In fierce opposition from the Democratic Party, the Florida Senate approved a proposal on Thursday to prevent future teachers and other civil servants from joining the state’s traditional pension system.
The Senate voted 24-16 to support the changes that would take effect on employees hired as of July 1, 2022. These workers must enroll in a 401 (k) style plan. Employees such as law enforcement officers, prison officers and firefighters can continue to participate in traditional pension schemes.
Parliamentarians have been discussing this move for years as private employers have moved significantly away from traditional pensions and moved to a 401 (k) retirement plan. Civil servants can now decide whether to join a state-owned pension plan or a 401 (k) style plan.
Senator Wilton Simpson, R-Trillby, prioritized the renewal of the retirement system. He made a statement after the bill (SB 84) Was passed, citing $ 36 billion of “Unfunded Actuarial Liability”. This is basically a measure of whether a pension fund is expected to have sufficient funds to meet its future obligations.
“In other states, we’ve seen examples of how quickly things change and the government could experience a financial crisis under the weight of future retirement obligations,” Simpson said. “Waiting for Florida’s situation to worsen to solve these problems is like closing the barn door after the horse has left.”
However, the Democratic Party said the pension system is in a solid financial position and many civil servants earn less than the private sector, but are attracted to the outlook for pensions and health insurance. Senator Loranne Ausley of D-Tallahassee said the state has made a “basic promise” to promise workers a safe retirement.
“This bill breaks that promise, and I simply can’t support it,” said Ausley, whose district is full of state workers.
There is no similar house bill
The Republican-controlled Senate approved the bill along the party’s straight line. However, the House of Representatives does not have a similar bill, and it is unclear whether the changes will pass before the end of the scheduled annual legislative session on April 30.
More than one million current and former workers, including state workers, county employees, and teachers throughout Florida, participate in the Florida Retirement Program (FRS). According to an analysis by Senate staff, about 74% of current employees joined the pension plan last year and about 26% joined the 401 (k) style plan.
According to Senate officials’ analysis, the pension scheme is funded by government and employee funding and return on investment, with actuarial value of approximately $ 164 billion as of June 30, last year. Actuarial debt totaled approximately $ 200 billion.
The bill, sponsored by Senator Ray Rodriguez and R-Estero, does not apply to current employees or retirees. He said actuarial liability for underfunding continues to grow and states must invest more in the pension system.
“It is our duty to ensure that Florida employees have a credible retirement plan, which ensures that we maintain long-term solvency,” Rodriguez said in a post-voting statement. I demand that. ” “Also, as a policymaker, rising costs of pension debt have overwhelmed funding for education, transportation, security, and other priorities such as helping our most vulnerable people. You have to be aware of that. “
However, the Democratic Party said the proposed changes would actually make the pension system more volatile, as fewer workers would pay for it in the future. Senate minority leader Gary Farmer of D-Lighthouse Point said Florida has a “sustainable” pension plan.
“This mousetrap isn’t broken. You don’t need a new one,” he said.