The chapters listed below are available in Adobe Acrobat PDF format and are intended to be duplex printed on letter-sized, three-hole-punched paper. Offering annuitization at retirement allows retirees to use their accrued retirement funds to buy a stream of guaranteed lifetime income. FRS, with its choice-based retirement offerings, is a plan design leader in this nation. System (FRS) employer contribution rates for the 2021-22 plan year. A generation of retirees inadequately prepared for retirement creates a risk of increased reliance on the states social safety net. Currently, the Florida Retirement System as a whole is governed by a set of objectives, but the unique nature of its two retirement options presents an opportunity for additional mission clarity and transparency. The Florida Retirement System (FRS) Investment Plan is available to Administration, 5737 Mesmer Ave. If you have specific questions or need additional information, you can find the division's contact Today, over a quarter of the FRS membership has either selected or defaulted into the Investment Plan, and its share continues to grow rapidly. The change also improves the footing of the states defined contribution plan, which plays a critical role in addressing the financial risks borne by public employers and taxpayers. Copyright 2023,University of South Florida. Visit our Ready to Retire page for information. Participants are vested upon completion of 8 years of creditable service and thus eligible to receive a lifetime monthly benefit upon retirement. Chairman Brandes, members of the committee, thank you for the opportunity to offer our brief analysis of the current state of the FRS Investment Plan. contributions of 3% of your gross salary. This shortcoming also creates more immediate challenges that can impact many stakeholders. By Richard Hiller June 15, 2023, Reason Foundation Your Retirement Plan Options. months after date of hire. With the passage of HB 5007, lawmakers have moved the state into a more competitive position by providing employees with more resources to meet their retirement needs. ), Teachers' Retirement System members. Senior Managing Director, Transportation Policy. This should not be the end of thoughtful improvements to the states retirement system, however. Other classifications of employees in the IP receive different contributions from the state. Other changes should be considered, but if the plan is to meet employer workplace needs and employee retirement needs, the contribution rate must be increased immediately. The largest grouping of employeesthe Regular Class, which includes teachers and most non . For additional information or professional This should not be the end of thoughtful improvements to the states retirement system, however. Providing annuities to improve members retirement security has long been an established practice in the FRS IP, but it could still be improved. This is exactly what we recommend to other states that are establishing new optional retirement plans. This field is for validation purposes and should be left unchanged. The biggest shortcoming of the FRS IP is the contribution rate. Policy and Terms of % originally published The FRS Investment Plan offers: For FRS Investment Plan members, HB 5007 increases the employer contribution to employee IP accounts by 3% of payroll over current levels, covering all membership classes, meaning all present and future members of the FRS IP will see an equal increase. From there, we engaged in educational outreach with policymakers, detailing the problem and proposing potential solutions to help bring the FRS Investment Plan up to industry standards. Lawmakers should recognize that with future efforts they can build upon the benefits that will come from this latest legislation. Employee will receive an information packet at their home address approximately three Florida State <> The plan could also better address lifetime income needs for participants through annuity options and long-term disability provisions could be improved by the addition of a low-cost insured provision. testified University. Our monthly newsletter highlights the latest actuarial analysis and policy insights from our team. The Eligibility TEAMS USPS For example, Regular Classmembers will see their employer contributions increase from3.3% to 6.3%. Time Period Zachary Christensen is a managing director of Reason Foundation's Pension Integrity Project. This shortcoming also creates more immediate challenges that can impact many stakeholders. Washington, DC 20009 The second area of opportunity lies in the types of investments offered to those participating in the Investment Plan. of the House Bill 5007, the 3% increase in employer contributions to the FRS IP is estimated to require an additional $249 million in the first year from all state and local government employers in aggregate. Those in the Special Risk class, which includes public safety officerswill see their total contributions rise from 14% to 17%. This is generally accomplished by using target date funds that adjust investment risk to the employees retirement horizon. This is the largest shortcoming of the FRS Investment Plan, and it will require legislative