(6001)
I am a member of the FRS Investment Plan and plan to retire in about 6 months. Will I continue to have access to the online ADVISOR SERVICE once I begin taking periodic distributions from my account?
No. Once you retire and take a distribution from the Investment Plan your access to the ADVISOR SERVICE will terminate. The ADVISOR SERVICE was designed to model projected asset accumulation and retirement benefits. It was not designed to model assets once distributions from the account begin. You will have access to the financial planners at the MyFRS Financial Guidance Line so long as you retain an account balance of $1,000 or more.
(55)
I don't have any experience or interest in managing an investment account. If I choose the Investment Plan, are there resources that will simplify this task, or even do it for me?
Yes. The CHOICE SERVICE, available on this Web site and through the MyFRS Financial Guidance Line 1-866-446-9377, offers personalized assistance in choosing your own investment portfolio. The MyFRS Financial Guidance Line also offers free one-on-one financial counseling by phone. Once you're in the Investment Plan, the ADVISOR SERVICE will help you with guidance on your portfolio. If you don't want to manage or monitor the investments in your account, the Investment Plan includes three "balanced" investment funds. These funds pre-select combinations of diversified investments. They automatically maintain that balanced combination (asset allocation) over time. Asset allocation is a critical factor in your success as a long-term retirement investor; experts say it determines 90% of your success. These funds are also low-cost. That means more of the funds' investment earnings stay in your account rather than go to the companies that manage the funds' investments.
(2099)
If I select the Investment Plan, what's the monthly contribution that will be paid to my Plan account?
The monthly contribution depends on your employment class, as shown below. Monthly Investment Plan Contribution Rates Effective July 1, 2008
| Employment Class | Monthly Contribution Rate | | Regular | 9.00% | | Special Risk | 20.00% | | Special Risk Administrative Support | 11.35% | | Judicial Subclass | 18.90% | | Legislative/Cabinet/Public Defenders/State Attorney Subclass | 13.40% | | Elected County Officers Subclass | 16.20% | | Senior Management Services | 10.95% |
(2118)
Is there a financial penalty if I switch to the Investment Plan and later decide to switch back to the Pension Plan?
No. There's no penalty, but you may need to "buy back" into the Pension Plan. (See the chart below.) If you are an eligible employee who transferred a present-value amount to the Investment Plan as your opening account balance, the total amount you'll need to buy back into the plan is the "present value" of your accumulated benefit in the Pension Plan, assuming all your service had been in that plan. If you did not transfer an opening account balance, your "buy-back" amount will be the total cost of the benefit under the Pension Plan. The Division of Retirement will calculate this amount once you notify your employer that you'd like to rejoin the Pension Plan. Remember, you can switch only once after you make your initial choice. The following chart shows what you can and cannot do regarding switching your choice. | If... | Then... | | Your total balance in the Investment Plan is greater than the "buy-back" amount... | Your Investment Plan balance will be reduced by the "buy-back" amount; the rest will stay in the Investment Plan. You will have a benefit in both plans. | | Your Investment Plan balance is less than the "buy-back" amount and you still want to switch back... | You must make up the difference out of your own money. | | You choose the Investment Plan going forward but leave your current benefit frozen in the Pension Plan... | You cannot move your frozen money later to the Investment Plan; it must stay in the Pension Plan. |
(2207)
What is the effective day of my plan choice?
Your choice becomes effective on the first day of the month after your choice is made and processed by the Plan Choice Administrator.
(2090)
How often can I change my investments under the Investment Plan?
Once contributions are in your account, you can generally change the way your account balance is invested on a daily basis, except that Foreign and global investment funds are subject to a minimum holding period of 7-calendar days following any non-exempt transfers into such funds and you may be subject to trading controls on other funds in the event that you are trading excessively. More information on these restrictions is available by calling the MyFRS Financial Guidance Line or by clicking on the Investment tool button in the tools menu bar.
(2096)
What is "normal retirement" under the Investment Plan?
There are not any "normal retirement" requirements under the Investment Plan. You own your benefit after you have achieved the one year vesting requirement, and are eligible to receive a benefit after being off FRS covered payrolls for three calendar months. At that time, you can: - Leave your money in the Investment Plan to grow;
- Roll it over to an IRA or other qualified retirement program; or
- Take a partial or total lump-sum distribution.
