HomeMy WebLinkAboutDocumentation_Special Meeting_Tab 02_04/19/2010 THE LAW OFFICES OF
PERRY & JENSEN, LLC
ANN H. PERRY BONNI SPATARA JENSEN
aperry@perryjensenlaw.com bsjensen @penyjensenlaw.wm
MEMORANDUM
TO: Board of Trustees
VILLAGE OF TEQUESTA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND
FROM: Bonni S. Jensen
THE LAW OFFICES OF PERRY & JENSEN, LLC
DATE: April, 2010
SUBJECT: State Legal Updates
The legislative session has been interesting so far as related to Public Sector
Pensions. Below is a discussion of some bills that impact governmental pension plans.
Please contact me if you have any questions regarding this matter.
Update - SB 1902 RELATING TO PUBLIC RETIREMENT PLANS
Senate Bill 1902 has been substantially revised in the Community Affairs Committee
as of March 23, 2010.
• Adding a new Section 1 calling the act the "Florida Pension Protection and
Transparency Act."
• Amending Florida Statute §112.65 (applicable to all public retirement
systems) to provide that "overtime, accrued unused sick leave or other
leave, or any form of payment other than the member's base hourly or yearly
salary" may not be included in the calculation of average final compensation
unless those amounts were paid before July 1, 2010. The limitation for the
benefits is still proposed to be 100% for all members who become a part of
the retirement system after January 1, 1980. The limitation does not include
cost of living adjustments or supplemental benefits.
NOTE: There is an amendment being proposed by the sponsor which
would make these changes effective for employees hired after July 1,
2010. This amendment was drafted on Friday, April 2, 2010 and will
be considered on April 7, 2010.
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Board of Trustees
State Legal Updates - April, 2090
Page 2 of 7
• Amending Florida Statutes §121.021 (applicable to the Florida
Retirement System only) changing the following definitions:
Compensation is proposed to include only:
♦ Monthly salary;
♦ Overtime payments made before July 1, 2010; and
♦ Amounts withheld for deferred compensation programs or tax
sheltered annuities.
After the effective date of the amendment, the definition of Compensation
would no longer include:
♦ Accumulated annual leave payments;
♦ Payments in addition to the employee's base rate of pay (if
paid pursuant to a formal written policy, paid after the 11th
year of employment, paid annually, for as long as the
employee continues his employment; and
♦ Payments in lieu of permanent increase in the base rate of
pay.
Average Final Compensation has been changed include all compensation,
presumably using the above definition. The exclusions from average final
compensation has been expanded to include overtime paid after June 30,
2010.
NOTE: This change has been removed from the most recent
amendment which is expected to be heard on April 7, 2010.
• Amending Florida Statutes § §175.032(3) and 185.02(4) (applies to
175/185 funds) to redefine a firefighter's' and police officer's base pay to
exclude overtime or other pay beyond base hourly or annual salary if the
overtime or additional pay is after June 30, 2010 and removing the ability to
use another definition of salary.
NOTE: This change has been removed from the most recent
amendment which is expected to be heard on April 7, 2010.
• Amending Florida Statutes § §175.061 and 185.05 (applies to 175/185
funds) amended to provide that the municipal appointees to the Board and
the fifth member to the Board may not be members or retirees of the Fund
that the Board administers. Additionally, the municipality may change the
municipal representation on the board of trustees as long as the change
Board of Trustees
State Legal Updates - Aprll, 2010
Page 3 of 7
does not reduce the membership percentage of police officers and
firefighters on the Board as in place on June 30, 1986.
• Amending Florida Statutes § §175.091 and 185.07 (applies to 1751185
funds) to allow increases in member contributions without a corresponding
increase in benefits.
• Amending Florida Statutes § §175.351 and 185.35 (applies to 175/185
funds) to allow supplemental plans to apply the definition of compensation
or salary in existence on the date of the act.
• Amending Florida Statutes § §175.351 and 185.35 (applies to 1751185
funds) to add a new subsection (5) which allows a municipality or special fire
control district to close the 175/185 plan and to create either a defined
contribution plan or join the Florida Retirement System after July 1, 2010 and
continue to receive the 175 and 185 money to fund the closed 175/185 plan
until the plan is fully funded.
1-1131543 has been withdrawn from consideration at this time and HB 1319 is not expected
to get placed on any further committee agendas.
