AFL-CIO group says report Weatherford ordered proves pension reform is a loser
The Florida Retirement Security Coalition issued a stinging rebuke on Saturday of Florida House Speaker Will Weatherford’s efforts to reform Florida’s pension system.
Ok, that’s hardly news coming from an outfit managed by the AFL-CIO. It’s no secret the group opposes HB 7011, which would force all public employees hired by agencies enrolled in the state’s $136 billion pension plan to sign-up instead with 401-k plans after January 2014. The coalition has even published a 19-page report arguing that the plan is fiscally sound and needs no major overhaul.
But the group pegged Saturday’s lament on a report released Friday that had been ordered by Weatherford to study the economic impact of the reform. It surely wasn’t Weatherford’s hope that the report would be used as ammo against his proposal.
The study was done by Milliman, a Vienna, VA firm that is among the world’s largest providers of actuarial services. It warned that the traditional pension plan, which Weatherford has vowed would remain intact, would rely on a shrinking payroll base on which contributions to retirees are made. This would require the contribution rates to increase as a share of payroll.
How to pay for the growing gap? Workers could pay more in contributions, which are now capped at 3 percent, or local governments and agencies would need to kick in the difference. They might have to kick in more money to make the plan fiscally sound because of the plan’s diminished capability of making long-term investments as the number of contributors erode over time, the report surmised.
That was the opening the coalition needed.
“There is clearly a significant cost associated with this plan,” said Gary Rainey, president of Florida Firefighters. “But the legislature apparently thinks price is no object – probably because they don’t intend to be the ones footing the bill.
“Not only does the legislature want to eliminate retirement security for thousands of public servants like school teachers, firefighters and police but they are likely to expect local governments to shoulder the financial burden,” Rainey added.
There will be other interpretations of the 49-page report, which is mostly actuarial tables, but the coalition was the first one to officially react to it.