You will still see the phrase "normal retirement" used on occasion in the Investment Plan. When it is used, it means that the normal retirement requirements of the Pension Plan will be used (Age 62 and six years of service or 30 years of service or, if Special Risk age 55 and six years of service or 25 years of Special Risk service). For example: - In order to be eligible for the Health Insurance Subsidy (HIS), Investment Plan members must meet the "normal retirement" requirement.
- Investment Plan members who have met the "normal retirement" requirements are eligible to receive a one-time distribution of up to 10 percent of their Investment Plan account balance after being off all FRS covered payrolls for one calendar month. These members are eligible to receive the balance of their account after a total of three calendar months.
Re-employment restrictions apply to all participants receiving an FRS benefit. Call the MyFRS Financial Guidance Line for information about the tax implications of your retirement and benefit payments. Click here for additional information.
(2106)
How will the present value of my current retirement benefit be determined?
| First, the Division of Retirement will calculate your present value using a formula developed by the Pension Plan's actuary, in accordance with Florida State law. The FRS actuary annually evaluates whether the Pension Plan is adequately funded. The formula to compute your current benefit is: | | Years of Creditable Service | X | Percentage Value (depends on class of FRS membership: 1.6% for regular class) | X | Average Final Compensation (average of highest 5 years of salary) | = | Yearly Benefit at Normal Retirement Date | Then the Division projects the total yearly benefits collected during retirement over your expected lifetime (including a 3% annual increase in benefits). This stream of increasing annual payments is converted to a single lump sum a "present value" (value in today's dollars) using an actuarial conversion factor. The conversion factor reflects an 7.75 percent interest rate and mortality tables specified by Florida Statutes. Please note that the conversion factor will increase monthly until you reach your normal retirement date and will decrease for each month after the normal retirement date.
Example: Let's say an employee is age 31 and has 12 years of Regular Class FRS service. The employee's normal retirement age will be 49 for his/her class of membership (the point when 30 years of service would be reached).
The employee's earnings for the five fiscal years ending with 2008-2009 are $31,263, $32,826, $34,467, $36,190, and $38,000. So the employee's Average Final Compensation is the average of these numbers, or $34,549. | 12
Years of Creditable Service | X | 1.6%
Percentage Value | X | $34,549
Average Final Compensation | = | $6,633
Yearly Benefit at Normal Retirement Date |
$6,633
Yearly Benefit | X | 4.0413
Conversion Factor (determined by actuary) | = | $26,806*
Present Value of Current Pension Benefit (Transfer Amount) |
(2093)
Can I contribute my own money to my Investment Plan account?
No. All contributions are made by your employer. This is also true under the Pension Plan. However, the Investment Plan does accept rollovers from qualified previous employer's plans. Note: Once you roll over eligible retirement monies into the FRS Investment Plan, you cannot receive any distributions of these funds (or your Investment Plan account balance) until you terminate employment for 3 calendar months. You may be eligible to withdraw up to 10% of your Investment Plan account balance one calendar month following the month of your termination if you meet the normal retirement requirements for the FRS Pension Plan.
(13001)
Do any of the FRS Investment Plan funds contain subprime mortgages?
Only five of the 20 investment funds in the Investment Plan have limited exposure: - FRS Select Yield Plus Money Market Fund
- Pyramis Intermediate Duration Pool Fund
- PIMCO Total Return Fund
- FRS Select Conservative Balanced Fund (contains an allocation to the FRS Select Yield Plus Money Market Fund)
- FRS Select Moderate Balanced Fund (contains an allocation to the Pyramis Intermediate Duration Pool Fund)
Fund holdings are limited to asset-backed securities (ABS), which may have some subprime mortgages mixed in the pools of mortgages the securities own. Most of the ABS are AAA-rated, the highest rating category possible. The number of ABS funds with a lower-than AAA rating is small. The managers of these funds believe their limited exposure may have only a small, short-term impact on their funds' investment performance.
To discuss any questions you have on this issue, please call the MyFRS Financial Guidance Line toll-free at 1-866-446-9473, Option 1, and speak to an Ernst & Young financial planner. To see a summary table of FRS Investment Plan subprime mortgage exposure, click on the link below. This information is updated monthly:
Summary Table of FRS Investment Plan Exposure
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