HB 1025 and SB 1710 (withdrawn from consideration)
• Amending Florida Statutes §112.0801 to provide for market determination
of premium cost for retiree health insurance; to allow the separation of the
claims experience of the retirees and active employees; and to require
retirees to pay the cost of the premiums.
HB 1151 and SB 2106
• Amending Florida Statutes §185.35 to allow municipalities to pay the cost
of purchasing annuities in a closed plan but be reimbursed over time from
future 185 money.
SB 2022 RELATING TO FLORIDA RETIREMENT SYSTEM
This bill passed the Senate but is only applicable to the Florida Retirement System.
This bill includes the following proposed changes:
Board of Trustees
State Legal Updates - April, 2010
Page 4 of 7
• Amending Florida Statutes §121.011 to require all employee and employer
contributions and provides that rights of members are contractual.
• Amending Florida Statutes §121.021 for the following definitions:
Prior Service - include time for which a member receives a refund of
contributions and eliminates the time limit reference for contributions.
Termination - amended to define that beginning January 1, 2011, a
termination occurs when a member ceases all employment relationship with
an employer for 3 calendar months.
Benefit - amended to include employee contributions.
• Amending Florida Statutes §121.051 to provide that employers can buy
past service time for employees only at the time of joining FRS. Also
subjects any employer -paid employee contributions to federal FICA taxes.
• Amending Florida Statutes §121.0515 to reference employee contributions
in the section regarding upgrades for special risk credit.
• Amending Florida Statutes §121.052 to provide that members of the
Elected Officers' Class shall pay retirement contributions effective January
1, 2011 and provides for refunds.
• Amending Florida Statutes §121.053 to include reference to employee
contributions.
• Amending Florida Statutes §121.055 to provide that members of the
Senior Management Class shall make employee contributions effective
January 1, 2011 and provides for refunds.
• Amending Florida Statutes §121.071 to provide that effective January 1,
2011, each employee and employer will pay retirement contributions. and
providing for refund.
• Amending Florida Statutes §121.081 to provide that to purchase prior
service performed on or after January 1, 2011, the purchase of prior service
must include 6.5% interest, compounded annually.
• Amending Florida Statutes §121.091 to provide for a refund of
contributions after termination of employment (except retirement) for three
consecutive calendar months.
Board of Trustees
State Legal Updates - April, 2010
Page 5 of 7
• Amending Florida Statutes §121.121 to provide that effective January 1,
2011, leave of absence purchases will be at employee and employer
contribution rates in effect during the leave of absence.
• Amending Florida Statutes §121.125 to provide that the employer shall
make employee and employer contributions on workers' compensation
payments.
• Amending Florida Statutes §121.35 to provide for employee contributions
for members in the State University System Optional Retirement Program
and included a provision for hardship withdrawals.
• Amending Florida Statutes §121.4501 to include participant contributions
in the Public Employee Optional Retirement Program. Provides for errors or
corrections that contributions shall be made within 1 year after erroneous
contributions. Participants present value of accumulated benefit obligation
will not be recalculated.
Adds language that a participant who terminates and takes a distribution is
a retiree. If reemployed with an FRS - covered employer, the participant is a
new hire, but retains his or her prior plan choice. After July 1, 2010, a retiree
is not eligible for renewed membership.
Refund is not permitted for contributions or payments exceeding employee
contributions had employee remained in the defined benefit program and not
transferred to Public Employee Option Retirement Program.
Contributions are made on a pre -tax basis. Participant is responsible for
monitoring contributions to ensure the maximum deferral amount permitted
under the Internal Revenue Code are not exceeded.
Participant will forfeit all nonvested employer contributions and service credit
if participant elects to receive any vested employee or employer
contributions.
• Amending Florida Statutes §121.4503 to provide for participant
contributions.
• Amending Florida Statutes §121.571 to converts plan from a
NonContributory plan to a Contributory Plan that each participant shall
submit contributions.
Board of Trustees
State Legal Updates - April, 2010
Page 6 of 7
• Amending Florida Statutes §121.591 to specify that benefits earned under
the Public Employee Optional Retirement Plan may not be payable for any
reason prior to termination. Nonvested accumulations will be forfeited upon
payment of any vested benefit. Distribution payment selected for normal
retirement benefits is final and irrevocable at the time distribution is made.
