Florida Senate - 2015                   (Proposed Bill) SPB 7082
       
       
        
       FOR CONSIDERATION By the Committee on Governmental Oversight and
       Accountability
       
       
       
       
       585-03395A-15                                         20157082pb
    1                        A bill to be entitled                      
    2         An act relating to death benefits under the Florida
    3         Retirement System; amending s. 121.091, F.S.;
    4         authorizing payment of death benefits to the surviving
    5         spouse or surviving children of a Special Risk Class
    6         member killed in the line of duty under specified
    7         circumstances; specifying eligibility; amending s.
    8         121.571, F.S.; conforming provisions to changes made
    9         by the act; amending s. 121.591, F.S.; authorizing
   10         payment of death benefits to the surviving spouse or
   11         surviving children of a Special Risk Class member in
   12         the investment plan; establishing qualifications and
   13         eligibility requirements in order to receive such
   14         benefits; prescribing the method of calculating the
   15         benefit; specifying circumstances under which benefit
   16         payments are terminated; creating s. 121.5912, F.S.;
   17         providing legislative intent; requiring the State
   18         Board of Administration or the Division of Retirement
   19         to take certain action upon receipt of notification of
   20         disqualification from the Internal Revenue Service;
   21         authorizing the state board and the Department of
   22         Management Services to adopt rules; creating s.
   23         121.735, F.S.; providing for allocations for death
   24         benefits authorized by the act; amending s. 121.75,
   25         F.S.; adding a cross-reference to conform to changes
   26         made by the act; adjusting employer contribution rates
   27         in order to fund changes made by the act; providing a
   28         directive to the Division of Law Revision and
   29         Information; declaring that the act fulfills an
   30         important state interest; providing an effective date.
   31          
   32  Be It Enacted by the Legislature of the State of Florida:
   33  
   34         Section 1. Paragraph (d) of subsection (7) of section
   35  121.091, Florida Statutes, is amended, and paragraph (i) is
   36  added to that subsection, to read:
   37         121.091 Benefits payable under the system.—Benefits may not
   38  be paid under this section unless the member has terminated
   39  employment as provided in s. 121.021(39)(a) or begun
   40  participation in the Deferred Retirement Option Program as
   41  provided in subsection (13), and a proper application has been
   42  filed in the manner prescribed by the department. The department
   43  may cancel an application for retirement benefits when the
   44  member or beneficiary fails to timely provide the information
   45  and documents required by this chapter and the department’s
   46  rules. The department shall adopt rules establishing procedures
   47  for application for retirement benefits and for the cancellation
   48  of such application when the required information or documents
   49  are not received.
   50         (7) DEATH BENEFITS.—
   51         (d) Notwithstanding any other provision in this chapter to
   52  the contrary, with the exception of the Deferred Retirement
   53  Option Program, as provided in subsection (13):
   54         1. The surviving spouse of any member killed in the line of
   55  duty may receive a monthly pension equal to one-half of the
   56  monthly salary being received by the member at the time of death
   57  for the rest of the surviving spouse’s lifetime or, if the
   58  member was vested, such surviving spouse may elect to receive a
   59  benefit as provided in paragraph (b). Benefits provided by this
   60  paragraph shall supersede any other distribution that may have
   61  been provided by the member’s designation of beneficiary.
   62         2. If the surviving spouse of a member killed in the line
   63  of duty dies, the monthly payments which would have been payable
   64  to such surviving spouse had such surviving spouse lived shall
   65  be paid for the use and benefit of such member’s child or
   66  children under 18 years of age and unmarried until the 18th
   67  birthday of the member’s youngest child. Beginning July 1, 2015,
   68  such monthly payments may be extended for a child of a member in
   69  the Special Risk Class when killed on or after July 1, 2013,
   70  until the 25th birthday of such child if the child is unmarried
   71  and enrolled as a full-time student.
   72         3. If a member killed in the line of duty leaves no
   73  surviving spouse but is survived by a child or children under 18
   74  years of age, the benefits provided by subparagraph 1., normally
   75  payable to a surviving spouse, shall be paid for the use and
   76  benefit of such member’s child or children under 18 years of age
   77  and unmarried until the 18th birthday of the member’s youngest
   78  child. Beginning July 1, 2015, such monthly payments may be
   79  extended for a child of a member in the Special Risk Class when
   80  killed on or after July 1, 2013, until the 25th birthday of such
   81  child if the child is unmarried and enrolled as a full-time
   82  student.