leadership to commit financially in the plans mission. (310) 391-2245, 1630 Connecticut Ave NW Terms and Conditions | Privacy Statement | Accessibility Statement | Copyright 2023 Department of Management Services - State of Florida, Fleet Management and Federal Property Assistance, Florida Division of Administrative Hearings, Florida Department of Management Services, Florida Retirement System (FRS) Employer Training Workshops, Renewed Membership Effective July 1, 2017. Employees may enter DROP any time after becoming fully vested and reaching their normal retirement date. For FRS Investment Plan members, HB 5007 increases the employer contribution to employee IP accounts by 3% of payroll over current levels, covering all membership classes, meaning all present and future members of the FRS IP will see an equal increase. The first opportunity to expand on HB 5007 lies in the stated objectives of the FRS IP, or lack thereof. For FRS Investment Plan members, HB 5007 increases the employer contribution to employee IP accounts by 3% of payroll over current levels, covering all membership classes, meaning all. Loans and hardship withdrawals are not permitted. More information on all of these options is available in a commentary published on the Reason.org website. The restricted 12-month election window has been removed. In the area of products offered to FRS Investment Plan members, FRS stakeholders can update some of the already positive aspects of the FRS Investment Plan by improving on target- date portfolio constructions in ways that allow more flexibility for individual life and retirement situations. After reporting on the needs of the Florida Retirement System (FRS) in 2019, the Pension Integrity Project began communicating the importance of ensuring the benefit offered in the FRS Investment Planthe states default defined contribution planmeets best practices typical of private sector corporate retirement offerings. The employee can roll this distribution over to an IRA or take periodic distributions. Judicial L/A/C County Items ORP OAP Annuity ORP AUTHORITY The collaborative effort was rewarded when Gov. The change also improves the footing of the states defined contribution plan, which plays a critical role in addressing the financial risks borne by public employers and taxpayers. Participants are vested upon completion of one year of creditable service and decide how to allocate contributions among offered investment funds. The annual interest rate has tripled from 1.3% to 4%, compounded monthly, for the accrued monthly DROP benefit. Florida Retirement System (FRS) Investment Plan According to the Houses fiscal analysis of the House Bill 5007, the 3% increase in employer contributions to the FRS IP is estimated to require an additional $249 million in the first year from all state and local government employers in aggregate. This site is protected by reCAPTCHA and the Google Privacy Suite 600 Steven Gassenberger is a policy analyst with Reason Foundation's Pension Integrity Project. FRS Pension Plan. PDF Contribution Rates Multiyear - Florida USPS employees will elect to participate in either the Florida Retirement System (FRS) Pension Plan or the FRS Investment Plan. From there, we engaged in educational outreach with policymakers, detailing the problem and proposing potential solutions to help bring the FRS Investment Plan up to industry standards. PDF The Florida Senate BILL ANALYSIS AND FISCAL IMPACT STATEMENT Therefore, the employer rate you see on your paychecks will be higher than the amount deposited into your account. SUSORP is a defined contribution plan. House Bill 5007 also included an unrelated policy provision that expanded law enforcement officers access to an existing Deferred Retirement Option Program (DROP) for those participating in the traditional FRS pension system. Gainesville, FL 32611 Florida policymakers should continue to seek reforms that strengthen the Investment Plan and reduce the risks of public pension debt. The FRS Investment Plan lets you choose how your money is invested and how you want to receive payments. end of the 8th month from the date of hire.). (Special Risk Class employees will be Insufficient contributions to a public retirement plan should be a major concern for employees, policymakers, and taxpayers alike. But a couple of critical factors are not met, however, and these factors need addressing for the Florida Retirement Systems Investment Plan to be an effective and adequate primary retirement vehicle for Floridas state employees. The FRS Investment Plan is funded by employer and employee contributions that are based on your salary and your FRS membership class (Regular Class, Special Risk Class, etc.). Overall, we see these as very positive attributes of the FRS Investment Plan forming a good foundation for a public retirement plan. The Investment Plan directs contributions to individual member accounts, and you allocate your contributions and account balance among various investment funds. PDF Pension Plan Member Handbook - Florida For over two decades, Floridas public employers at the state and local levels were required to contribute 3.3% of an employees salary to their FRS IP account for the largest