HomeMy WebLinkAboutHandouts_Regular_AOM_04/08/2010 THE LAW OFFICES OF
PERRY & JENSEN LLC
ANN H. PERRY BONNI SPATARA J ENSEN
aperry@perryjensenlaw.com bsjensen@perryjensenlaw.com
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, 2010
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• 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 1751185
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 - April, 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 175/185
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 175/185
funds) to add a new subsection (5) which allows a municipality or special fire
O p ty p
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.
1-1131643 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:
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State Legal Updates - April, 2010
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• 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.
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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.
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State Legal Updates - April, 2010
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• 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%
e c
S p al Risk 0.00% 5.97%
i
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
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State Legal Updates - April, 2010
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• 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
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