Weatherford's pension overhaul hits snag in Senate
One of Florida House Speaker Will Weatherford’s top priorities appears to be troubled two weeks into session.
Weatherford wants to close the Florida Retirement System’s pension plan to new employees after Jan. 1, 2014. He wants to steer employees away from the guaranteed benefit system, which he says will require a major taxpayer bailout in the future, and toward 401(k)-style plans instead.
But the Florida Senate, at least so far, is going in another direction. SB 1392, sponsored by Sen. Wilton Simpson, R-New Port Richey, would make such a shift to 401(k)s voluntary for most new employees.
Only the highest paid employees such as senior managers and department heads would be forced to enroll. But other employees, from teachers to bus drivers to police and secretaries, could remain in the system as long as they choose to stay (it does include a new default to the 401(k)-plans). The bill provides for an enticement: all employees in the investment plan will contribute 2 percent of their salary towards retirement. Employees participating in the pension plan will continue to pay 3 percent.
Simpson’s bill is considered more palatable to senators who still aren’t convinced the FRS is in such dire condition. A study by a Virginia actuarial firm, Milliman, was supposed to provide answers, but has only made the case for reform even more convoluted, said Sen. Jeremy Ring, D-Margate, who chairs the Government Accountability and Oversight Committee.
“There’s so many questions about the costs of closing a defined benefit plan, and I don’t think anyone has gotten their arms around that study,” Ring said. “So (Simpson’s bill) came up as an option.”
The sponsor of HB 7011, which is Weatherford’s desired form of reform, said he’s not a big fan of Simpson’s bill.
Rep. Jason Brodeur, R-Sanford, said employees already can join a 401(k)-plans, so that part of the bill doesn’t represent needed change. The enticement to encourage employees to enroll will end up costing taxpayers money, which the state can’t afford, he said.
“That bill just doesn’t go far enough,” Brodeur said.
At least for now, then, pension issue will move along separate tracks. Brodeur’s bill heads to the House State Affairs Committee. Two hours later, Simpson’s bill heads to Ring’s government oversight committee.
Where it will end up is anyone’s guess.
“It’s early, we’re only two weeks into this,” Ring said. “But right now, the House and Senate are far apart.”