Legislators are once again proposing to alter the Florida Retirement System (FRS), even though it is considered one of the best and most well-funded in the country and recent polling conducted for the Florida Education Association (FEA) shows that nearly 70 percent of registered voters believe the Legislature should leave the retirement system for teachers alone.
The latest proposal is called a “cash balance plan,” which House Speaker Will Weatherford says will only apply to new employees and won’t impact those currently in the retirement system. But if new employees aren’t going to replenish the system, it will ultimately threaten the financial stability of the retirement fund that 375,000 retired teachers and other public workers rely on now and 620,000 more currently paying into the system will rely on in the future. As a result, many believe any changes will adversely impact the viability of the Florida Retirement System and could harm current school employees enrolled in the system.
“We don’t understand why some political leaders in Florida continue to seek to dismantle a retirement system that is considered one of the best and most well-funded in the country,” said FEA President Andy Ford.
Investment earnings do most of the work in funding retirement for teachers and other school employees, law enforcement officers, firefighters and other workers in the Florida Retirement System. Contributions made by workers and employers are invested, and the earnings are compounded over time — funding over two-thirds of retirement benefits.
Furthermore, the system provides important support to the state and local economies. In 2011, the Florida Retirement System paid out nearly $7 billion in retirement payments. These dollars support retirees and circulate throughout the Florida economy, paying for food, clothing, housing and other necessities and supporting thousands of jobs spread throughout every community in the state.
Studies show that every dollar paid in public retirement benefits in Florida creates $1.64 in total economic activity. About two-thirds of money paid out comes from investment earnings, so every dollar invested in retirement plans from taxes supports $4.47 in total economic output.
The Florida Retirement System is in good financial condition, and is consistently ranked among the top 10 state systems in the nation and the Legislature already made significant cost saving changes to the FRS in 2011. They mandated a three percent employee contribution, suspended cost-of-living increases, increased the vesting period and reduced the DROP accrual rate.
Opponents of the planned changes worry they will only shift more of the burden to those currently in the state retirement system while denying new teachers, bus drivers and cafeteria workers the option to participate in a plan that could provide them with real retirement security.
Mark Pudlow is a Florida Education Association spokesperson. Send him an email or call 850-201-3223.