• Amending Florida Statutes §121.70 to provide for employee contributions.
• Amending Florida Statutes §121.71 to set rates of employee contributions
by class (all classes contribute .25 %)
Employer Rates:
Membership Class Effective 7/1/10 Effective 7/1/11
Regular 9.76% 9.54%
Special Risk 22.15% 21.92%
Special Risk Admin 11.24% 11.02%
Elected Officers - Leg, Exec 14.38% 14.16%
Elected Officers - Judges 19.39% 19.15%
Membership Class Effective 7/1/10 Effective 7/1/11
Elected Officers - County 16.62% 16.39%
Senior Management 11.70% 11.49%
DROP 14.23% 14.21%
Employer Rates to Address Unfunded:
Membership Class Effective 7/1/10 Effective 7/1/11
Regular 0.00% 1.58%
Special Risk 0.00% 5.97%
Special Risk Admin 0.00% 15.97%
Elected Officers - Leg, Exec 0.00% 17.05%
Elected Officers - Judges 0.00% 11.00%
Elected Officers - County 0.00% 19.75%
Senior Management 0.00% 9.26%
DROP 0.00% 4.97%
• Amending Florida Statutes §121.72 to set rates for the optional retirement
programs.
I
Board of Trustees
State Legal Updates - April, 2010
Page 7 of 7
• Amending Florida Statutes §121.73 to set rate for disability coverage for
members of the optional retirement programs.
• Amending Florida Statutes §121.74 to set rate for administrative services
Reduction from 0.05% to 0.03% for four years July 1, 2010 - June 30, 2014.
Effective July 1, 2014, contribution rate shall be 0.04% of payroll reported.
• Amending Florida Statutes §121.76 to provide that contributions are
subject to federal FICA taxes.
• Amending Florida Statutes §121.78 to include employee contributions and
to provide for a 1 % delinquent fee for each month or portion of a month that
contributions should have been paid. Overages will be credited to future
contributions owed. Employer is responsible for reimbursing employee for
excess contributions.
• Florida Statutes §1012.875 applies to Community College Optional
Retirement Program and is not applicable to your Fund.
Additionally, this bill appropriates funds for eight full -time positions and salary rate
of $265,621 for the purpose of implementing this act.
BSJ /adt
March 25, 2010
April 5, 2010
H :\AII Miscellaneous\ALL BOARDS\2010\2010 -04 State Legal Updates.frm
Public Pension Legislation
Updated April 16, 2010
HB 1543 - Relating to Public Retirement Plans
Sponsor(s) by Zapata
Summary
General Public Retirement Plans: Provides requirements for retirement system or plan actuarial reports;
limits benefits payable to certain members of retirement system; requires board of trustees of retirement
system or plan to provide account report of its expenses; revises definition of terms "member," "special risk
member," "normal retirement date," & "phased retirement program" for purposes of FRS to reduce system
to two classes; revises calculations used for upgrading special risk member's contributions for past service;
repeals Elected Officers' Class & Senior Management Service Class; limits factoring of overtime into
pension benefit; reduces service credit for special risk members; revises provisions to conform to repeal of
specified classes within system; revises applicability of ch. 175, F.S., to firefighters who are eligible for
FRS; revises applicability of ch. 185, F.S., to police officers who are eligible for FRS; provides
membership requirements for special fire control district & municipality board of trustees; revises
requirements for increasing firefighter & police officer member contributions; revises provisions relating to
firefighter & police officer benefits; provides that any elected official convicted of crime, or who is forced
to resign office as result of plea bargain, shall forfeit any pension benefit administered by state or any
political subdivision thereof, provides declaration of important state interest. Effective Date: July 1, 2010
Actions
Date Chamber Action
03/01/10 HOUSE Filed
03/10/10 HOUSE Referred to Governmental Affairs Policy Committee; Government Operations
