Florida House speaker wants 401(k) for state retirement accounts
House Speaker Will Weatherford wants to eliminate pensions for all new employees and replace them with 401(k)-style accounts.
01/24/2013 1:35 PM
01/24/2013 6:22 PM
House Speaker Will Weatherford will battle state workers to get one of his top priorities passed.
Weatherford, R-Wesley Chapel, has called Florida’s current pension plan a "ticking time bomb" because he fears it could require a costly taxpayer bailout in the future. To prevent that, he says he wants to require new employees, starting on Jan. 1, 2014, to enroll in 401(k)-style accounts rather than rely on getting regular pension payments.
On Thursday, a week after the Florida Supreme Court ruled against state workers and upheld a 3 percent levy on their salaries to shore up the pension plan, a retirement reform plan supported by Weatherford was discussed at a House Government Operations Committee workshop.
The draft legislation prevents new employees from joining the pension plan and requires them instead to enroll in a plan in which they direct the investments. It also eliminates an option to apply for disability benefits for new employees, although Rep. Jason Brodeur, R-Sanford, said it will be replaced by another option that has yet to be determined. Many other details won’t be known until a report on the Florida Retirement System and its $125 billion pension plan is completed in the next three to five weeks.
Participants in the new plan will have more flexibility in deciding their investments, while taxpayers won’t be left on the hook if market conditions change, Brodeur said.
"There will no longer be a blank check written by taxpayers," he said.
As vague as they were, the changes were denounced by representatives for state workers.
"What are we trying to fix?" said Rich Templin, political and legislative director of the Florida AFL-CIO. "A defined benefit pension system is the best way to attract employees because we can’t match the private sector."
A recent report said that the worth of the fund itself compared to what it owes is 86.9 percent — while the average level is 77 percent. While that shortfall is enough for Weatherford and other Republicans to say the fund is dangerously underfunded, Templin said concerns are overblown.
"We all know we have one of the strongest and most stable pension funds not just in the country, but in the world," Templin said.
Rowan Taylor, president of the Metro-Dade County Association of Firefighters, said the plan would expose many state workers to the uncertainties of the marketplace.
"As firefighters, job security is one of the most important things to us," Taylor said. "When you go in and fight a fire, you shouldn’t have to worry about how the stock market is doing and whether your family will be taken care of if something happens to you. That’s the last thing you should worry about."
For nearly an hour, state workers told the committee they like the pension system the way it is now. With Weatherford pushing this and Senate President Don Gaetz pushing similar reforms with municipal pensions, this issue won’t go away.
"We’re going to talk an awful lot, I have a feeling," Brodeur told the crowd.
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