Volume 5: Issue 2
Issue Date: June 2006

Legislative Update

The Florida Legislature completed its 2006 General Session on May 6, 2006. Many retirement-related bills were filed in this years session, but only a few were passed. Below are two of the more important retirement bills from the session. While only one of these bills has become law to date, they are both expected to be signed by the Governor:

• Senate Bill 1670, effective July 1, 2006, provides that members of the Investment Plan will be given 90 days from the date of notice to repay any invalid distributions taken from the plan. If the distribution is not repaid within the 90 days, the State Board of Administration may declare the member retired under the Investment Plan. As a retired member he or she would be subject to the reemployment restrictions and renewed membership provisions applicable to a retiree if employed by an FRS employer. There are also two housekeeping changes to the Investment Plan law; one adjusting the present value calculation used when FRS members wish to change retirement plans to use the actuarial assumptions used in the most recent valuation of the FRS, and the second allowing for the purchase of a military leave-of-absence under the Investment Plan (Investment Plan members currently purchase military leaves under the provisions of Part I of the FRS). This bill has not been presented to the Governor for signing as of the release of this newsletter.
• House Bill 5025, signed by Governor Bush on May 24, 2006, sets the new FRS Employer Contribution Rates effective July 1, 2006.

Uniform FRS Employer Contribution Rates Effective July 1, 2006

Please note that the contribution rates applicable to Investment Plan members (i.e., 9% for Regular Class members, 20% for Special Risk Class members, etc.) have not changed.

The State Board of Administration and the Division of Retirement will continue to review the new legislation to determine how it might affect you and your employees. Please keep in mind that SB 1670 has not yet been signed into law; it is still pending certification to the Governor by the Legislature for his approval or veto. We will provide you with more details in our upcoming editions of this newsletter and separate mailings. To get information on additional legislation passed during session, please visit www.MyFRS.com and click on the Resources tab and then on the Legislation, The Law & Public Records link.
back to top

Critical Decisions

Every year FRS employers must deal with active employees who have major illnesses or accidents. These are critical times where employees and their families will have important and time sensitive questions and decisions. Have you ever had an employee come down with a debilitating illness or injury, or maybe a potential disabling or life threatening event in their life? Should the employee have used their 2nd Election to change plans, would the employee been better off retiring under the disability provisions of the FRS, or should the employee have done nothing at all? Did the employee have a spouse and/or dependents, or was the employee single with no dependents? Were you able to get the employee and any family members through such a critical and sensitive time?

The following may help you in your counseling the next time this happens. Some decisions and processes may be different for an employee with a spouse or dependents than the decision would be for the employee with no dependents or family:

• If an FRS member or retiree is determined by a judge to be physically or mentally incapacitated, the judge will appoint a legal guardian. The guardian will need to furnish the Division of Retirement (Pension Plan) or CitiStreet (Investment Plan) with a copy of the Letters of Guardianship to be able to act on the members behalf. The guardian will be notified if any other documentation is needed from the FRS.
• A member or retiree may grant a durable power of attorney to someone to handle his/her financial affairs. A copy of the durable power of attorney must be provided to the Division or CitiStreet when requested. The person appointed as attorney-in-fact through the durable power of attorney will be notified if any other documentation is needed (medical powers of attorney are not accepted).
• A legal guardian or person granted a durable power of attorney for the member may make a members 2nd Election or application for retirement on behalf of a member and is allowed to make changes to the deductions, mailing address and direct deposit information for the member or retiree.
• It is important to remember that if the legal guardian or a person granted a durable power of attorney makes application for a 2nd Election retirement plan change, the member must be living and earning retirement service credit at the time the 2nd Election Retirement Plan Enrollment Form is submitted and received by CitiStreet. If the member dies prior to receipt of the enrollment form, or if the member is not earning retirement service credit or the election is received by CitiStreet after the member has terminated employment, the 2nd Election will not be valid.
• If the legal guardian or a person granted a durable power of attorney makes application for Pension Plan retirement benefits, the member must be living on the effective date of his/her retirement. If the member dies prior to their retirement effective date, benefits will be paid under the death benefit provisions of the Pension Plan.
• If the legal guardian or a person granted a durable power of attorney wishes to retire the member from the Investment Plan, and requests a distribution of benefits, the guardian or attorney-in-fact must follow the termination and waiting period provisions of the Investment Plan before the distribution will be processed.

Other important benefits to think about include the need for continuing health insurance and life insurance coverage and eligibility for the Health Insurance Subsidy (HIS) benefit. Is the member or members beneficiary entitled to receive the HIS? Under the Investment Plan, only members and spouses are eligible, and the member must have at least 6 years of service and must meet the normal retirement requirements of the Pension Plan. Under the Pension Plan, members, spouses and other dependents (depending on option selected) are eligible for the HIS at the time the Pension Plan benefit commences.

If you need assistance in putting together a package of information for one of your employees, please do not hesitate to call the FRS Employer Assistance Line and speak to one of the financial planners from Ernst & Young or a retirement counselor from the Division of Retirement.
back to top

New Web Password Authentication Procedures

A new web site password authentication procedure will be implemented in early July for FRS members using the MyFRS.com web site. This change is to enhance the security of the system and to make it easier for FRS members to gain access to the site if they forget their password. When an FRS member logs on to MyFRS.com the first time, they will be prompted to sign up by entering a new password and two secret questions. A user manual will be available on the site for members who need assistance in getting set up. And as always, the MyFRS Financial Guidance Line (1-866-446-9377) is available for assistance by selecting option 1.
back to top

Redesign of Print Materials Almost Complete

Over the last several months we have been working with Aon Consulting, to redesign most of the printed materials used in the retirement plan choice by new employees, and by FRS Investment Plan members. By early July you will begin seeing these materials. Most, if not all of the materials, will be graphically redesigned and the text will be further shortened and simplified. Once completed we will issue an FRS Employer Newsletter with PDF copies of these redesigned materials.

We greatly appreciate the efforts of those employers who have been helping us in this project to redesign our retirement materials and hope the new look and simplified information will help employees make the best retirement decisions possible.
back to top

A Few Facts about the FRS

• The FRS now serves over 676,000 active public employees through 900 public employers in the state of Florida.
• The FRS Investment Plan now has over 70,000 active accounts and over $2 billion in assets. The FRS Pension Plan has over 600,000 active participants and close to $121 billion dollars in assets.
• Over 15,000 FRS covered employees have used their one-time 2nd Election to switch retirement plans since the Investment Plan became available in 2002. Almost 97% of employees using their 2nd Election have switched from the Pension Plan to the Investment Plan.

Important Enrollment Deadlines!

All enrollment forms must be mailed directly to the FRS Plan Choice Administrator, CitiStreet. To be considered timely filed, CitiStreet who must receive all forms by 4pm ET on the last business day of an employee's deadline month.

The table below lists the FRS new employee retirement plan enrollment deadlines for the next 12 months.