Florida Senate - 2016 (PROPOSED BILL) SPB 7012
FOR CONSIDERATION By the Committee on Governmental Oversight and
Accountability
585-00361-16 20167012pb
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 children of a Special Risk Class member
6 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 ss. 121.71,
25 121.74, and 121.75, F.S.; conforming cross-references
26 to changes made by the act; requiring the State Board
27 of Administration to transfer moneys to fund survivor
28 benefit payments under specified circumstances;
29 adjusting employer contribution rates in order to fund
30 changes made by the act; providing a directive to the
31 Division of Law Revision and Information; declaring
32 that the act fulfills an important state interest;
33 providing an appropriation; providing an effective
34 date.
35
36 Be It Enacted by the Legislature of the State of Florida:
37
38 Section 1. Paragraph (d) of subsection (7) of section
39 121.091, Florida Statutes, is amended, and paragraph (i) is
40 added to that subsection, to read:
41 121.091 Benefits payable under the system.—Benefits may not
42 be paid under this section unless the member has terminated
43 employment as provided in s. 121.021(39)(a) or begun
44 participation in the Deferred Retirement Option Program as
45 provided in subsection (13), and a proper application has been
46 filed in the manner prescribed by the department. The department
47 may cancel an application for retirement benefits when the
48 member or beneficiary fails to timely provide the information
49 and documents required by this chapter and the department’s
50 rules. The department shall adopt rules establishing procedures
51 for application for retirement benefits and for the cancellation
52 of such application when the required information or documents
53 are not received.
54 (7) DEATH BENEFITS.—
55 (d) Notwithstanding any other provision in this chapter to
56 the contrary, with the exception of the Deferred Retirement
57 Option Program, as provided in subsection (13):
58 1. The surviving spouse of any member killed in the line of
59 duty may receive a monthly pension equal to one-half of the
60 monthly salary being received by the member at the time of death
61 for the rest of the surviving spouse’s lifetime or, if the
62 member was vested, such surviving spouse may elect to receive a
63 benefit as provided in paragraph (b). Benefits provided by this
64 paragraph shall supersede any other distribution that may have
65 been provided by the member’s designation of beneficiary.
66 2. If the surviving spouse of a member killed in the line
67 of duty dies, the monthly payments that which would have been
68 payable to such surviving spouse had such surviving spouse lived
69 shall be paid for the use and benefit of such member’s child or
70 children under 18 years of age and unmarried until the 18th
71 birthday of the member’s youngest child. Beginning July 1, 2016,
72 such payments may be extended, for the surviving child of a
73 member in the Special Risk Class at the time he or she was
74 killed in the line of duty on or after July 1, 2013, until the
75 25th birthday of any child of the member if the child is
76 unmarried and enrolled as a full-time student.
77 3. If a member killed in the line of duty leaves no
78 surviving spouse but is survived by a child or children under 18
79 years of age, the benefits provided by subparagraph 1., normally
80 payable to a surviving spouse, shall be paid for the use and
81 benefit of such member’s child or children under 18 years of age
82 and unmarried until the 18th birthday of the member’s youngest
83 child. Beginning July 1, 2016, such monthly payments may be
84 extended, for the surviving child of a member in the Special
85 Risk Class at the time he or she was killed in the line of duty
86 on or after July 1, 2013, until the 25th birthday of any child
87 of the member if the child is unmarried and enrolled as a full
88 time student.
89 4. The surviving spouse of a member whose benefit
90 terminated because of remarriage shall have the benefit
91 reinstated beginning July 1, 1993, at an amount that would have
92 been payable had the benefit not been terminated.