Appropriations Committee; Economic Development & Community Affairs Policy Council
HOUSE Now in Governmental Affairs Policy Committee
03124110 HOUSE Withdrawn from further consideration
HB 859 - Relating to West Palm Beach Police Pension Fund of the City of West Palm Beach, Palm
Beach County
Sponsor(s) by Domino CS Sponsors: Government Operations Appropriations Committee
Summary
Local West Palm Beach Police Pension Fund of the City of West Palm Beach, Palm Beach County:
Revises definition of term "salary "; authorizes other fiduciary designees to sign fund drafts; clarifies
exception relating to adoption of experience tables & interest rates; provides for adjustment of benefits
when changing joint annuitants or beneficiaries; removes requirement for spouse's consent to waive joint &
survivor benefit; provides for quarterly adjustment of share accounts; provides exception to exclusion for
disabled members; revises provisions relating to payment of certain death benefits; provides for bimonthly
refund repayments; requires board of trustees to identify & report any holdings in scrutinized company;
requires divestiture of certain securities within specified time; limits board liability relating to such
divestiture; authorizes withholding of certain retirement funds for certain purposes upon request of retiree;
reduces amount of small retirement income that may be paid in lump sum; authorizes certain city police
officers to recontribute to fund; revises provisions relating to determination of creditable service for
members who die or become disabled while on active duty military service; provides for distribution of
fund in event of termination of pension plan. Effective Date: upon becoming a law
Actions
Date Chamber Action
02/02/10 HOUSE Filed
02/10/10 HOUSE Referred to Military & Local Affairs Policy Committee; Government Operations
Appropriations Committee;Economic Development & Community Affairs Policy Council
HOUSE Now in Military & Local Affairs Policy Committee
03/01/10 HOUSE On Committee agenda - Military & Local Affairs Policy Committee, 03/03/10,9:00 am,
212 K
03/03/10 HOUSE Favorable by Military & Local Affairs Policy Committee; 10 Yeas, 0 Nays
HOUSE Now in Government Operations Appropriations Committee
03/08/10 HOUSE On Committee agenda - Government Operations Appropriations Committee, 03/10/10,
3:00 pm, 116 K
03/10/10 HOUSE Favorable with CS by Government Operations Appropriations Committee; 12 Yeas, 0
Nays
03/12/10 HOUSE Committee Substitute Text (C1) Filed
Cook d
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03/15/10 HOUSE Now in Economic Development & Community Affairs Policy Council
04/05/10 HOUSE On Council agenda - Economic Development & Community Affairs Policy Council,
04/07/10, 8:00 am, 404 H
04/07/10 HOUSE Favorable by Economic Development & Community Affairs Policy Council; 15 Yeas, 0
Nays
HOUSE Placed on Calendar, on second reading
HB 937 - Relating to City of West Palm Beach, Palm Beach County
Sponsor(s) by Domino
Summary
Local City of West Palm Beach, Palm Beach County: Revises definitions relating to West Palm Beach
Firefighters Pension Fund; revises terms of board members; provides that authorized fiduciary may sign
drafts for fund disbursements; provides additional requirements for board relating to certain holdings;
deletes certain requirements relating to service pension for normal retirement, including optional transition
benefits for certain employees; provides that retired member may change certain designation of joint
annuitant or beneficiary relating to payment of benefits; provides that members who are disabled due to
specified military service are not excluded from disability pensions; provides that board may authorize
withholdings from retirement pay under certain circumstances; provides that firefighter for federal fire
department constitutes prior firefighter service; provides for termination of fund & distribution of assets.
