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Florida retirement plans defended by union, experts

TALLAHASSEE — The AFL-CIO and two outside experts Monday disputed what they say are "myths" that Florida's public employee retirement plans are underfunded and provide lavish benefits.

Also, during a news conference they disagreed with claims that public pension costs are too high and eating up state and local budgets and that they hurt local economies.

The pension plans have drawn those kinds of criticisms from Gov. Rick Scott, lawmakers and a conservative think tank.

Florida AFL-CIO legislative and political director Rich Templin said the union is troubled by such comments although details of proposed legislation are hazy and nothing has yet been filed.

He said pension benefits averaging $16,000 to $23,000 a year cannot be considered extravagant.

Scott has called the $122 billion Florida Retirement System "a ticking fiscal time bomb" because he doesn't think it can sustain its current high rate of return on investment. He's also worried about its unfunded liability.

As of last June 30, the closing date for the plan's last annual report, it had $109 billion in assets and an unfunded liability of about $15 billion, or 12 percent.

That percentage is one of the lowest of any public pension funds in the nation.

"You are one of the shining stars of pension systems throughout the United States," said Ray Edmonsdon, chief executive of the Florida Public Pension Trustees Association, a nonprofit educational organization for local plans.

The state plan, which isn't a member of Edmonsdon's organization, covers state and some local employees, including teachers. Florida also has 488 local government pension funds.

In response, the James Madison Institute, a Tallahassee think tank, issued a news release acknowledging underfunded public pensions have not yet reached a crisis in most Florida municipalities but saying that possibility should be addressed now to prevent future problems.

"Underfunded public pension liabilities are economic sinkholes waiting to collapse," said the institute's president, J. Robert McClure III.

Florida is one of very few states that don't require state employees to pay into its pension fund. Scott has proposed compelling them to contribute.

Scott also wants new hires to be placed in a defined contribution plan similar to a 401K. That would allow employees to take their individual plans with them if they move to a new job not covered by the state system. They'd also be responsible for managing their own investments and would not be guaranteed lifetime payments that they get under the present defined benefits plan.

Edmonsdon, a retired Fort Lauderdale police officer, said switching to defined contributions could cost taxpayers more because retirees who exhaust their pension benefits would qualify for welfare at taxpayer expense.

Florida retirement plans defended by union, experts 01/10/11 [Last modified: Monday, January 10, 2011 10:02pm]
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