   83         4. The surviving spouse of a member whose benefit
   84  terminated because of remarriage shall have the benefit
   85  reinstated beginning July 1, 1993, at an amount that would have
   86  been payable had the benefit not been terminated.
   87         (i)Notwithstanding any other provision in this chapter to
   88  the contrary, with the exception of the Deferred Retirement
   89  Option Program, as provided in subsection (13), for a member in
   90  the Special Risk Class when killed in the line of duty on or
   91  after July 1, 2013, the following benefits are payable in
   92  addition to the benefits provided in paragraph (d) beginning on
   93  or after July 1, 2015:
   94         1.The surviving spouse may receive a monthly pension equal
   95  to one-half of the monthly salary being received by the member
   96  at the time of death for the rest of the surviving spouse’s
   97  lifetime or, if the member was vested, such surviving spouse may
   98  elect to receive a benefit as provided in paragraph (b).
   99  Benefits provided by this paragraph shall supersede any other
  100  distribution that may have been provided by the member’s
  101  designation of beneficiary.
  102         2.If the surviving spouse dies, the monthly payments which
  103  would have been payable to such surviving spouse had such
  104  surviving spouse lived shall be paid for the use and benefit of
  105  such member’s child or children until the 18th birthday of the
  106  member’s youngest, unmarried child. Such monthly payments may be
  107  extended beyond this period until the 25th birthday of the
  108  member’s child if the child is unmarried and enrolled as a full
  109  time student.
  110         3.If the member leaves no surviving spouse but is survived
  111  by a child or children under 18 years of age, the benefits
  112  provided by subparagraph 1., normally payable to a surviving
  113  spouse, shall be paid for the use and benefit of such member’s
  114  child or children until the 18th birthday of the member’s
  115  youngest, unmarried child. Such monthly payments may be extended
  116  beyond this period until the 25th birthday of the member’s child
  117  if the child is unmarried and enrolled as a full-time student.
  118         Section 2. Subsection (2) of section 121.571, Florida
  119  Statutes, is amended to read:
  120         121.571 Contributions.—Contributions to the Florida
  121  Retirement System Investment Plan shall be made as follows:
  122         (2) CONTRIBUTION RATES GENERALLY.—Contributions to fund the
  123  retirement, and disability, and line-of-duty death benefits
  124  provided under this part must be based on the uniform
  125  contribution rates established by s. 121.71 and on the
  126  membership class or subclass of the member. Such contributions
  127  must be allocated as provided in ss. 121.72, and 121.73, and
  128  121.735.
  129         Section 3. Subsection (3) of section 121.591, Florida
  130  Statutes, is amended, present subsection (4) of that section is
  131  redesignated as subsection (5), and a new subsection (4) is
  132  added to that section, to read:
