http://weblogs.sun-sentinel.com/news/politics/dcblog/2011/02/gov_scott_lays_out_pensionrefo.htmlGov. Rick Scott today announced sweeping reforms of the state pension system, including requiring workers to contribute 5 percent of their paychecks and converting new employees to a 401(k)-type investment account.
Scott said the changes would save taxpayers $2.8 billion over two years.
“We must bring Florida in line with the private sector and nearly every other state in the country by requiring government workers to contribute towards their own retirement,” he said in a statement released by his office.
Scott’s office said the changes will apply to the 655,000 government employees who are enrolled in the Florida Retirement System, including the roughly 111,000 people who work for the state. Just under half the covered workers are school teachers and other employees of the state’s 67 school districts.
The key provision include:
– Requiring employees to contribute 5 percent of their annual pay. They contribute nothing now.
– Ending annual 3 percent cost-of-living adjustments for new retirees, while maintaining the COLA for existing retirees.
– Ending the controversial DROP program, which has allowed veteran employees to work for up to five years and “bank” their retirement benefits, which they’re then able to take in a lump sum. Some high-paid employees have used DROP to generate six-figure lump-sum payments.
– Reducing the annual service credit, which determines an employee’s percentage of salary paid at retirement, to 1.6 percent from as much as 3 percent for some special classes. “High-risk” credits paid to police and fire would drop to 2 percent.
– Enrolling all new employees in a 401(k) type investment program, thus eventually phasing out the state’s defined benefit program.
Scott’s release is on the jump:
Governor Rick Scott Announces Budget Proposals
That Will Save $2.8 Billion Over Two Years by
Modernizing the Florida Retirement System
Naples, Fla. – Keeping in line with his 7-7-7 plan and his plan to modernize the Florida Retirement System, Governor Rick Scott announced today that he would send the Legislature a budget proposal that better aligns government workers’ pensions with those in the private sector and saves taxpayers $2.8 billion over two years.
Governor Scott announced that the savings would be realized by requiring government employees to contribute five percent of their salaries to the system and requiring new employees to enroll in investment plans similar to private sector 401(k)s.
“We must bring Florida in line with the private sector and nearly every other state in the country by requiring government workers to contribute towards their own retirement,” said Governor Scott.
The Governor also announced his intention to close the Deferred Retirement Option Program to new participants as of July 1, 2011, and to reduce the annual service credit to 1.6 percent for most members (special risk class members, to two percent).
Governor Scott said the Cost of Living Adjustment on retirement benefits will be eliminated for all service earned after July 1, 2011. Current retirees will be unaffected. Those members retiring after July 1, 2011, will receive a three percent Cost of Living Adjustment on the retirement benefit attributable to the service earned prior to July 1, 2011, and no cost of living adjustment for service earned after July 1, 2011.
“Government workers, like private sector employees, deserve the opportunity to save for the future, but taxpayers shouldn’t be asked to foot that bill alone.”
Governor Scott said that modernizing the Florida Retirement System would help reduce spending and help get government back to its core missions
Governor Scott will send his full budget proposals to the Legislature on Monday, February 7th.
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