Florida’s Retirement System is Facing Changes
Florida’s Retirement System might soon be facing changes if some lawmakers get their way. These changes would address how pension plans are managed. Specifically, the changes would include defaulting newer state employees into Florida’s investment plan instead of its pension plan. It would also change the eligibility requirements of pension plan members.
While these changes are in progress, there is still much research that must be done to determine if the changes would be to the state’s benefit. The Republican House Speaker requested that the Department of Management Service investigate how to the potential legal changes would impact the state through an actuarial study. This study would consider the effects of changing the current retirement system, such as the impact of shifting the default enrollment from the pension plan to a more traditional 401k plan, as well as what the effects would be of closing the pension plan to elected officials and senior managers. The study would also examine what economic impact it would have if you adjusted the vesting period of the current pension plan from eight to 10 years.
The issue at the heart of these proposed changes is the current cost of the state’s pension plan. The plan that is in place right now demands that Florida spend more than a half a billion dollars in order to close a $20 billion unfunded actuarial liability. Many who do not support the proposed changes have pointed to the fact that most pension plans are not fully funded and Florida’s is 86.6 funded, which is actually very functional. Republicans disagree and are pushing the suggested modifications.
Whether or not you are enrolled in a pension plan, it is important to plan for your retirement. For assistance with these matters in Florida, contact the estate planning attorneys at BaumannKangas Estate Law.