93 (i) Effective July 1, 2016, and notwithstanding any
94 provision in this chapter to the contrary, if a member in the
95 Special Risk Class, other than a participant in the Deferred
96 Retirement Option Program under subsection (13), is killed in
97 the line of duty on or after July 1, 2013, the following
98 benefits are payable in addition to the benefits provided in
99 paragraph (d):
100 1. The surviving spouse may receive a monthly pension equal
101 to one-half of the monthly salary being received by the member
102 at the time of the member’s death for the rest of the surviving
103 spouse’s lifetime or, if the member was vested, such surviving
104 spouse may elect to receive a benefit as provided in paragraph
105 (b). Benefits provided by this paragraph supersede any other
106 distribution that may have been provided by the member’s
107 designation of beneficiary.
108 2. If the surviving spouse dies, the monthly payments that
109 otherwise would have been payable to such surviving spouse shall
110 be paid for the use and benefit of the member’s child or
111 children under 18 years of age and unmarried until the 18th
112 birthday of the member’s youngest child. Such monthly payments
113 may be extended until the 25th birthday of the member’s child if
114 the child is unmarried and enrolled as a full-time student.
115 3. If the member leaves no surviving spouse but is survived
116 by a child or children under 18 years of age, the benefits
117 provided by subparagraph 1., normally payable to a surviving
118 spouse, shall be paid for the use and benefit of such member’s
119 child or children under 18 years of age and unmarried until the
120 18th birthday of the member’s youngest child. Such monthly
121 payments may be extended until the 25th birthday of any of the
122 member’s children if the child is unmarried and enrolled as a
123 full-time student.
124 Section 2. Subsection (2) of section 121.571, Florida
125 Statutes, is amended to read:
126 121.571 Contributions.—Contributions to the Florida
127 Retirement System Investment Plan shall be made as follows:
128 (2) CONTRIBUTION RATES GENERALLY.—Contributions to fund the
129 retirement, and disability, and line-of-duty death benefits
130 provided under this part must be based on the uniform
131 contribution rates established by s. 121.71 and on the
132 membership class or subclass of the member. Such contributions
133 must be allocated as provided in ss. 121.72, and 121.73, and
134 121.735.
135 Section 3. Subsection (3) of section 121.591, Florida
136 Statutes, is amended, present subsection (4) of that section is
137 redesignated as subsection (5), and a new subsection (4) is
138 added to that section, to read:
