Volume 4: Issue 2
Issue Date: May 20th, 2005

Legislative Update

The Florida Legislature has completed its 2005 session, and has passed several bills affecting the Florida Retirement System. While these have not yet become law, they are expected to be signed by the Governor:

• Senate Bill 60, effective October 1, 2005, expands the Special Risk Class to include forensic positions within a law enforcement agency or medical examiner's office.
• Senate Bill 106, effective July 1, 2005, allows employees whose permanent jobs require them to work outside the State of Florida to have their disability certified by physicians in that state if applying for disability retirement. It also increases the size of the State Retirement Commission from 3 to 5 members and revises the quorum requirements of the Commission. This bill deletes the requirement that to qualify for the University Optional Retirement Program (SUSORP), one must be employed or appointed for no less than one academic year.
• Senate Bill 252, effective October 1, 2005, allows municipalities to purchase annuities for their employees to offset the FRS early retirement reduction of benefits in the same manner as allowed for county employees.
• House Bill 1159 permits a local government senior manager who has withdrawn from the FRS a six-month window from January 1, 2006 through June 30, 2006 to rejoin the FRS Senior Management Service Class under the Pension Plan or Investment Plan with certain criteria being met.
• Senate Bill 1446, effective July 1, 2005, updates and clarifies FRS Investment Plan processes and policies:
  • Revises termination and re-employment processes for Investment Plan participants who must have a bona fide termination in order to receive a distribution from their Investment Plan account. Investment Plan participants must remain off all FRS-covered payrolls for three calendar months after termination of employment before being eligible to receive a distribution, unless they have met the normal retirement requirements of the FRS Pension Plan. If they meet the normal retirement requirements of the Pension Plan, the participant may receive up to 10% of their account balance after being off FRS payrolls for one calendar month, and the remainder of the account balance after three months. However, if the participant returns to FRS employment before the three-month period is completed, they will not be eligible for the remaining distribution.
  • Allows Pension Plan DROP participants to leave their money in the FRS by rolling over their DROP lump sum to the Investment Plan after terminating employment. This new option allows DROP participants to use the low-cost investment and retiree annuity offerings of the Investment Plan.
  • Provides that Investment Plan benefit distribution checks not cashed within 180 days are to be cancelled and the funds moved to a suspense account while the FRS searches for the participant. If the participant has not been found after 10 years, the amount of the cancelled check would become part of the Investment Plan trust and used to offset administrative costs and employer contributions.
  • Allows FRS members to use their one-time 2nd Election to switch plans without working in the next month to finalize the change, as long as the 2nd Election Enrollment Form is received by the Plan Choice Administrator, CitiStreet, prior to the member's termination date.
  • Provides that a FRS employer who hires any retired FRS member (i.e., Pension or Investment Plan) in violation of the reemployment after retirement provisions will be held jointly and severally liable for reimbursement of any FRS benefits paid, unless the employer has a written statement from the employee that he/she is not retired from a state-administered retirement plan.
  • Allows the State Board of Administration to invest the Pension Plan Trust Fund assets in asset-backed securities.
• House Bill 1907 sets the new FRS Employer Contribution Rates. Table 1 below shows the current rates. Table 2 shows the new rates effective July 1, 2005.

TABLE 1 Current Contribution Rates

	Retirement Benefit	Administration	HIS	Total
Regular Class	6.20%	0.08%	1.11%	7.39%
Special Risk Class	17.34%	0.08%	1.11%	18.53%
Special Risk Admin	8.73%	0.08%	1.11%	9.92%
Elected Officers (Judges)	17.46%	0.08%	1.11%	18.65%
Elected officers (Legislative/Cabinet/Public Defender/State Attorney)	11.30%	0.08%	1.11%	12.49%
Elected Officers (County)	14.04%	0.08%	1.11%	15.23%
Senior Management Service Class	8.18%	0.08%	1.11%	9.37%
DROP Class	8.00%	0%	1.11%	9.11%