grouping of employees (the Regular Class), which includes teachers and most civilian government employees. The Investment Plan is designed primarily for employees who want greater control over their DROP is a pension plan program for employees who have reached normal retirement date which allows them to simultaneously earn a salary and retirement income in order to accumulate a tax-deferred lump sum payment. The Pension Integrity Project offers pro-bono consulting to public officials and other stakeholders to help them design and implement policy solutions aimed at improving plan resiliency and promoting retirement security for public employees. By Zachary Christensen June 19, 2023. Faculty and Staff employees. Florida State University reporting the importance of ensuring the benefit offered in the FRS Investment Planthe states default defined contribution plan A defined contribution plan where participants decide how to allocate the money in their account among available investment funds. Pension Integrity Project Participating employers make uniform contributions by membership class to support both the FRS Pension Plan and Investment Plan. 4 0 obj For FRS Investment Plan members, HB 5007 increases the employer contribution to employee IP accounts by 3% of payroll over current levels, covering all membership classes, meaning all present and future members of the FRS IP will see an equal increase. A total contribution rate of between 12 percent and 15 percent is accepted as necessary to . Lastly, the increases in HB 5007 brought total contributions nearly, but not quite, to the 10% minimum standard set by industry experts. stream PDF Frequently Asked Questions - Employer - Florida is_redirect && ! It is republished by the Washington Examiner with the Reason Foundation's kind permission. A health insurance subsidy is available under this plan at the time of retirement. endobj The more the FRS IP membership continues to increase, the less the inherent risk of cost overruns associated with the alternative FRS Pension Plan, which remains $7.6 billion underfunded today. Participants are vested immediately once enrolled and decide what approved SUSORP provider company, or companies, to invest their funds. The architects of the Investment Plan also deserve credit for structuring the plan in a way that in no way hinders the states ability to eventually pay off legacy pension debt. 5737 Mesmer Ave. Retirement contributions are due by the fifth business day of the month. Select the FRS Investment Plan option on the online form. Participating employers make uniform contributions by membership class to support both the FRS Pension Plan and Investment Plan. %PDF-1.5 account, and you will be able to select how to allocate the contributions among various Service apply. (310) 391-2245, 1630 Connecticut Ave NW These plans are primarily employer-funded accounts with employees making a mandatory 3% contribution regardless of the plan chosen. 3 0 obj Interest Rate St Augustine, FL 32084 FRS Investment | Retirement Benefits | Human Resources | USF Employees are vested into the plan upon completion Certain best-practice principles are met by the FRS IP in its current form, including having a comprehensive communication and education plan for employees and retirees, automatically enrolling new employees into the plan, and recognizing the mobility needs of the modern workforce by providing for benefit portability. With the passage of HB 5007, lawmakers have moved the state into a more competitive position by providing employees with more resources to meet their retirement needs. While the investment menuthe established investment options that allow those less versed to select a basic strategy that works for themin the FRS IP is low cost and diversified, it could be improved. By bringing contributions up closer to industry best practices, HB 5007 ensures that the defined contribution plan will continue to be an attractive option for future public workers. Overall, the Florida Retirement System Investment Plan has a good foundation upon which to build a sound and effective modern retirement plan. P: (904) 209-0635 The contribution rate paid by employers into FRS Investment Plan accounts is increased by 2% in ALL membership classes. As researchers who have analyzed FRS for years, we appreciate the opportunity to discuss our perspective on the current FRS Investment Plan, the important role it plays in public service in Florida, and potential enhancements to bring it more in line with national best practices and better serve both employees and taxpayers. This is generally accomplished by using target date funds that adjust investment risk to the employees retirement horizon. New Contribution Rates (pdf). Framing explicit language delineating the specific objectives of the Investment Plansuch as lifetime income and retirement securitycould help communicate the goals of the plan to new and existing public workers. Faculty in the College of Medicine are mandatory SUSORP participants. This will have the long-term effect of mitigating financial risk to taxpayers while improving employees ability to contribute to a secure, future retirement no matter how long they work in public service. You