139 121.591 Payment of benefits.—Benefits may not be paid under
140 the Florida Retirement System Investment Plan unless the member
141 has terminated employment as provided in s. 121.021(39)(a) or is
142 deceased and a proper application has been filed as prescribed
143 by the state board or the department. Benefits, including
144 employee contributions, are not payable under the investment
145 plan for employee hardships, unforeseeable emergencies, loans,
146 medical expenses, educational expenses, purchase of a principal
147 residence, payments necessary to prevent eviction or foreclosure
148 on an employee’s principal residence, or any other reason except
149 a requested distribution for retirement, a mandatory de minimis
150 distribution authorized by the administrator, or a required
151 minimum distribution provided pursuant to the Internal Revenue
152 Code. The state board or department, as appropriate, may cancel
153 an application for retirement benefits if the member or
154 beneficiary fails to timely provide the information and
155 documents required by this chapter and the rules of the state
156 board and department. In accordance with their respective
157 responsibilities, the state board and the department shall adopt
158 rules establishing procedures for application for retirement
159 benefits and for the cancellation of such application if the
160 required information or documents are not received. The state
161 board and the department, as appropriate, are authorized to cash
162 out a de minimis account of a member who has been terminated
163 from Florida Retirement System covered employment for a minimum
164 of 6 calendar months. A de minimis account is an account
165 containing employer and employee contributions and accumulated
166 earnings of not more than $5,000 made under the provisions of
167 this chapter. Such cash-out must be a complete lump-sum
168 liquidation of the account balance, subject to the provisions of
169 the Internal Revenue Code, or a lump-sum direct rollover
170 distribution paid directly to the custodian of an eligible
171 retirement plan, as defined by the Internal Revenue Code, on
172 behalf of the member. Any nonvested accumulations and associated
173 service credit, including amounts transferred to the suspense
174 account of the Florida Retirement System Investment Plan Trust
175 Fund authorized under s. 121.4501(6), shall be forfeited upon
176 payment of any vested benefit to a member or beneficiary, except
177 for de minimis distributions or minimum required distributions
178 as provided under this section. If any financial instrument
179 issued for the payment of retirement benefits under this section
180 is not presented for payment within 180 days after the last day
181 of the month in which it was originally issued, the third-party
182 administrator or other duly authorized agent of the state board
183 shall cancel the instrument and credit the amount of the
184 instrument to the suspense account of the Florida Retirement
185 System Investment Plan Trust Fund authorized under s.
186 121.4501(6). Any amounts transferred to the suspense account are
187 payable upon a proper application, not to include earnings
188 thereon, as provided in this section, within 10 years after the
189 last day of the month in which the instrument was originally
190 issued, after which time such amounts and any earnings
191 attributable to employer contributions shall be forfeited. Any
192 forfeited amounts are assets of the trust fund and are not
193 subject to chapter 717.
194 (3) DEATH BENEFITS.—Under the Florida Retirement System
195 Investment Plan:
196 (a) Survivor benefits are payable in accordance with the
197 following terms and conditions, except as provided in subsection
198 (4):
199 1. To the extent vested, benefits are payable only to a
200 member’s beneficiary or beneficiaries as designated by the
201 member as provided in s. 121.4501(20).
202 2. Benefits shall be paid by the third-party administrator
203 or designated approved providers in accordance with the law, the
204 contracts, and any applicable state board rule or policy.
205 3. To receive benefits, the member must be deceased.
206 (b) Except as provided in subsection (4), in the event of a
207 member’s death, all vested accumulations as described in s.
208 121.4501(6), less withholding taxes remitted to the Internal
209 Revenue Service, shall be distributed, as provided in paragraph
210 (c) or as described in s. 121.4501(20), as if the member retired
211 on the date of death. No other death benefits are available for
212 survivors of members, except for benefits, or coverage for
213 benefits, as are otherwise provided by law or separately
214 provided by the employer, at the employer’s discretion.
215 (c) Except as provided in subsection (4), upon receipt by
216 the third-party administrator of a properly executed application
217 for distribution of benefits, the total accumulated benefit is
218 payable by the third-party administrator to the member’s
219 surviving beneficiary or beneficiaries, as:
220 1. A lump-sum distribution payable to the beneficiary or
221 beneficiaries, or to the deceased member’s estate;
222 2. An eligible rollover distribution, if permitted, on
223 behalf of the surviving spouse of a deceased member, whereby all
224 accrued benefits, plus interest and investment earnings, are
225 paid from the deceased member’s account directly to the
226 custodian of an eligible retirement plan, as described in s.
227 402(c)(8)(B) of the Internal Revenue Code, on behalf of the
228 surviving spouse; or
229 3. A partial lump-sum payment whereby a portion of the
230 accrued benefit is paid to the deceased member’s surviving
231 spouse or other designated beneficiaries, less withholding taxes
232 remitted to the Internal Revenue Service, and the remaining
233 amount is transferred directly to the custodian of an eligible
234 retirement plan, if permitted, as described in s. 402(c)(8)(B)
235 of the Internal Revenue Code, on behalf of the surviving spouse.
236 The proportions must be specified by the member or the surviving
237 beneficiary.
238
239 This paragraph does not abrogate other applicable provisions of
240 state or federal law providing for payment of death benefits.
241 (4) DEATH BENEFITS FOR SPECIAL RISK CLASS MEMBERS.—Benefits
242 are provided under this subsection to the spouse and child or
243 children of members in the Special Risk Class when such members
244 are killed in the line of duty and are payable in lieu of the
245 benefits that would otherwise be payable under subsection (1) or
246 subsection (3). Benefits provided by this subsection supersede
247 any other distribution that may have been provided by the
248 member’s designation of beneficiary. Such benefits must be
249 funded from employer contributions made under s. 121.571,
250 transferred employee contributions and funds accumulated
251 pursuant to paragraph (a), and interest and earnings thereon.
