Florida Senate - 2023 SB 224 By Senator Hooper 21-00298A-23 2023224__ 1 A bill to be entitled 2 An act relating to Special Risk Class retirement date; 3 amending s. 121.021, F.S.; revising the definition of 4 normal retirement date; decreasing the age and years 5 of service needed to reach the normal retirement date 6 for certain members; amending ss. 121.091 and 7 121.4501, F.S.; conforming provisions to changes made 8 by this act; providing a declaration of important 9 state interest; providing an effective date. 10 11 Be It Enacted by the Legislature of the State of Florida: 12 13 Section 1.Paragraph (b) of subsection (29) of section 14 121.021, Florida Statutes, is amended to read: 15 121.021Definitions.The following words and phrases as 16 used in this chapter have the respective meanings set forth 17 unless a different meaning is plainly required by the context: 18 (29)Normal retirement date means the date a member 19 attains normal retirement age and is vested, which is determined 20 as follows: 21 (b)For If a Special Risk Class members member initially 22 enrolled: 23 1.Before July 1, 2011: 24 1.a.The first day of the month the member attains age 55 25 and completes the years of creditable service in the Special 26 Risk Class equal to or greater than the years of service 27 required for vesting; 28 2.b.The first day of the month following the date the 29 member completes 25 years of creditable service in the Special 30 Risk Class, regardless of age; or 31 3.c.The first day of the month following the date the 32 member completes 25 years of creditable service and attains age 33 52, which service may include a maximum of 4 years of military 34 service credit if such credit is not claimed under any other 35 system and the remaining years are in the Special Risk Class. 36 2.On or after July 1, 2011: 37 a.The first day of the month the member attains age 60 and 38 completes the years of creditable service in the Special Risk 39 Class equal to or greater than the years of service required for 40 vesting; 41 b.The first day of the month following the date the member 42 completes 30 years of creditable service in the Special Risk 43 Class, regardless of age; or 44 c.The first day of the month following the date the member 45 completes 30 years of creditable service and attains age 57, 46 which service may include a maximum of 4 years of military 47 service credit if such credit is not claimed under any other 48 system and the remaining years are in the Special Risk Class. 49 50 For pension plan members, normal retirement age is attained on 51 the normal retirement date. For investment plan members, normal 52 retirement age is the date a member attains his or her normal 53 retirement date as provided in this section, or the date a 54 member is vested under the investment plan as provided in s. 55 121.4501(6), whichever is later. 56 Section 2.Subsection (3) and paragraph (a) of subsection 57 (13) of section 121.091, Florida Statutes, are amended to read: 58 121.091Benefits payable under the system.Benefits may not 59 be paid under this section unless the member has terminated 60 employment as provided in s. 121.021(39)(a) or begun 61 participation in the Deferred Retirement Option Program as 62 provided in subsection (13), and a proper application has been 63 filed in the manner prescribed by the department. The department 64 may cancel an application for retirement benefits when the 65 member or beneficiary fails to timely provide the information 66 and documents required by this chapter and the departments 67 rules. The department shall adopt rules establishing procedures 68 for application for retirement benefits and for the cancellation 69 of such application when the required information or documents 70 are not received. 71 (3)EARLY RETIREMENT BENEFIT.Upon retirement on his or her 72 early retirement date, the member shall receive an immediate 73 monthly benefit that shall begin to accrue on the first day of 74 the month of the retirement date and be payable on the last day 75 of that month and each month thereafter during his or her 76 lifetime. Such benefit shall be calculated as follows: 77 (a)1.For all Special Risk Class members or a member of the 78 Regular Class, Senior Management Service Class, or the Elected 79 Officers Class initially enrolled: 80 1.before July 1, 2011, the amount of each monthly payment 81 shall be computed in the same manner as for a normal retirement 82 benefit, in accordance with subsection (1), but shall be based 83 on the members average monthly compensation and creditable 84 service as of the members early retirement date. The benefit so 85 computed shall be reduced by five-twelfths of 1 percent for each 86 complete month by which the early retirement date precedes the 87 normal retirement date of age 62 for a member of the Regular 88 Class, Senior Management Service Class, or the Elected Officers 89 Class, and age 55 for a member of the Special Risk Class, or age 90 52 if a Special Risk member has completed 25 years of creditable 91 service in accordance with s. 121.021(29)(b)3. s. 92 121.021(29)(b)1.c. 93 2.For a member of the Regular Class, Senior Management 94 Service Class, or the Elected Officers Class initially enrolled 95 on or after July 1, 2011, the amount of each monthly payment 96 shall be computed in the same manner as for a normal retirement 97 benefit, in accordance with subsection (1), but shall be based 98 on the members average monthly compensation and creditable 99 service as of the members early retirement