Effective Date: upon becoming a law
Actions
Date Chamber Action
02/05/10 HOUSE Filed
02/18/10 HOUSE Referred to Military & Local Affairs Policy Committee; Government Operations
Appropriations Committee; Economic Development & Community Affairs Policy Council
HOUSE Now in Military & Local Affairs Policy Committee
03/01/10 HOUSE On Committee agenda - Military & Local Affairs Policy Committee, 03/03/10,9:00 am,
212 K
03/03/10 HOUSE Favorable by Military & Local Affairs Policy Committee; 10 Yeas, 0 Nays
HOUSE Now in Government Operations Appropriations Committee
03/08/10 HOUSE On Committee agenda - Government Operations Appropriations Committee, 03/10/10,
3:00 pm, 116 K
03/10/10 HOUSE Favorable by Government Operations Appropriations Committee; 12 Yeas, 0 Nays
03/11/10 HOUSE Now in Economic Development & Community Affairs Policy Council
04/05/10 HOUSE On Council agenda - Economic Development & Community Affairs Policy Council,
04/07/10, 8:00 am, 404 H
04/07/10 HOUSE Favorable by Economic Development & Community Affairs Policy Council; 15 Yeas, 0
Nays
HOUSE Police on Calendar, on second reading
HB 413 - Relating to Defined Contribution Retirement Program
Sponsor(s) by Wood, Precourt CoSponsors: Mayfield
Summary
General Defined Contribution Retirement Program: Changes name of Public Employee Optional
Retirement Program to Public Employee Retirement Investment Program; limits option of enrolling in State
Retirement System's defined benefit program or defined contribution program to certain employees;
requires certain public employees to enroll in defined contribution program; deletes obsolete provisions;
deletes requirements for educational program that compares retirement programs; deletes provisions
relating to having choice in retirement plans; provides conforming changes; provides directive to Division
of Statutory Revision. Effective Date: July 1, 2010
Actions
Date Chamber Action
11/25/09 HOUSE Filed
12/18/09 HOUSE Referred to Governmental Affairs Policy Committee; Full Appropriations Council on
Education & Economic Development
HOUSE Now in Governmental Affairs Policy Committee
HB 1319 - Relating to Governmental Retirement Systems
Sponsor(s) by Grady
Summary
General Governmental Retirement Systems: Designates act "Public Employee Retirement Preservation
Act "; requires certain public employees to contribute an additional specified percentage of their gross
income for certain purposes; provides requirements for certain retirement system or plan actuarial reports &
experience studies; provides for closing of certain plans; provides maximum retirement benefit for certain
retirement system or plan members; provides requirements for board of trustees of each retirement system
or plan; provides membership requirements for special fire control district board of trustees; revises
requirements for increasing firefighter member contributions; authorizes municipality or special fire control
district to establish defined contribution retirement plan for certain purposes; requires municipalities &
special fire control districts with their own pension plans for firefighters to provide certain extra benefits;
provides membership requirements for municipality board of trustees; revises requirements for increasing
police officer member contributions; authorizes municipality to establish defined contribution retirement
plan for certain purposes; requires municipalities with their own pension plans for police officers to provide
certain extra benefits; requires state & local government balance sheets to contain certain pension
information; requires the Chief Financial Officer & officials of governing bodies of political subdivision of
the state to issue specified reports; authorizes certain units of government to postpone compliance with
provisions of this act under specified conditions; provides effective dates. Effective Date: July 1, 2010
Actions
Date Chamber Action
02/25/10 HOUSE Filed
03/03/10 HOUSE Referred to Governmental Affairs Policy Committee; Government Operations
Appropriations Committee; Finance & Tax Council; Economic Development & Community Affairs Policy
Council
HOUSE Now in Governmental Affairs Policy Committee
SB 660 - Relating to Defined Contribution Retirement Program
Sponsor(s) by Fasano
Summary
General Defined Contribution Retirement Program [WPSC]; Changes the name of the Public Employee
Optional Retirement Program to the Public Employee Retirement Investment Program. Limits the option of
enrolling in the State Retirement System's defined benefit program or defined contribution program to
public employees employed before January 1, 2011. Deletes requirements for an educational program that
compares retirement programs, etc. EFFECTIVE DATE: 07/01/2010.
Actions
Date Chamber Action
11/10/09 SENATE Filed
12117109 SENATE Referred to Community Affairs; Governmental Oversi -aht and Accountability;
General Government Appropriations: Policy & Steerine Committee on Ways and Means
SB 1902 - Relating to Public Retirement Plans
Sponsor(s) by Bennett
Summary
General Public Retirement Plans [WPSC]; Requires that a retirement system or plan include in its actuarial
report a projection of the employer's annual required contributions and an experience study. Limits the
benefits payable to a member of a retirement system or plan who has not attained 10 years of service by a
certain date. Revises the calculations used for upgrading a special risk member's contributions for past
service, etc. EFFECTIVE DATE: 07/01/2010.
Actions
Date Chamber Action
02/10/10 SENATE Filed
02/17/10 SENATE Referred to Community Affairs; Governmental Oversight and Accountability; General
Government Appropriations; Policy & Steering Committee on Ways and Means
03/18/10 SENATE On Committee agenda - Community Affairs, 03/23/10, 1:00 pm, 412 K
03/23/10 SENATE Temporarily postponed by Community Affairs
04/01/10 SENATE On Committee agenda -Community Affairs, 04/07/10,8:00 am, 412 K
04107110 SENATE Not Considered by Community Affairs