FRS Employer Electronic Newsletter


Volume 1: Issue 4

Issue Date: May 10, 2002

As part of the FRS's communication effort for the upcoming retirement plan choice opportunity, we're committed to keeping employer representatives up-to-date on what's happening during the Outreach and Choice periods for the FRS Pension Plan and FRS Investment Plan. This newsletter is the fourth in an ongoing series to keep you posted.

It includes the following sections:


SPOTLIGHT ON...

A Salute to Some Outstanding Site Coordinators
We'd like to give recognition and special thanks to those site coordinators who are going above and beyond the call of duty in organizing employee workshops and encouraging workshop participation among their employees. When employers get involved, so do their employees. So, we're putting together an ongoing recognition program that will reward those of you who are doing such an outstanding job.

If you feel that you or someone else within your organization has gone "above and beyond," we'd like you to nominate that person to win a prize. Tell us who the outstanding individual is, and what they've done or are doing to support the education program and encourage workshop attendance by employees. Submit nominations to this e-mail address, MyFRS_FinancialGuidanceProgram@ketchum.com, by the 27th day of each month. We'll review the nominations on a monthly basis and advise the winners in upcoming issues of the employer newsletter.

Stay tuned — more about the reward and recognition later this month!

AFSCME Letter to FRS Members
We recently learned that the American Federation of State, County and Municipal Employees (AFSCME) issued a news release regarding the current choice of FRS retirement plans. Because the statement contained a number of inaccuracies, the State Board of Administration (SBA) has offered to host an information roundtable for the AFSCME leadership. The purpose would be to answer questions about the two plans and discuss how having a real choice of plans is a win-win situation (and certainly not a takeaway) for the very diverse audience of Florida public employees.

In this newsletter, the MyFRS Financial Guidance Program would also like to address some of the statements from the news release to make sure you and other FRS employers are clear on key issues.

Issue FRS Response
The FRS has lost credibility because of the $330 million Enron loss to the Pension Fund.
  • First of all, Pension Plan benefits are guaranteed against any investment losses, so the Enron collapse will have no effect on your benefits.
  • That Enron declared bankruptcy and the Pension Fund lost roughly 1/3 of 1% of its total assets (approximately $300 million) was unfortunate, but rest assured the Pension Fund is sound and currently enjoys a surplus in excess of $14 billion.
  • The Pension Fund has performed well over the long-term and returns have exceeded actuarial requirements.
  • The SBA is aggressively pursuing legal action against the external investment management firm that was responsible for the Enron losses. The SBA is firmly committed to act in the interests of plan participants under both the Pension Plan and the Investment Plan.
  • In addition, if you participate in the Investment Plan, you will be able to choose your own investments and ensure that they're broadly diversified enough to avoid the impact of any individual investment loss.
Unlike the current plan, Investment Plan benefits will not be guaranteed.
  • The amount of your Investment Plan benefit is subject to investment gains and losses, and is therefore not guaranteed.
  • However, you can purchase lifetime annuity payment options for your Investment Plan benefit at retirement, guaranteeing that you'll receive a benefit for the remainder of your lifetime.
  • As for guarantees, the Pension Plan does have a guaranteed benefit based on a formula. However, because you don't know how long you will remain with the FRS and don't know how much your salary will grow, your Pension Plan benefit amount is uncertain. Length of service has a big impact on which plan is likely to provide you a greater benefit at retirement. Typically, people who leave the FRS early in their working career will receive a larger benefit from the Investment Plan, whereas the Pension Plan typically provides a larger benefit to longer-service employees.
  • Our purpose here is simply to remind you that there are benefits and uncertainties under both plans. It's up to each of you to evaluate both plans and select the one best suited to your personal situation.
Participants' Investment Plan retirement benefits are eliminated once their individual accounts are depleted.
  • It would be very difficult for you to fully deplete your Investment Plan account through investment losses, because all the available investment options are diversified funds (large pools of many different securities) rather than individual stocks or bonds. There are also three professionally managed balanced funds, which provide an even higher level of diversification by investing in stocks, bonds and money market funds in a way that balances both returns and risks.
  • As long as you're actively employed, your account will receive regular monthly contributions based on pay, regardless of the amount currently in the account.
  • And once you retire, you may purchase a lifetime annuity payment option for all or part of your account balance to provide a guaranteed monthly payment for life.
  • That said, if you lack the discipline to leave your money invested over the long-term and are likely to withdraw it, pay the tax penalties and spend it, then the Investment Plan might not be for you.
Participants will not be able to broadly diversify their assets in the Investment Plan.
  • The Investment Plan has been designed to make diversification almost automatic. The plan offers more than 40 investment funds (diversified pools of securities, not individual stocks or bonds) to choose from.
  • A person cannot buy or hold individual stocks in the Investment Plan. Therefore, Investment Plan participants will never face a situation like the one Enron employees faced.
Some of the Investment Plan's funds will have mandatory advisory fees that could reduce the amount of return.
  • All investment funds have fees to cover their operating expenses. But in the Investment Plan, employees pay only investment management fees, while employers pay for administration and education costs.
  • The MyFRS Financial Guidance Program actively encourages participants to consider the advantages of funds with low fees.
  • The program's "institutional funds" have been specially created to provide high value for low cost.

