underfunded is obscured by 33 governmental accounting rules and practices, particularly as 34 they relate to the valuation of plan assets and liabilities. 35 This results in a misstatement of the value of plan assets and 36 an understatement of plan liabilities, a situation that poses a 37 significant threat to the soundness of state and local budgets, 38 and 39 WHEREAS, there is currently a lack of meaningful disclosure 40 regarding the value of state or local government employee direct 41 benefit pension plan assets and liabilities. This lack of 42 meaningful disclosure poses a direct and serious threat to the 43 financial stability of such plans and their sponsoring 44 governments, impairs the ability of state and local government 45 taxpayers and officials to understand the financial obligations 46 of their government, and reduces the likelihood that state and 47 local government processes will be effective in assuring the 48 prudent management of their plans, and 49 WHEREAS, the financial health of state or local government 50 employee pension benefit plans can have statewide public 51 repercussions, and the meaningful disclosure of the value of 52 their assets and liabilities is necessary and desirable in order 53 to adequately protect plan participants and their beneficiaries 54 as well as the general public, and to further efforts to provide 55 for the general welfare and the free flow of commerce, NOW, 56 THEREFORE, 57 58 Be It Enacted by the Legislature of the State of Florida: 59 60 Section 1. Subsection (14) is added to section 112.66, 61 Florida Statutes, to read: 62 112.66 General provisions.—The following general provisions 63 relating to the operation and administration of any retirement 64 system or plan covered by this part are
shall beapplicable: 65 (14) The state is not liable for any obligation relating to 66 any current or future shortfall in any local government 67 retirement system or plan. 68 Section 2. Section 112.664, Florida Statutes, is created to 69 read: 70 112.664 Reporting standards for defined benefit retirement 71 plans or systems.— 72 (1) In addition to the other reporting requirements of this 73 part, effective July 1, 2013, and for every other plan year 74 completed on or after January 1, 2013, each defined benefit 75 retirement system or plan, including the Florida Retirement 76 System, shall electronically report the following information to 77 the Department of Management Services in a format established by 78 the department: 79 (a) The long-term funded ratio calculated in a manner 80 similar to the Government Accounting Standards Board’s Statement 81 No. 67, Financial Reporting for Pension Plans, including the 82 market value of its assets, the value of its actuarial 83 liabilities, and the amount of its unfunded accrued liability, 84 if any. 85 (b) The dollar value of the unfunded accrued liability, if 86 any, of the plan. 87 (c) The number of months or years for which the current 88 market value of assets are adequate to sustain the payment of 89 expected retirement benefits. 90 (d) The recommended contributions to the plan under the 91 calculations required under paragraph (a) stated as an annual 92 dollar value and a percentage of valuation payroll. 93 (2) Each defined benefit retirement system or plan shall 94 use the following assumptions and methods in determining the 95 information required under subsection (1): 96 (a) The actuarial cost method, which is the Entry Age 97 Normal method. 98 (b) The assumed rate of return on investments and the 99 assumed discount rate, which are the adjusted 24-month average 100 corporate bond segment rates determined under s. 101 430(h)(2)(C)(iv) of the Internal Revenue Code by the Department 102 of the Treasury. 103 (c) Preretirement mortality calculated using the RP-2000 104 Mortality Tables for male and female employees. Postretirement 105 mortality is calculated using the RP-2000 Mortality Tables for 106 healthy white-collar employees, as projected from the year 2000 107 to the valuation year using Projection Scale AA. 108 (d) The asset valuation method, which is the market value 109 less the value of any deferred retirement option program 110 accounts. 111 (e) All other assumptions and methods used by the system or 112 plan in its latest valuation. 113 (3) Each defined benefit retirement system or plan and its 114 plan sponsor shall provide the information required by this 115 section and the funded ratio of the system or plan as determined 116 in the most recent actuarial valuation as part of the 117 disclosures required under s. 166.241(3) and on any website that 118 contains budget information relating to the plan sponsor or 119 actuarial or performance information related to the system or 120 plan. 121 (4) Each retirement system or plan shall submit the 122 information required by this section to the department within 123 180 days after the close of the plan year together with 124 appropriate signed actuarial certification as established by the 125 department. For those plan years ending between January 1, 2013, 126 and July 1, 2013, the due date for the submission of information 127 is October 1, 2013. 128 (5) A plan established under chapter 175 or chapter 185 129 that fails to submit the information on a timely basis shall be 130 deemed to be in noncompliance with chapters 175 and 185, as 131 applicable. 132 (6) Any local government defined benefit pension plan that 133 fails to submit the information on a timely basis shall be 134 deemed to be in noncompliance with this part. 135 Section 3. This act shall take effect July 1, 2013.