date. The benefit so 100 computed shall be reduced by five-twelfths of 1 percent for each 101 complete month by which the early retirement date precedes the 102 normal retirement date of age 65 for a member of the Regular 103 Class, Senior Management Service Class, or the Elected Officers 104 Class, and age 60 for a member of the Special Risk Class, or age 105 57 if a special risk member has completed 30 years of creditable 106 service in accordance with s. 121.021(29)(b)2.c. 107 (b)If the employment of a member is terminated by reason 108 of death within 10 years before normal retirement as described 109 in s. 121.021(29)(a)1.b. or s. 121.021(29)(a)2.b., the monthly 110 benefit payable to the members beneficiary shall be calculated 111 in accordance with subsection (1), but must be based on average 112 monthly compensation and creditable service as of the date of 113 death. The benefit so computed shall be reduced by five-twelfths 114 of 1 percent for each complete month by which death precedes the 115 normal retirement date specified above or the date on which the 116 member would have attained the normal retirement date had he or 117 she survived and continued his or her employment, whichever 118 provides a higher benefit. 119 (13)DEFERRED RETIREMENT OPTION PROGRAM.In general, and 120 subject to this section, the Deferred Retirement Option Program, 121 hereinafter referred to as DROP, is a program under which an 122 eligible member of the Florida Retirement System may elect to 123 participate, deferring receipt of retirement benefits while 124 continuing employment with his or her Florida Retirement System 125 employer. The deferred monthly benefits shall accrue in the 126 Florida Retirement System on behalf of the member, plus interest 127 compounded monthly, for the specified period of the DROP 128 participation, as provided in paragraph (c). Upon termination of 129 employment, the member shall receive the total DROP benefits and 130 begin to receive the previously determined normal retirement 131 benefits. Participation in the DROP does not guarantee 132 employment for the specified period of DROP. Participation in 133 DROP by an eligible member beyond the initial 60-month period as 134 authorized in this subsection shall be on an annual contractual 135 basis for all participants. 136 (a)Eligibility of member to participate in DROP.All 137 active Florida Retirement System members in a regularly 138 established position, and all active members of the Teachers 139 Retirement System established in chapter 238 or the State and 140 County Officers and Employees Retirement System established in 141 chapter 122, which are consolidated within the Florida 142 Retirement System under s. 121.011, are eligible to elect 143 participation in DROP if: 144 1.The member is not a renewed member under s. 121.122 or a 145 member of the State Community College System Optional Retirement 146 Program under s. 121.051, the Senior Management Service Optional 147 Annuity Program under s. 121.055, or the optional retirement 148 program for the State University System under s. 121.35. 149 2.Except as provided in subparagraph 6., for all Special 150 Risk Class members and Regular Class, Senior Management Service 151 Class, or Elected Officers Class members initially enrolled 152 before July 1, 2011, election to participate is made within 12 153 months immediately following the date on which the member first 154 reaches normal retirement date, or, for a member who reaches 155 normal retirement date based on service before he or she reaches 156 age 62, or age 55 for Special Risk Class members, election to 157 participate may be deferred to the 12 months immediately 158 following the date the member attains age 57, or age 52 for 159 Special Risk Class members. Except as provided in subparagraph 160 6., for Regular Class, Senior Management Service Class, or 161 Elected Officers Class members initially enrolled on or after 162 July 1, 2011, election to participate is made within 12 months 163 immediately following the date on which the member first reaches 164 normal retirement date, or, for a member who reaches normal 165 retirement date based on service before he or she reaches age 166 65, or age 60 for Special Risk Class members, election to 167 participate may be deferred to the 12 months immediately 168 following the date the member attains age 60, or age 55 for 169 Special Risk Class members. A member who delays DROP 170 participation during the 12-month period immediately following 171 his or her maximum DROP deferral date, except as provided in 172 subparagraph 6., loses a month of DROP participation for each 173 month delayed. A member who fails to make an election within the 174 12-month limitation period forfeits all rights to participate in 175 DROP. The member shall advise his or her employer and the 176 division in writing of the date DROP begins. The beginning date 177 may be subsequent to the 12-month election period but must be 178 within the original 60-month participation period provided in 179 subparagraph (b)1. When establishing eligibility to participate 180 in DROP, the member may elect to include or exclude any optional 181 service credit purchased by the member from the total service 182 used to establish the normal retirement date. A member who has 183 dual normal retirement dates is eligible to elect to participate 184 in DROP after attaining normal retirement date in either class. 