House Speaker Will Weatherford’s push to close the state’s $136 billion pension system to new state employees is on hold.
A report released Friday was supposed to provide an estimate of how much the change would cost to pay out benefits to the employees currently in the system while switching new state employees into 401(k)-style retirement plans.
Instead, the report was deemed incomplete. Weatherford said Monday he wants the missing information before he can decide his next move, and that won’t be until at least March 1.
Weatherford, R-Wesley Chapel, has made ending pensions for new employees one his top priorities of the coming legislative session. He says change is needed because the state’s current pension — which has about 145,000 current and future beneficiaries — is unsustainable and will require a mammoth taxpayer bailout sometime in the future.
Unions oppose the move because they say it shifts costs and risks to workers.
A report released Friday by Milliman, a Virginia actuarial firm, concluded that closing the state’s pension system to future employees would endanger the benefits of those currently enrolled in the pension plan. The problem: Because Weatherford’s proposal would turn away new workers, the pension plan would be forced to rely on a shrinking payroll base on which contributions to retirees are made.
To make up the shortfall, either workers or taxpayers would chip in more, the report stated.
Weatherford said he wasn’t surprised that the $70,000 report, which he had ordered, concluded it would cost more money to reform Florida’s retirement system.
“We know that doesn’t come free,” Weatherford said.
But what the report didn’t include were costs associated with keeping the pension plan intact, making it difficult to compare costs between reform and status quo.
Weatherford said he didn’t know why that estimate wasn’t included.
“We do need, I believe, to have that baseline so that we can give the citizens of Florida and the Legislature all the information necessary to make a decision,” Weatherford said.
Ben Wolf, a spokesman for Florida’s Department of Management Services, said as soon as the report was received, state officials notified Milliman that the study was incomplete. He said another study, this one costing $25,000, will be sent to the state explaining how much the current pension system will cost.
So far, at least, Senate President Don Gaetz hasn’t publicly matched Weatherford’s enthusiasm in reforming the retirement system for state workers, teachers and college and local government employees.
The Senate is preoccupied instead with reforming smaller pension systems that are run separately by local governments. Sen. Jeremy Ring, D-Margate, who chairs the Senate committee that is handling pension reform, said he doesn’t see a pressing need to reform the state pension plan.
“With municipal pensions, there’s a legitimate need for reform,” Ring said. “But the Florida Retirement System is a completely different discussion because it’s difficult to define the urgency. I don’t believe moving to a 401(k) system is a bad thing. The challenge, however, and it’s a big however, is that it could be a bad thing in terms of how much it could cost to close down.”
Ring said he’s received little guidance from Gaetz on the issue.
“And that’s because he wants to wait for all actuarial reports to come out,” Ring said. “Ultimately, he’ll have to get engaged and give us some direction.”
But with the confusion over the Milliman report, that would have to wait.
Gaetz’s spokeswoman, Katie Betta, said in an e-mail he was reviewing the study and couldn’t comment.