TABLE 2 Contribution Rates Effective July 1, 2005

	Retirement Benefit	Administration	HIS	Total
Regular Class	6.67%	0.05%	1.11%	7.83%
Special Risk Class	17.37%	0.05%	1.11%	18.53%
Special Risk Admin	8.76%	0.05%	1.11%	9.92%
Elected Officers (Judges)	17.49%	0.05%	1.11%	18.65%
Elected officers (Legislative/Cabinet/Public Defender/State Attorney)	11.33%	0.05%	1.11%	12.49%
Elected Officers (County)	14.07%	0.05%	1.11%	15.23%
Senior Management Service Class	9.29%	0.05%	1.11%	10.45%
DROP Class	8.22%	0%	1.11%	9.33%

Additionally, the Institute of Food and Agricultural Sciences (IFAS) Supplemental Retirement Program contribution rate increased from 13.83% to 20.23%, effective July 1, 2005.

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 the bills we've described have not yet been signed into law; they are still pending. 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/legislation.
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2nd Election Resource for You and Your Employees

After initial retirement plan selection, every FRS-covered employee has a one-time option to switch retirement plans. This is called a "2nd Election." This option to switch is very valuable, but may not be right for everybody. Employees should carefully and objectively consider their individual circumstances before making a permanent plan change.

We've created an informational flyer to help you and your employees learn more about the 2nd Election option. A copy is attached to this newsletter that you can share with your employees. (2nd Election Flyer) You can also order copies of the flyer online or download the flyer from www.MyFRS.com.

Note: The legislative changes described above will have some effect on the examples given in the flyer, but it can still be useful in explaining the 2nd Election option. The flyer will be updated in July if SB 1446 becomes law as expected.
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Employee Mailing Addresses

Encourage your employees to update their mailing addresses to insure they receive all of the necessary forms and information concerning their FRS retirement benefits. Employee information will be updated in our database once we receive the updated payroll file from you. Without current employee address information on file, it is possible your employees could miss out on important account and benefit information.

If you have any questions about reporting address changes or any other payroll reporting process, please contact the Division of Retirement Contributions Section by email at Contributions@frs.state.fl.us, by telephone at (850) 488-6011 or SUNCOM 278-6011.
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The Division of Retirement has Moved!

After over 30 years in one location, the Division of Retirement moved across town in late April 2005. You may continue to reach the Division via email by visiting their website at www.MyFlorida.com/frs. All of the Division's telephone and fax numbers will remain the same and can be found on the website by clicking "Contact Us." The new mailing address for the Division is:

Division of Retirement
P.O. Box 9000
Tallahassee, FL 32315-9000

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A Few Facts about the FRS

Did you know:

• The FRS now serves over 660,000 public employees, 235,000 Pension Plan retirees and 845 public employers in the state of Florida.
• The FRS Investment Plan now has over 53,000 active participants and 1.2 billion dollars in assets. The FRS Pension Plan has almost 600,000 participants and close to 110 billion dollars in assets.
• As of April 2005, over 8,500 FRS covered employees have used their one-time 2nd Election to switch retirement plans. Almost 97% of employees using their 2nd Election have switched from the Pension Plan to the Investment Plan.
• In March 2005, the default rate fell to 58 percent. This means 42 percent of new FRS-covered employees are actively choosing their retirement plan!
• Of the newly hired FRS-covered employees whose choice deadline was March 2005, 20 percent actively chose the FRS Pension Plan and 22 percent actively chose the FRS Investment Plan.

Important Enrollment Deadlines!

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

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

If Hired in this Month...	Retirement Plan Choice Deadline is...
December 2004 January 2005 February 2005 March 2005 April 2005 May 2005 June 2005 July 2005 August 2005 September 2005 October 2005 November 2005	May 31, 2005 June 30, 2005 July 29, 2005 August 31, 2005 September 30, 2005 October 31, 2005 November 30, 2005 December 30, 2005 January 31, 2006 February 28, 2006 March 31, 2006 April 28, 2006

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