185 3.The employer of a member electing to participate in 186 DROP, or employers if dually employed, shall acknowledge in 187 writing to the division the date the members participation in 188 DROP begins and the date the members employment and DROP 189 participation terminates. 190 4.Simultaneous employment of a member by additional 191 Florida Retirement System employers subsequent to the 192 commencement of a members participation in DROP is permissible 193 if such employers acknowledge in writing a DROP termination date 194 no later than the members existing termination date or the 195 maximum participation period provided in subparagraph (b)1. 196 5.A member may change employers while participating in 197 DROP, subject to the following: 198 a.A change of employment takes place without a break in 199 service so that the member receives salary for each month of 200 continuous DROP participation. If a member receives no salary 201 during a month, DROP participation ceases unless the employer 202 verifies a continuation of the employment relationship for such 203 member pursuant to s. 121.021(39)(b). 204 b.The member and new employer notify the division of the 205 identity of the new employer on forms required by the division. 206 c.The new employer acknowledges, in writing, the members 207 DROP termination date, which may be extended but not beyond the 208 maximum participation period provided in subparagraph (b)1., 209 acknowledges liability for any additional retirement 210 contributions and interest required if the member fails to 211 timely terminate employment, and is subject to the adjustment 212 required in sub-subparagraph (c)5.d. 213 6.Effective July 1, 2001, for instructional personnel as 214 defined in s. 1012.01(2), election to participate in DROP may be 215 made at any time following the date on which the member first 216 reaches normal retirement date. The member shall advise his or 217 her employer and the division in writing of the date on which 218 DROP begins. When establishing eligibility of the member to 219 participate in DROP for the 60-month participation period 220 provided in subparagraph (b)1., the member may elect to include 221 or exclude any optional service credit purchased by the member 222 from the total service used to establish the normal retirement 223 date. A member who has dual normal retirement dates is eligible 224 to elect to participate in either class. 225 Section 3.Paragraph (b) of subsection (3) of section 226 121.4501, Florida Statutes, is amended to read: 227 121.4501Florida Retirement System Investment Plan. 228 (3)RETIREMENT SERVICE CREDIT; TRANSFER OF BENEFITS. 229 (b)Notwithstanding paragraph (a), an eligible employee who 230 elects to participate in, or who defaults into, the investment 231 plan and establishes one or more individual member accounts may 232 elect to transfer to the investment plan a sum representing the 233 present value of the employees accumulated benefit obligation 234 under the pension plan, except as provided in paragraph (4)(b). 235 Upon transfer, all service credit earned under the pension plan 236 is nullified for purposes of entitlement to a future benefit 237 under the pension plan. A member may not transfer the 238 accumulated benefit obligation balance from the pension plan 239 after the time period for enrolling in the investment plan has 240 expired. 241 1.For purposes of this subsection, the present value of 242 the members accumulated benefit obligation is based upon the 243 members estimated creditable service and estimated average 244 final compensation under the pension plan, subject to 245 recomputation under subparagraph 2. For state employees, initial 246 estimates shall be based upon creditable service and average 247 final compensation as of midnight on June 30, 2002; for district 248 school board employees, initial estimates shall be based upon 249 creditable service and average final compensation as of midnight 250 on September 30, 2002; and for local government employees, 251 initial estimates shall be based upon creditable service and 252 average final compensation as of midnight on December 31, 2002. 253 The dates specified are the estimate date for these employees. 254 The actuarial present value of the employees accumulated 255 benefit obligation shall be based on the following: 256 a.The discount rate and other relevant actuarial 257 assumptions used to value the Florida Retirement System Trust 258 Fund at the time the amount to be transferred is determined, 259 consistent with the factors provided in sub-subparagraphs b. and 260 c. 261 b.A benefit commencement age, based on the members 262 estimated creditable service as of the estimate date. 263 c.Except as provided under sub-subparagraph d., for a 264 member initially enrolled: 265 (I)Before July 1, 2011, the benefit commencement age is 266 the younger of the following, but may not be younger than the 267 members age as of the estimate date: 268 (A)Age 62; or 269 (B)The age the member would attain if the member completed 270 30 years of service with an employer, assuming the member worked 271 continuously from the estimate date, and disregarding any 272 vesting requirement that would otherwise apply under the pension 273 plan. 274 (II)On or after July 1, 2011, the benefit commencement age 275 is the younger of the following, but may not be younger than the 276 members age as of the estimate date: 277 (A)Age 65; or 278 (B)The age the member would attain if the member completed 279 33 years of service with an employer, assuming the member worked 280 continuously from the estimate