252 (a) Transfer of funds.—To qualify to receive monthly
253 benefits under this subsection:
254 1. All moneys accumulated in the member’s account,
255 including vested and nonvested accumulations as described in s.
256 121.4501(6), must be transferred from such individual accounts
257 to the division for deposit in the survivor benefit account of
258 the Florida Retirement System Trust Fund. Moneys in the survivor
259 benefit account must be accounted for separately. Earnings must
260 be credited on an annual basis for amounts held in the survivor
261 benefit account of the Florida Retirement System Trust Fund
262 based on actual earnings of the trust fund.
263 2. If the member has retained retirement credit earned
264 under the pension plan as provided in s. 121.4501(3), a sum
265 representing the actuarial present value of such credit within
266 the Florida Retirement System Trust Fund shall be transferred by
267 the division from the pension plan to the survivor benefit
268 retirement program as implemented under this subsection and
269 shall be deposited in the survivor benefit account of the trust
270 fund.
271 (b) Survivor retirement; entitlement.—An investment plan
272 member who is in the Special Risk Class at the time the member
273 is killed in the line of duty on or after July 1, 2013,
274 regardless of length of creditable service, may have survivor
275 benefits paid as provided in s. 121.091(7)(d) and (i) to:
276 1. The surviving spouse for the spouse’s lifetime; or
277 2. If there is no surviving spouse or the surviving spouse
278 dies, the member’s child or children under 18 years of age and
279 unmarried until the 18th birthday of the member’s youngest
280 child. Such payments may be extended until the 25th birthday of
281 any child of the member if the child is unmarried and enrolled
282 as a full-time student as provided in s. 121.091(7)(d) and (i).
283 (c) Survivor benefit retirement effective date.—The
284 effective retirement date for the surviving spouse or eligible
285 child of a Special Risk Class member who is killed in the line
286 of duty is:
287 1. The first day of the month following the member’s death
288 if the member dies on or after July 1, 2016.
289 2. July 1, 2016, for a member of the Special Risk Class
290 when killed in the line of duty on or after July 1, 2013, but
291 before July 1, 2016, if the application is received before July
292 1, 2016; or the first day of the month following the receipt of
293 such application.
294
295 If the investment plan account balance has already been paid out
296 to the surviving spouse or the eligible unmarried dependent
297 child or children, the benefit payable shall be actuarially
298 reduced by the amount of the payout.
299 (d) Line-of-duty death benefit.—
300 1. The following individuals are eligible to receive a
301 retirement benefit under s. 121.091(7)(d) and (i) if the
302 member’s account balance is surrendered and an application is
303 received and approved:
304 a. The surviving spouse.
305 b. If there is no surviving spouse or the surviving spouse
306 dies, the member’s child or children under 18 years of age and
307 unmarried until the 18th birthday of the member’s youngest
308 child, or until the 25th birthday of the member’s child if the
309 child is unmarried and enrolled as a full-time student.
310 2. Such surviving spouse or such child or children shall
311 receive a monthly survivor benefit that begins accruing on the
312 first day of the month of survivor benefit retirement, as
313 approved by the division, and is payable on the last day of that
314 month and each month thereafter during the surviving spouse’s
315 lifetime or on behalf of the unmarried children of the member
316 until the 18th birthday of the youngest child, or until the 25th
317 birthday of any of the member’s unmarried children who are
318 enrolled as full-time students. Survivor benefits must be paid
319 out of the survivor benefit account of the Florida Retirement
320 System Trust Fund established under this subsection.
321
322 If the investment plan account balance has already been paid out
323 to the surviving spouse or the eligible unmarried dependent
324 child or children, the benefit payable shall be actuarially
325 reduced by the amount of the payout.