Keep in mind that, as always, we're not asking you to recommend one plan over the other. We simply want you to have the straight facts about both plans and to continue promoting the MyFRS Financial Guidance Program as the main source of objective information about the FRS Choice Program.

ARTICLES AND IDEAS TO SHARE

As we've said before, it makes a huge difference when you and other employers talk about the Retirement Choice program in newsletters and in e-mails as well as advocate participation in the MyFRS Financial Guidance Program. Your interest sparks their interest, and the opposite is true as well. Please take your communication role seriously. If you'd like to jump on the bandwagon, click here to download a brief article that you may want to forward to employees or include in your local publications. More will be forthcoming in future issues on a variety of related topics.

IMPORTANT CHANGES AND REMINDERS

Changes to the 180-Day Timeline for New Hires
Newly hired employees covered by the FRS currently have 180 days to make a decision to transfer from the Pension Plan (the default plan) to the Investment Plan. Recent legislation has changed the deadline to the end of the fifth month following the month of hire to simplify record keeping. (A new hire is considered to be any employee who is hired on or after April 1, 2002 for Group 1, on or after July 1, 2002 for Group 2, and on or after October 1, 2002 for Groups 3 and 4.)

Rollover Contributions Now Allowed in the Investment Plan
The law has been changed to allow participants in the Investment Plan to roll over into the plan other qualified plan assets from previous employers (FRS and non-FRS), including IRAs, 401(a), 401(k), 457, and 403(b) plan funds. An employee must have an account established in the Investment Plan in order to roll over assets. (At this time, a member of the Pension Plan cannot roll over assets into the Investment Plan to establish an account).

Reemployed Retirees
Former Pension Plan members who retired and have returned to employment under the FRS are now eligible for the FRS Choice program, and will be able to choose between the Pension Plan and the Investment Plan. They were previously not eligible to make this choice.

These members will be part of a new Group 4 with the same Outreach and Choice period dates as Group 3 (Outreach period beginning on or about August 19, 2002 and Choice period from December 1, 2002 through February 28, 2003). There are approximately 3,176 employees in this group, with 623 represented by Group 1 state employers, 1,771 represented by Group 2 school district employers and 782 represented by Group 3 local government employers.

All future retirees who return to employment with an FRS employer in a regularly established position will also have the ability to choose between the Pension Plan and the Investment Plan.

Reminder — New Blended Contribution Rate Takes Effect July 1, 2002
As we previously announced in a memo sent out to all employers earlier this month, the employer contribution rates under the FRS Pension Plan and the new FRS Investment Plan will be changed to a single, uniform contribution rate schedule, effective July 1, 2002. This means that regardless of which retirement plan your employees choose, you will pay the same contribution rate. The new rate schedule is lower than the current rates in effect for both plans. Refer to the detailed summary of the contribution rate changes that was mailed and e-mailed to you from the Division of Retirement on April 15. If you did not receive this summary, please contact the Division at 850-488-5706 (SUNCOM 278-5706). The rates are also posted on the MyFRS.com Web site under the Employer Services tab.

New Group 1 Workshop Being Offered
Due to overwhelming demand, the MyFRS Financial Guidance Program has added an additional workshop at the following location on the date shown below:

Location Date
Duval County
Florida Department of Transportation
Jacksonville Urban Office
Training Center Room
2250 Irene Street
Jacksonville, FL 32236 		Friday, May 24, 2002

If you're near this location, you might want to alert your employees that this new session will be available to them. They can enroll by going online at MyFRS.com to the "Register for a Workshop" box on the left-hand side of the home page or by selecting the link under the "Catch Your Wave" section, which is also on the home page. Those who don't have online access can call the MyFRS Financial Guidance Line at 1-866-44-MyFRS (1-866-446-9377).

Reminder About the Employer Assistance Line
Please remember that the MyFRS Employer Assistance Line (1-866-FRS-2121 or 1-866-377-2121) is available only to employers, not to the general employee population. We're hearing that some employers are providing the Employer Assistance Line telephone number to employees, which makes our limited resources less available to the employers who need information urgently. Instead, you should be giving your employees the MyFRS Financial Guidance Line number: 1-866-44-MyFRS (1-866-446-9377), which is staffed expressly for them.

Retirement Choice Kits Available in Braille
Starting in late May/early June, Retirement Choice Kits and Retirement Choice Workshop Manuals will be available in Braille to visually impaired employees upon request. Additionally, screen readers and Braille readers will be available on CD-ROM. To request a Braille kit or CD-ROM, go to the Employer Services tab on the home page and click Online Resource Library and then choose Ordering Materials. Because these materials are currently in production, they won't be available for mailing until late May/early June. Since these materials will be limited in supply, we ask that you request them only if they are truly needed.