date, and disregarding any 281 vesting requirement that would otherwise apply under the pension 282 plan. 283 d.For members of the Special Risk Class and for members of 284 the Special Risk Administrative Support Class entitled to retain 285 the special risk normal retirement date: 286 (I)Initially enrolled before July 1, 2011, the benefit 287 commencement age is the younger of the following, but may not be 288 younger than the members age as of the estimate date: 289 (I)(A)Age 55; or 290 (II)(B)The age the member would attain if the member 291 completed 25 years of service with an employer, assuming the 292 member worked continuously from the estimate date, and 293 disregarding any vesting requirement that would otherwise apply 294 under the pension plan. 295 (II)Initially enrolled on or after July 1, 2011, the 296 benefit commencement age is the younger of the following, but 297 may not be younger than the members age as of the estimate 298 date: 299 (A)Age 60; or 300 (B)The age the member would attain if the member completed 301 30 years of service with an employer, assuming the member worked 302 continuously from the estimate date, and disregarding any 303 vesting requirement that would otherwise apply under the pension 304 plan. 305 e.The calculation must disregard vesting requirements and 306 early retirement reduction factors that would otherwise apply 307 under the pension plan. 308 2.For each member who elects to transfer moneys from the 309 pension plan to his or her account in the investment plan, the 310 division shall recompute the amount transferred under 311 subparagraph 1. within 60 days after the actual transfer of 312 funds based upon the members actual creditable service and 313 actual final average compensation as of the initial date of 314 participation in the investment plan. If the recomputed amount 315 differs from the amount transferred by $10 or more, the division 316 shall: 317 a.Transfer, or cause to be transferred, from the Florida 318 Retirement System Trust Fund to the members account the excess, 319 if any, of the recomputed amount over the previously transferred 320 amount together with interest from the initial date of transfer 321 to the date of transfer under this subparagraph, based upon the 322 effective annual interest equal to the assumed return on the 323 actuarial investment which was used in the most recent actuarial 324 valuation of the system, compounded annually. 325 b.Transfer, or cause to be transferred, from the members 326 account to the Florida Retirement System Trust Fund the excess, 327 if any, of the previously transferred amount over the recomputed 328 amount, together with interest from the initial date of transfer 329 to the date of transfer under this subparagraph, based upon 6 330 percent effective annual interest, compounded annually, pro rata 331 based on the members allocation plan. 332 3.If contribution adjustments are made as a result of 333 employer errors or corrections, including plan corrections, 334 following recomputation of the amount transferred under 335 subparagraph 1., the member is entitled to the additional 336 contributions or is responsible for returning any excess 337 contributions resulting from the correction. However, a return 338 of such erroneous excess pretax contribution by the plan must be 339 made within the period allowed by the Internal Revenue Service. 340 The present value of the members accumulated benefit obligation 341 may not be recalculated. 342 4.As directed by the member, the state board shall 343 transfer or cause to be transferred the appropriate amounts to 344 the designated accounts within 30 days after the effective date 345 of the members participation in the investment plan unless the 346 major financial markets for securities available for a transfer 347 are seriously disrupted by an unforeseen event that causes the 348 suspension of trading on a national securities exchange in the 349 country where the securities were issued. In that event, the 30 350 day period may be extended by a resolution of the state board. 351 Transfers are not commissionable or subject to other fees and 352 may be in the form of securities or cash, as determined by the 353 state board. Such securities are valued as of the date of 354 receipt in the members account. 355 5.If the state board or the division receives notification 356 from the United States Internal Revenue Service that this 357 paragraph or any portion of this paragraph will cause the 358 retirement system, or a portion thereof, to be disqualified for 359 tax purposes under the Internal Revenue Code, the portion that 360 will cause the disqualification does not apply. Upon such 361 notice, the state board and the division shall notify the 362 presiding officers of the Legislature. 363 Section 4.The Legislature finds that a proper and 364 legitimate state purpose is served when employees and retirees 365 of the state and its political subdivisions, and the dependents, 366 survivors, and beneficiaries of such employees and retirees, are 367 extended the basic protections afforded by governmental 368 retirement systems that provide fair and adequate benefits and 369 that are managed, administered, and funded in an actuarially 370 sound manner as required by s. 14, Article X of the State 371 Constitution and part VII of chapter 112, Florida Statutes. 372 Therefore, the Legislature determines and declares that this act 373 fulfills an important state interest. 374 Section 5.This act shall take effect July 1, 2023.