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,anddisability, 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,and121.73, 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.