  133         121.591 Payment of benefits.—Benefits may not be paid under
  134  the Florida Retirement System Investment Plan unless the member
  135  has terminated employment as provided in s. 121.021(39)(a) or is
  136  deceased and a proper application has been filed as prescribed
  137  by the state board or the department. Benefits, including
  138  employee contributions, are not payable under the investment
  139  plan for employee hardships, unforeseeable emergencies, loans,
  140  medical expenses, educational expenses, purchase of a principal
  141  residence, payments necessary to prevent eviction or foreclosure
  142  on an employee’s principal residence, or any other reason except
  143  a requested distribution for retirement, a mandatory de minimis
  144  distribution authorized by the administrator, or a required
  145  minimum distribution provided pursuant to the Internal Revenue
  146  Code. The state board or department, as appropriate, may cancel
  147  an application for retirement benefits if the member or
  148  beneficiary fails to timely provide the information and
  149  documents required by this chapter and the rules of the state
  150  board and department. In accordance with their respective
  151  responsibilities, the state board and the department shall adopt
  152  rules establishing procedures for application for retirement
  153  benefits and for the cancellation of such application if the
  154  required information or documents are not received. The state
  155  board and the department, as appropriate, are authorized to cash
  156  out a de minimis account of a member who has been terminated
  157  from Florida Retirement System covered employment for a minimum
  158  of 6 calendar months. A de minimis account is an account
  159  containing employer and employee contributions and accumulated
  160  earnings of not more than $5,000 made under the provisions of
  161  this chapter. Such cash-out must be a complete lump-sum
  162  liquidation of the account balance, subject to the provisions of
  163  the Internal Revenue Code, or a lump-sum direct rollover
  164  distribution paid directly to the custodian of an eligible
  165  retirement plan, as defined by the Internal Revenue Code, on
  166  behalf of the member. Any nonvested accumulations and associated
  167  service credit, including amounts transferred to the suspense
  168  account of the Florida Retirement System Investment Plan Trust
  169  Fund authorized under s. 121.4501(6), shall be forfeited upon
  170  payment of any vested benefit to a member or beneficiary, except
  171  for de minimis distributions or minimum required distributions
  172  as provided under this section. If any financial instrument
  173  issued for the payment of retirement benefits under this section
  174  is not presented for payment within 180 days after the last day
  175  of the month in which it was originally issued, the third-party
  176  administrator or other duly authorized agent of the state board
  177  shall cancel the instrument and credit the amount of the
  178  instrument to the suspense account of the Florida Retirement
  179  System Investment Plan Trust Fund authorized under s.
  180  121.4501(6). Any amounts transferred to the suspense account are
  181  payable upon a proper application, not to include earnings
  182  thereon, as provided in this section, within 10 years after the
  183  last day of the month in which the instrument was originally
  184  issued, after which time such amounts and any earnings
  185  attributable to employer contributions shall be forfeited. Any
  186  forfeited amounts are assets of the trust fund and are not
  187  subject to chapter 717.
  188         (3) DEATH BENEFITS.—Under the Florida Retirement System
  189  Investment Plan:
  190         (a) Survivor benefits are payable in accordance with the
  191  following terms and conditions, except as provided in subsection
  192  (4):
  193         1. To the extent vested, benefits are payable only to a
  194  member’s beneficiary or beneficiaries as designated by the
  195  member as provided in s. 121.4501(20).
  196         2. Benefits shall be paid by the third-party administrator
  197  or designated approved providers in accordance with the law, the
  198  contracts, and any applicable state board rule or policy.
  199         3. To receive benefits, the member must be deceased.
  200         (b) Except as provided in subsection (4), in the event of a
  201  member’s death, all vested accumulations as described in s.
  202  121.4501(6), less withholding taxes remitted to the Internal
  203  Revenue Service, shall be distributed, as provided in paragraph
  204  (c) or as described in s. 121.4501(20), as if the member retired
  205  on the date of death. No other death benefits are available for
  206  survivors of members, except for benefits, or coverage for
  207  benefits, as are otherwise provided by law or separately
  208  provided by the employer, at the employer’s discretion.
  209         (c) Except as provided in subsection (4), upon receipt by
  210  the third-party administrator of a properly executed application
  211  for distribution of benefits, the total accumulated benefit is
  212  payable by the third-party administrator to the member’s
  213  surviving beneficiary or beneficiaries, as:
  214         1. A lump-sum distribution payable to the beneficiary or
  215  beneficiaries, or to the deceased member’s estate;
  216         2. An eligible rollover distribution, if permitted, on
  217  behalf of the surviving spouse of a deceased member, whereby all
  218  accrued benefits, plus interest and investment earnings, are
  219  paid from the deceased member’s account directly to the
  220  custodian of an eligible retirement plan, as described in s.
  221  402(c)(8)(B) of the Internal Revenue Code, on behalf of the
  222  surviving spouse; or
  223         3. A partial lump-sum payment whereby a portion of the
  224  accrued benefit is paid to the deceased member’s surviving
  225  spouse or other designated beneficiaries, less withholding taxes
  226  remitted to the Internal Revenue Service, and the remaining
  227  amount is transferred directly to the custodian of an eligible
  228  retirement plan, if permitted, as described in s. 402(c)(8)(B)
  229  of the Internal Revenue Code, on behalf of the surviving spouse.
  230  The proportions must be specified by the member or the surviving
  231  beneficiary.
  232  
  233  This paragraph does not abrogate other applicable provisions of
  234  state or federal law providing for payment of death benefits.
  235         (4)DEATH BENEFITS FOR SPECIAL RISK CLASS MEMBERS.—Benefits
  236  are provided under this subsection to the spouse and children of
  237  members in the Special Risk Class when killed in the line of
  238  duty and are payable in lieu of the benefits that would
  239  otherwise be payable under the provisions of subsections (1) or
  240  (3). Such benefits must be funded from employer contributions
  241  made under s. 121.571, transferred employee contributions and
  242  funds accumulated pursuant to paragraph (a), and interest and
  243  earnings thereon.
  244         (a)Transfer of funds.—To qualify to receive monthly
  245  benefits under this subsection:
  246         1.All moneys accumulated in the member’s account,
  247  including vested and nonvested accumulations as described in s.
