If Priscilla Thoopthong had a crystal ball, it would be a lot easier for her to decide which of the state's two retirement plans is a better option.
+ A traditional pension plan with a guaranteed benefit for life _ but only if she works long enough to earn it.
+ A self-directed investment plan that's a brand new option. The value of that account would fluctuate with Thoopthong's investment returns _ but she could take all of the money with her if she left her job as a computer analyst with the Southwest Florida Water Management District.
"It's hard to decide," she said. "This is a good place to work, but you never know. I've been here for only two years, and it's hard to know what's going to be going on in your life 20 or 30 years from now."
This month the Florida Retirement System began asking its more than 600,000 active participants to choose between the two plans. The first group of state employees will be able to start making their own investment decisions this summer, with teachers, county and city employees joining them later this year.
The majority are expected to stay put. Only 10 percent of the first 2,000 to turn in their selection forms opted for the new plan. For career employees, sticking with the current plan is the obvious choice. But for Thoopthong and other employees with just a few years' service, it is not a simple decision.
A secure pension always has been one of the chief attractions of a government career. Under the Florida Retirement System, most employees can retire at just under half their final average pay after 30 years of service regardless of age. Once a retiree begins collecting, pension benefits increase 3 percent a year.
"It's very hard to beat that guarantee," said Tom Herndon, executive director of the State Board of Administration, which invests the current pension plan and is putting the new investment plan in place.
The big drawback of the current plan is that thousands of employees don't stick with their government jobs long enough to earn significant benefits. Those who leave in the first six years get nothing.
The new plan, approved by the Legislature two years ago, is similar to a 401(k) savings plan funded entirely with employer contributions. How much an individual's account is ultimately worth will depend on the size of the contributions and the performance of the investments selected. If they work at least a year, employees who quit will be able to take their accounts with them.
The annual employer contributions will be a set percentage of pay _ 9 percent for most employees, 20 percent for law enforcement workers who have more generous pensions. The account also will contain the present value of the pension benefits employees already have earned, unless they choose to keep one foot in each plan. Under that option they can stay in the old plan, with benefits frozen at the level they've already earned, and invest new contributions in the new plan.
Employees who become unhappy with their choices will have a one-time chance later in their careers to switch plans. Moving from the investment plan to the pension plan will require a payment that may be more or less than the value of their investment accounts.
The investment plan will offer a menu of 42 funds covering the spectrum, from U.S. and foreign stocks to bonds and money market funds. The investment managers include household names such as Fidelity, Prudential and Invesco.
To help them assess their choices, participants in the Florida Retirement System will receive personalized statements showing the present value of their retirement benefits. For example, a young employee with four years' service now making $38,000 a year would have earned benefits worth $5,570, which would be deposited in the investment account if he chooses to make the switch.
By reading printed materials or using an interactive Web site, employees can find out how much their benefits would be worth under each plan, using various assumptions about the number of years they will work, how big their annual pay raises will be, how much inflation will be and what kind of returns they will earn on their investments.
The state has hired the accounting firm Ernst & Young to staff a free telephone hotline with financial planners and to present workshops that began last week. So far the process is off to a bumpy start. In some counties workshops were canceled because announcements went unnoticed, buried in a thick packet of plan information.
Problems also have cropped up with several of the investment choices in the plan. The managers of one specialty stock fund quit and the sponsor no longer offers the fund, Herndon said. In addition, he said four specialty bond funds want to impose restrictions on withdrawals that the state does not want to accept.
When state officials first began developing the new plan, consultants predicted as many as half the employees might sign up for it, transferring between $8-billion and $30-billion out of the $95-billion retirement plan.
Herndon said such a strong response is now viewed as unlikely. He said investing your own retirement money is no longer so appealing in the wake of the stock market's reversal, the terrorist attacks and the highly publicized bankruptcies of companies such as Enron.
"I do not believe I can manage the funds in my account better and cheaper than the Florida Retirement System," said Adrian Nenu, a detention corporal for the Pinellas County Sheriff's Department. Although he invests in stocks and bonds on his own, he said he likes the guarantees the traditional pension offers.
Priscilla Thoopthong said she thinks about that too:
"It's nice to have the choice, but if you don't really know what you're doing, you could really mess yourself up."