House OK’s pension overhaul — facing troubled futureby John Kennedy | March 22nd, 2013
After fierce debate Friday between ruling Republicans and union-allied Democrats, the House approves an overhaul of the Florida Retirement System, the pension fund used by more than 620,000 teachers, law enforcement and other public employees.
Breaking along party lines, the House voted 74-42 for the measure (CS/HB 7011), which would close the traditional pension plan to new employees. New hires seeking a retirement account would instead be required to join a defined contribution investment plan beginning Jan. 1.
The legislation is a top priority of House Speaker Will Weatherford, R-Wesley Chapel, who maintains that the Florida Retirement System is underfunded and will command increasing millions of dollars from Florida taxpayers to keep it afloat in future years, a stance disputed by many experts.
“It’s fair. It’s fiscally responsible. And it’s time to act,” said Rep. Ritch Workman, R-Melbourne.
But Democrats accused House Republicans of using scare tactics to push through a proposal which already has been rejected by fellow Republicans in the Senate.
“You’re using boogyman tactics of how the taxpayers will save money….it’s absolutely false,” said Rep. Dwayne Taylor, D-Daytona Beach.
Democrats said the legislation is not only unnecessary but potentially dangerous to the $136 billion pension fund, which is used by more than 623,000 state and local government workers and another 335,000 retirees.
The FRS is considered 87 percent funded, with most analysts acknowledging that 80 percent is the benchmark for a fund considered to be on solid financial footing.
Republican leaders, however, say that unfunded actuarial liability is $19.2 billion — a level they say is alarming. Still, those defending the fund say the shortfall exists only if every pensioner demanded their full payments at once, which analysts say would never happen.