  248  121.4501(6), must be transferred from such individual accounts
  249  to the division for deposit in the survivor benefit account of
  250  the Florida Retirement System Trust Fund. Moneys in the survivor
  251  benefit account must be accounted for separately. Earnings must
  252  be credited on an annual basis for amounts held in the survivor
  253  benefit account of the Florida Retirement System Trust Fund
  254  based on actual earnings of the trust fund.
  255         2.If the member has retained retirement credit earned
  256  under the pension plan as provided in s. 121.4501(3), a sum
  257  representing the actuarial present value of such credit within
  258  the Florida Retirement System Trust Fund shall be reassigned by
  259  the division from the pension plan to the survivor benefit
  260  retirement program as implemented under this subsection and
  261  shall be deposited in the survivor benefit account of the trust
  262  fund.
  263         (b)Survivor retirement; entitlement.—An investment plan
  264  member who is in the Special Risk Class at the time the member
  265  is killed in the line of duty on or after July 1, 2013,
  266  regardless of length of creditable service, may have survivor
  267  benefits paid as provided in s. 121.091(7)(d) and (i) to:
  268         1.The surviving spouse for the spouse’s lifetime; or
  269         2.If no surviving spouse or the surviving spouse dies, the
  270  dependent child or children until the 18th birthday of the
  271  youngest, unmarried child. Such payments may be extended until
  272  the 25th birthday of the member’s child if the child is
  273  unmarried and enrolled as a full-time student as provided in s.
  274  121.091(7)(d) and (i).
  275         (c)Survivor benefit retirement effective date.—The
  276  effective retirement date for the surviving spouse or eligible
  277  dependent child of a Special Risk Class member who is killed in
  278  the line of duty shall be:
  279         1.The first of the month following the member’s death if
  280  the member dies on or after July 1, 2015.
  281         2.July 1, 2015, for a member of the Special Risk Class
  282  when killed in the line of duty on or after July 1, 2013, but
  283  before July 1, 2015, if the application is received before July
  284  1, 2015; or the first of the month following the receipt of the
  285  application.
  286  
  287  If the investment plan account balance has already been paid out
  288  to the surviving spouse or the eligible unmarried dependent
  289  child or children, the benefit payable shall be actuarially
  290  reduced by the amount of the payout.
  291         (d)Line-of-duty death benefit.—The surviving spouse; or if
  292  no surviving spouse or the surviving spouse dies, the unmarried
  293  child or children under 18 years of age and until the 18th
  294  birthday of the youngest child, or until the 25th birthday of
  295  the member’s child if the child is unmarried and enrolled as a
  296  full-time student, is eligible to receive a retirement benefit
  297  under s. 121.091(7)(d) and (i) if the member’s account balance
  298  is surrendered and an application is received and approved. Such
  299  surviving spouse or such child or children shall receive a
  300  monthly survivor benefit that begins accruing on the first day
  301  of the month of survivor benefit retirement, as approved by the
  302  division, and is payable on the last day of that month and each
  303  month thereafter during the surviving spouse’s lifetime or on
  304  behalf of the unmarried children until the 18th birthday of the
  305  youngest child, or until the 25th birthday of any of the
  306  member’s children enrolled as a full-time student. All survivor
  307  benefits must be paid out of the survivor benefit account of the
  308  Florida Retirement System Trust Fund established under this
  309  subsection.
  310  
  311  If the investment plan account balance has already been paid out
  312  to the surviving spouse or the eligible unmarried dependent
  313  child or children, the benefit payable shall be actuarially
  314  reduced by the amount of the payout.
  315         (e)Computation of survivor benefit retirement benefit.—The
  316  amount of each monthly payment must be calculated as provided
  317  under s. 121.091(7)(d) and (i).
  318         (f)Death of the surviving spouse or children.
  319         1.Upon the death of a surviving spouse, the monthly
  320  benefits shall be paid through the last day of the month of
  321  death and shall terminate or be paid on behalf of the unmarried
  322  child or children until the 18th birthday of the youngest child,
  323  or the 25th birthday of any of the member’s unmarried children
  324  enrolled as a full-time student.
  325         2.If the surviving spouse dies and the benefit is being
  326  paid on behalf of the unmarried children under 18 years of age
  327  until the youngest, unmarried child reaches his or her 18th
  328  birthday, or the 25th birthday of any of the member’s unmarried
  329  children enrolled as a full time student, benefits shall be paid
  330  through the last day of the month until the later of the month
  331  the youngest, unmarried child reaches his or her 18th birthday,
  332  the month of the 25th birthday of any of the member’s unmarried
  333  children enrolled as a full-time student, or the month of the
  334  death of the youngest child.
