City pension plans next target for GOP and biz coalitionby John Kennedy | May 12th, 2011
The business coalition backing Gov. Rick Scott and the Republican-ruled Legislature’s drive against public pensions Thursday turned its eye toward next year — saying municipal retirement plans are the next target and that these funds must be shifted into 401 (k)-styled investments.
Lawmakers agreed to take 3 percent out of the paychecks of 655,000 government employees enrolled in the Florida Retirement System, and used the $1.1 billion it generated as a plug for the state’s almost $3.8 billion budget shortfall.
The last time Floridians for Sustainable Pensions surfaced, it was joined by Gov. Rick Scott, was last month prodded legislators to pull money from employees because the retirement system was on troubled ground financially.
Analysts said the FRS could meet about 87 percent of its benefits payout — if all pensioners demanded the money at once. Although financial analysts said this level of funding is not alarming, Scott did all he could to fan fears of a financial meltdown.
But on Thursday, Florida State University economist Randall Holcombe said the FRS is strong. And putting the $1.1 billion extracted from employees into their retirement plans “is irrelevant to the solvency of the pension scheme.”
Instead, Holcombe and others who spoke on behalf of the business coalition, said lawmakers next year should convert the FRS and the dozens of municipal pension plans around the state into investment funds.
Just as Scott used questions of FRS solvency to push for reform, analysts are again raising doubts about whether city plans will have enough cash for beneficiaries.
“I think the Legislature needs to do that and bring (them) under control,” Holcombe said.