326 (e) Computation of survivor benefit retirement benefit.—The
327 amount of each monthly payment must be calculated as provided
328 under s. 121.091(7)(d) and (i).
329 (f) Death of the surviving spouse or children.—
330 1. Upon the death of a surviving spouse, the monthly
331 benefits shall be paid through the last day of the month of
332 death and shall terminate or be paid on behalf of the unmarried
333 child or children until the 18th birthday of the youngest child,
334 or the 25th birthday of any of the member’s unmarried children
335 who are enrolled as full-time students.
336 2. If the surviving spouse dies and the benefits are being
337 paid on behalf of the member’s unmarried children as provided in
338 subparagraph 1., benefits shall be paid through the last day of
339 the month until the later of the month the youngest child
340 reaches his or her 18th birthday, the month of the 25th birthday
341 of any of the member’s unmarried children enrolled as full-time
342 students, or the month of the death of the youngest child.
343 Section 4. Section 121.5912, Florida Statutes, is created
344 to read:
345 121.5912 Survivor benefit retirement program; qualified
346 status; rulemaking authority.—It is the intent of the
347 Legislature that the survivor benefit retirement program for
348 Special Risk Class members of the Florida Retirement System
349 investment plan meet all applicable requirements for a qualified
350 plan. If the state board or the division receives notification
351 from the Internal Revenue Service that this program or any
352 portion of this program will cause the retirement system, or any
353 portion thereof, to be disqualified for tax purposes under the
354 Internal Revenue Code, the portion that will cause the
355 disqualification does not apply. Upon such notice, the state
356 board or the division shall notify the presiding officers of the
357 Legislature. The state board and the department may adopt any
358 rules necessary to maintain the qualified status of the survivor
359 benefit retirement program.
360 Section 5. Section 121.735, Florida Statutes, is created to
361 read:
362 121.735 Allocations for member line-of-duty death benefits;
363 percentage amounts.—
364 (1) The allocations established in subsection (3) shall be
365 used to provide line-of-duty death benefit coverage for Special
366 Risk Class members in the investment plan and shall be
367 transferred monthly by the division from the Florida Retirement
368 System Contributions Clearing Trust Fund to the survivor benefit
369 account of the Florida Retirement System Trust Fund.
370 (2) Such allocations are stated as a percentage of each
371 investment plan member’s gross compensation for the calendar
372 month. Any change in a contribution percentage is effective the
373 first day of the month for which retirement contributions may be
374 made on or after the beginning date of the change. Contribution
375 percentages may be modified by general law.
376 (3) Effective July 1, 2016, allocations from the Florida
377 Retirement System Contributions Clearing Trust Fund to provide
378 line-of-duty death benefits for Special Risk Class members in
379 the investment plan and to offset the costs of administering
380 said coverage, are as follows:
381
382
383 Membership Class Percentage of Gross Compensation
384
385 Special Risk Class 0.82%
386
387 Section 6. Subsection (1) of section 121.71, Florida
388 Statutes, is amended to read:
389 121.71 Uniform rates; process; calculations; levy.—
390 (1) In conducting the system actuarial study required under
391 s. 121.031, the actuary shall follow all requirements specified
392 to determine, by Florida Retirement System employee membership
393 class, the dollar contribution amounts necessary for the next
394 fiscal year for the pension plan. In addition, the actuary shall
395 determine, by Florida Retirement System membership class, based
396 on an estimate for the next fiscal year of the gross
397 compensation of employees participating in the investment plan,
398 the dollar contribution amounts necessary to make the
399 allocations required under ss. 121.72, and 121.73, and 121.735.
400 For each employee membership class and subclass, the actuarial
401 study must establish a uniform rate necessary to fund the
402 benefit obligations under both Florida Retirement System
403 retirement plans by dividing the sum of total dollars required
404 by the estimated gross compensation of members in both plans.