  335         Section 4. Section 121.5912, Florida Statutes, is created
  336  to read:
  337         121.5912 Survivor benefit retirement program; qualified
  338  status; rulemaking authority.—It is the intent of the
  339  Legislature that the survivor benefit retirement program for
  340  Special Risk Class members of the Florida Retirement System
  341  investment plan meet all applicable requirements for a qualified
  342  plan. If the state board or the division receives notification
  343  from the Internal Revenue Service that this program or any
  344  portion of this program will cause the retirement system, or any
  345  portion thereof, to be disqualified for tax purposes under the
  346  Internal Revenue Code, the portion that will cause the
  347  disqualification does not apply. Upon such notice, the state
  348  board or the division shall notify the presiding officers of the
  349  Legislature. The state board and the department may adopt any
  350  rules necessary to maintain the qualified status of the survivor
  351  benefit retirement program.
  352         Section 5. Section 121.735, Florida Statutes, is created to
  353  read:
  354         121.735 Allocations for member line-of-duty death benefits;
  355  percentage amounts.—
  356         (1) The allocations established in subsection (3) shall be
  357  used to provide line-of-duty death benefit coverage for Special
  358  Risk Class members in the investment plan and shall be
  359  transferred monthly by the Division of Retirement from the
  360  Florida Retirement System Contributions Clearing Trust Fund to
  361  the survivor benefit account of the Florida Retirement System
  362  Trust Fund.
  363         (2) The allocations are stated as a percentage of each
  364  investment plan member’s gross compensation for the calendar
  365  month. A change in a contribution percentage is effective the
  366  first day of the month for which retirement contributions may be
  367  made on or after the beginning date of the change. Contribution
  368  percentages may be modified by general law.
  369         (3)Effective July 1, 2015, allocations from the Florida
  370  Retirement System Contributions Clearing Trust Fund to provide
  371  line-of-duty death benefits for Special Risk Class members in
  372  the investment plan, and to offset the costs of administering
  373  said coverage, are as follows:
  374  
  375  
  376  Membership Class                 Percentage of Gross Compensation 
  377  
  378  Special Risk Class               0.82%                            
  379  
  380  
  381         Section 6. Section 121.75, Florida Statutes, is amended to
  382  read:
  383         121.75 Allocation for pension plan.—After making the
  384  transfers required pursuant to ss. 121.71, 121.72, 121.73,
  385  121.735, and 121.74, the monthly balance of funds in the Florida
  386  Retirement System Contributions Clearing Trust Fund shall be
  387  transferred to the Florida Retirement System Trust Fund to pay
  388  the costs of providing pension plan benefits and plan
  389  administrative costs under the pension plan.
  390         Section 7. (1) In order to fund the benefit changes
  391  provided in this act, the required employer contribution rates
  392  for members of the Florida Retirement System established in s.
  393  121.71(4), Florida Statutes, must be adjusted as follows:
  394         (a) The Special Risk Class must be increased by 0.45
  395  percentage point; and
  396         (b) The Deferred Retirement Option Program must be
  397  increased by 0.06 percentage point.
  398         (2) In order to fund the benefit changes provided in this
  399  act, the required employer contribution rate for the unfunded
  400  actuarial liability of the Florida Retirement System established
  401  in s. 121.71(5), Florida Statutes, for the Special Risk Class is
  402  increased by 0.13 percentage point.
  403         (3) The adjustments provided in subsections (1) and (2)
  404  shall be in addition to all other changes to such contribution
  405  rates which may be enacted into law to take effect on July 1,
  406  2015. The Division of Law Revision and Information is directed
  407  to adjust accordingly the contribution rates provided in s.
  408  121.71, Florida Statutes.
  409         Section 8. The Legislature finds that a proper and
  410  legitimate state purpose is served when employees and retirees
  411  of the state and of its political subdivisions, and the
  412  dependents, survivors, and beneficiaries of such employees and
  413  retirees, are extended the basic protections afforded by
  414  governmental retirement systems that provide fair and adequate
  415  benefits that are managed, administered, and funded in an
  416  actuarially sound manner, as required by s. 14, Article X of the
  417  State Constitution and part VII of chapter 112, Florida
  418  Statutes. Therefore, the Legislature determines and declares
  419  that this act fulfills an important state interest.
  420         Section 9. This act shall take effect July 1, 2015.