contribute 3% of your salary each month regardless of which plan you are participating in. Through a collaborative effort grounded in Reason Foundations experience with best practices of retirement policy, House Bill 5007 changes the FRS IP in a way that is undeniably important for the long-term future of Floridas taxpayers and retirees. There are a number of straightforward plan design principles, such as benefit portability and adequate contribution requirements, that when carefully incorporated into defined contribution (DC) plans, serve to create a sound retirement plan option. The FRS Pension Plan is a defined benefit plan in which participants are guaranteed a benefit at retirement. Today, over a quarter of the FRS membership has either selected or defaulted into the Investment Plan, and its share continues to grow rapidly. This article was FRS Investment Plan Employer Handbook. All new hires, except those in the Special Risk class, are automatically enrolled into the FRS Investment Plan by the end of their eighth month of employment unless they choose the FRS pension option. Originally adopted during the 2000 legislative session as an alternative option to the states traditional defined benefit pension, the Florida Retirement System Investment Plan (FRS IP) has taken on increasing importance in Florida state and local government administration and now serves as the states primary vehicle for providing retirement security to most public workers. For those participating in the FRS Investment Plan, this will bring the total increase in compensation to more than 8%. PDF Florida Retirement System Pension Plan This notable step also improves the long-term viability of the Florida Retirement System. the FRS IP to be the default choice for most new workers (excluding first responders in the Special Risk class) in 2016. House Bill 5007 also included an unrelated policy provision that expanded law enforcement officers access to an existing Deferred Retirement Option Program (DROP) for those participating in the traditional FRS pension system. Additional contribution rate information is available here. For those participating in the FRS Investment Plan, this will bring the total increase in compensation to more than 8%. Financial advisors and industry experts typically recommend total contributions into a plan like the FRS IP should total at least 10% of an employees paywith many even preferring 12% to 15% percent to ensure benefit adequacyfor the eventual accrued benefits to be sufficient for retirement. PDF July 2022 2 - MyFRS Reason has not performed an in-depth analysis of this particular aspect of the bill, but there are many risks involved in DROPs that are frequently overlooked, and there are likely more efficient ways to improve the retention of public workers. Additionally, the FRS Investment Plan offers a solid mix of proprietary investment funds with market average fees, as well as a series of reasonably priced target-date funds for participants preferring a one-choice, set-it-and-forget-it option. Sign up now to get the Washington Examiners breaking news and timely commentary delivered right to your inbox. Total Rates by Class/Plan () Basic Rate Components, Multiyear () FRS Rate Components () 2022-23 Contribution Rates All rights reserved. Suite 600 While the 3% increase appears simple at face value, this reform marks a significant improvement in the retirement security of most incoming workers. Modern public retirement plans need to reflect realistic employment patterns, focus on income replacement, and meet individual needs. This handbook is intended to explain the administration of the retirement plan choice process and the FRS Investment Plan in nontechnical language. PDF House of Representatives Staff Analysis By Zachary Christensen June 19, 2023. FRS Retirement and Cobra Information - Alachua County, Florida Effective July 1, 2011, FRS members are required to make employee contributions in addition to employer contributions to establish service credit for work performed in a regularly . (202) 986-0916. If the FRS IP is to be successful as the primary retirement plan for Floridas public employees, the first and most important change the state should consider must be an increase in the total contribution rate to bring it into the 12-15 percent range. By bringing contributions up closer to industry best practices, HB 5007 ensures that the defined contribution plan will continue to be an attractive option for future public workers. Complete the FRS Investment Plan Beneficiary Designation Form and fax it to the number on the form. PDF House of Representatives Staff Final Bill Analysis Bill #: Cs/Cs/Hb With these trends in mind, Florida lawmakers appropriately switched the default choice to the Investment Plan, but it is still up to them to ensure this option provides an adequate and secure retirement. by the performance of your investment choices. endobj The employer contribution rates paid into members' FloridaRetirement System (FRS) Investment Plan accounts will increaseby 3% for all membership classes. Reason Foundations Pension Integrity Project has helped policymakers in states like Arizona, Colorado, Michigan, and Montana implement substantive