Group 1 Employers: Paycheck Stuffers are Coming in May
FYI: In mid-May, all state employees will receive a paycheck stuffer that will promote a raffle for a big-screen TV for those employees who have made their FRS plan choice.

Group 2 Employers: Employee Workshops Are Starting!
Retirement Choice Kits for employees in Group 2 (School District and Charter School employees) have been arriving since mid-April. That means it's time for employee workshops. A general schedule for Group 2 workshops is included in each Retirement Choice Kit. Employees may sign up for any session they want, regardless of where that session is held. Employees don't need to have received their kit prior to registering for a workshop.

Please be sure to remind employees about the importance of attending a Retirement Choice Workshop. We hope that you not only encourage your employees to attend, but that you allow them to attend during work time.

Workshop locations, dates and times are also available online at MyFRS.com under the "Register for a Workshop" box on the left hand side of the home page or through the link under the "Catch Your Wave" section also on the home page. Employees who don't have online access can call the MyFRS Financial Guidance Line at 1-866-44-MyFRS (1-866-446-9377).

Please note that the Workshop Registration Schedule included in the Retirement Choice Kit is subject to change. For the most up-to-date scheduling information, refer to the schedule listed on MyFRS.com.

Retirement Choice Kit Mailings

Due to the large number of kits being sent out, the Group 2 Choice Kit mailings are being staggered over a three-week period. Because the mailings are sorted in the order of employees' home ZIP codes, your employees who work in the same location may receive their kits at different times. These kits are being mailed to the employee's home address, as provided on the monthly payroll report you submit to the Division of Retirement. If no address has been provided, the kits will be mailed to you for distribution. If the employee's mailing address is incorrect and the kit is returned to us, it will be forwarded to you for distribution.


Reminder to Group 3 and 4 Employers: Kits to Arrive in Late August
Employees in Group 3 (all local government employees) and Group 4 (reemployed retirees with renewed FRS membership) will begin receiving their Retirement Choice Kits in late August, and their workshops will begin in September. Once again, your participation does make a difference! We would appreciate any effort that you're willing to make to help us get employees thinking seriously about their retirement plan decision and about the equally pressing need to plan for their future.

More Frequently Asked Questions

Here are answers to a few of the questions you might be asking:

Q.   

Are retired employees who have been rehired eligible for the plan choice?
 
A.

Yes. As a result of recent legislative action, reemployed retirees with renewed FRS membership will now be eligible for the Choice program. These employees will be part of the new Group 4 choice period, which takes place on the same dates as Group 3 (Outreach beginning August 19, 2002 and the Choice period going from December 1, 2002 through February 28, 2003). Print and MyFRS.com materials will reflect this once the Governor signs the bill, which should be later this month.

 
Q.   

Can a DROP participant's beneficiary be different than his or her designated beneficiary/joint annuitant in the Pension Plan?
 
A.

No, but if that participant rolls his or her DROP distribution over to an IRA or other qualified plan when he or she terminates DROP, any person may be named as the beneficiary at that time.

 
Q.   

Can creditable service be purchased with qualified (pre-tax) money?
 
A.

Yes. The Division has agreed to accept rollovers/transfers from qualified 401(a) plans (except for 401(k) plans), 403(a), 403(b), 408(a), 408(b), and 457(b) plans. The Division has not yet agreed to accept rollovers/transfers from 401(k) plans.

The member must owe an amount due to claim creditable service, must have had the amount due calculated by the Division of Retirement, and must complete a Pretax Direct Rollover Form and submit it to the custodian/trustee for the account (plan) he or she wants the rollover/transfer to come from. The custodian completes the form and submits the form and payment to the Division of Retirement at the address shown on the form.

 
Q.   

When will the laptop computer drawings take place?
 
A.

One laptop winner will be drawn from each of the three employee groups after all workshops for that group have ended. We expect that the drawing will take place for Group 1 in mid-August; for Group 2 in mid-October; and for Groups 3 and 4 in mid-December. A representative from Ernst & Young will conduct the drawings, and the winners will be notified by mail. After the winners have been notified, we will be posting the winners' names on MyFRS.com.

 

Employer Resources
Remember, you're not alone! When you need help or have questions about the plans or the choice options, we have several resources available to assist you.

  • The MyFRS.com Web site. Click on the Employer Services tab in the upper right corner of the home page to get information specifically geared toward employers. If you're a state agency employer who currently does not have access to this information, we are working to allow you access prior to June.
  • The FRS Employer Assistance Line, toll-free at 1-866-FRS-2121 (1-866-377-2121). Representatives are available 9 a.m. to 8 p.m. (Eastern time)/8 a.m. to 7 p.m. (Central time), Monday through Friday, except holidays. Remember, this telephone number is for employers only! Employees should call the MyFRS Financial Guidance Line at 1-866-44-MyFRS (1-866-446-9377).

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