TALLAHASSEE — Florida lawmakers in the House and Senate may be on a long road to compromise as they advance starkly different plans on overhauling the state retirement system.
The Senate Appropriations Committee on Thursday cleared a bill (SB 1392) that keeps the option for new state and county employees and teachers to have a traditional pension. It now goes to the full Senate for approval.
But the House's plan (HB 7011) closes the state pension plan to workers hired as of Jan. 1, 2014, and forces them into 401(k)-style investment plans for their retirement. It has already passed the full House.
Senate president Don Gaetz, a Niceville Republican, said he agrees with House Speaker Will Weatherford that the Legislature "needs to make a significant structural change in the retirement system."
He thinks the Senate proposal, sponsored by Sen. Wilton Simpson, can be the compromise, though it changes much less than the House.
"I don't think the story is entirely written about that yet," he said. "I think it's possible that we could wind up with no bill. But I think it's more likely that we'll wind up with something that achieves the speaker's goals — and I share those goals — but at the same time earns enough votes to pass the Senate."
Overhauling the pension plan has been a priority of Weatherford's. He has said changing the pension system would save nearly $10 billion over 30 years and relieve taxpayers of the burden of another $19 billion in unfunded liabilities.
Pension plans offer reliable income, and states generally have to guarantee them with tax dollars. But a retiree invested in a 401(k)-style plan must suffer the ups and downs of the market. Those now in the Florida Retirement System can select a traditional pension or a 401(k)-style plan.
Among other things, the Senate bill:
• Extends the vesting period for a pension from eight to 10 years,
• Requires employees who don't pick between a pension and an investment plan to "default" into an investment plan,
• Reduces the employee contribution rate from 3 percent to 2 percent of earnings for investment plan participants.
That bill was approved on a mostly party-line 14-5 vote, with Sen. Jeremy Ring of Margate as the lone Democrat in favor.
A number of labor unions oppose the Senate alternative, though some firefighter and other public employee representatives have started to sign on to the plan as the lesser of two evils, as one said privately.
But Shari Gewanter, a teacher at Oak Ridge Elementary in Tallahassee, told lawmakers she didn't think 401(k)-style plans would serve the needs of future retirees. She used herself as an example— she's now in a Florida Retirement System investment plan.
"After 18 years of teaching, I make $38,000," she said. "I don't have any extra money to invest.
"I'm counting on you to help me in my retirement," Gewanter added. "A promise was made that if I gave you 30 years of my time, my energy, that there would be a payoff at the end. I realize now … that I will not retire with enough income to support myself."
More than 900,000 current employees and retirees belong to the state's pension plan. State workers make up about a quarter. The rest are teachers and local government workers, such as law enforcement officers and firefighters.
Florida's pension fund has about $133 billion, and is 87 percent funded. Pension plans that are at least 80 percent funded are considered healthy.