pension reforms. By Richard Hiller June 15, 2023, Reason Foundation To build on this sessions success and remain competitive with the private sector, stakeholders should continue searching for ways the FRS IP can better serve public employees. Freedom First Budget at 1-866-446-9377 or visit the MyFRS website. There appears to be a clear understanding within the FRS of what is needed to properly fund an individuals retirement, given the rates already used for specific employment classes. endobj Given the serious role these funds play in the lives of public workers and their families, protecting the value of a members FRS IP account from market fluctuations as the worker nears retirement should be a high priority. Chief among these is the Special Risk classification which covers police, fire, corrections and certain other employees. Login ID - Your Login ID for Quicken/Mint is your Social Security number, a hyphen, and "14470" (this is the company ID). This increase includes current retirees. After Plus: Improving Florida's defined contribution plan, higher education pension blueprint, and more. With the help of several key stakeholders in the state, including Gov. Please note that your PIN is different than the password you use to log on to MyFRS.com. Contribution Rates for State-Run Primary Defined Contribution Retirement Plans. (Rates below apply to the salaries of FRS members who are in the FRS Pension Plan, the FRS Investment Plan, reemployed retirees without renewed membership in a regularly established position, or the non-integrated defined contribution plans) for fiscal year 2020-21. financial guidance regarding this plan, contact the MyFRS Financial Guidance Line The new rates should be reflected in your first payroll dated on or after July 1, 2022. Seeing that most public employees werent staying in the system long enough to maximize their pension benefits, Florida lawmakers appropriately switched the FRS IP to be the default choice for most new workers (excluding first responders in the Special Risk class) in 2016. The increased amount employers will contribute to their employees FRS IP accounts comes on the heels of lawmakers also agreeing to a 5.38% across-the-board pay increase for public employees. When the FRS Investment Plan was created during the 2000 legislative session, the intent was to offer public employees an additional path to a financially secured retirement. The normal retirement date for Special Risk Class members initially enrolled on or after July 1, 2011, is changed to either 25 years of creditable service or age 55, whichever is earlier. Expanding those offerings to include deferred annuities could present an opportunity to further improve this offering to retirees. 165181774 Cheri Alguire | Dreamstime.com, Florida Senate Committee on Governmental Oversight and Accountability, Increases to contribution rate improve the long-term viability of Floridas defined contribution plan, Pension Reform News: Florida increases contributions, recruiting and retaining teachers, and more, States can learn from pension plan design colleges and universities use for professors. retirement system see Table 1 Ron DeSantis released his Member Contribution Refunds: May 2023 Chapter 9 () Pension Plan Service Retirement: May 2023 Chapter 10 () Disability Retirement: May 2023 Chapter 11 () . The amount of the future benefit is determined by a formulabased on earnings, length of service, and membership class. The Florida Retirement Systems (FRS) defined contribution optionthe FRS Investment Plan (IP)meets many of the design principles defining a sound DC retirement plan. typical of private sector corporate retirement offerings. This site is protected by reCAPTCHA and the Google Privacy For example, if your Social Security number is 123456789, the format of the Login ID would be 123456789-14470. Lastly, the increases in HB 5007 brought total contributions nearly, but not quite, to the 10% minimum standard set by industry experts. The Florida Retirement System (FRS) is a multiple-employer, contributory plan that provides retirement income benefits for employees of state and county government agencies, district school boards, state colleges and universities. For the sake of this analysis, the objective of the FRS IP should be to provide for meeting employer workplace needs in the recruiting and retention of qualified workers, and for the maintenance of an employees standard of living, in combination with social security and personal savings, following a full career of employment. The objectives should further include that this benefit is provided in a cost-efficient way, and without the creation of unfunded liabilities, or debt. FRS Investment Plan / Financial Future | MyBenefits / Department of The first opportunity to expand on HB 5007 lies in the stated objectives of the FRS IP, or lack thereof. Conclusions and Next Pension Reform Steps. MyFRS :: Investment Plan Employer Manual Our monthly newsletter highlights the latest actuarial analysis and policy insights from our team. Lawmakers should recognize that with future efforts they can build upon the benefits that will come from this latest legislation.
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