405 Section 7. Section 121.74, Florida Statutes, is amended to
406 read:
407 121.74 Administrative and educational expenses.—In addition
408 to contributions required to fund member accounts under s.
409 121.71 ss. 121.71 and 121.73, effective July 1, 2010, through
410 June 30, 2014, employers participating in the Florida Retirement
411 System shall contribute an employer assessment amount equal to
412 0.03 percent of the payroll reported for each class or subclass
413 of Florida Retirement System membership. Effective July 1, 2014,
414 the employer assessment is 0.04 percent of the payroll reported
415 for each class or subclass of membership. The amount assessed
416 shall be transferred by the division of Retirement from the
417 Florida Retirement System Contributions Clearing Trust Fund to
418 the State Board of Administration’s Administrative Trust Fund to
419 offset the costs of administering the investment plan and the
420 costs of providing educational services to members of the
421 Florida Retirement System. Approval of the trustees is required
422 before the expenditure of these funds. Payments for third-party
423 administrative or educational expenses shall be made only
424 pursuant to the terms of the approved contracts for such
425 services.
426 Section 8. Section 121.75, Florida Statutes, is amended to
427 read:
428 121.75 Allocation for pension plan.—After making the
429 transfers required pursuant to ss. 121.71, 121.72, 121.73,
430 121.735, and 121.74, the monthly balance of funds in the Florida
431 Retirement System Contributions Clearing Trust Fund shall be
432 transferred to the Florida Retirement System Trust Fund to pay
433 the costs of providing pension plan benefits and plan
434 administrative costs under the pension plan.
435 Section 9. For the 2016-2017 fiscal year only, upon
436 notification by the Department of Management Services that
437 sufficient funds are not available to make survivor benefit
438 payments authorized by this act, the State Board of
439 Administration shall transfer, to the extent necessary, moneys
440 in the Administrative Trust Fund to the survivor benefits
441 account in the Florida Retirement System Trust Fund to ensure
442 the timely payment of survivor benefits.
443 Section 10. (1) In order to fund the benefit changes
444 provided in this act, the required employer contribution rates
445 for members of the Florida Retirement System established in s.
446 121.71(4), Florida Statutes, are adjusted as follows:
447 (a) The Special Risk Class is increased by 0.45 percentage
448 point; and
449 (b) The Deferred Retirement Option Program is increased by
450 0.06 percentage point.
451 (2) In order to fund the benefit changes provided in this
452 act, the required employer contribution rate for the unfunded
453 actuarial liability of the Florida Retirement System established
454 in s. 121.71(5), Florida Statutes, for the Special Risk Class is
455 increased by 0.13 percentage point.
456 (3) The adjustments provided in subsections (1) and (2) are
457 in addition to any other changes to such contribution rates
458 which may be enacted into law to take effect on July 1, 2016.
459 The Division of Law Revision and Information is directed to
460 adjust accordingly the contribution rates provided in s. 121.71,
461 Florida Statutes.
462 Section 11. The Legislature finds that a proper and
463 legitimate state purpose is served when employees and retirees
464 of the state and of its political subdivisions, and the
465 dependents, survivors, and beneficiaries of such employees and
466 retirees, are extended the basic protections afforded by
467 governmental retirement systems that provide fair and adequate
468 benefits that are managed, administered, and funded in an
469 actuarially sound manner, as required by s. 14, Article X of the
470 State Constitution and part VII of chapter 112, Florida
471 Statutes. Therefore, the Legislature determines and declares
472 that this act fulfills an important state interest.
473 Section 12. For the 2016-2017 fiscal year, the recurring
474 sums of $5,445,537 from the General Revenue Fund and $1,062,991
475 from trust funds are appropriated to Administered Funds in order
476 to fund the increased employer contribution rates to be paid
477 under this act by state agencies, state universities, state
478 colleges, and school districts.
479 Section 13. This act shall take effect July 1, 2016.