Public employees planning to spend their careers in Florida could see big changes to their retirement plans, the result of a controversial move by the Florida House.
House Republicans pushed through a bill on Thursday that would default new hires into a 401(k)-style savings plan, rather than a traditional pension.
Rich Templin, legislative and political director of the Florida AFLCIO, says the major policy change, which passed along party lines, places workers’ savings in riskier investments, rather than a plan with defined benefits. He says similar moves have proven costly and unsustainable in other states, including West Virginia and Michigan.
“This is damaging not only for the individual – it hurts the system and, by extension, is really threatening what has become a pillar of Florida’s overall economy,” he explained.
Supporters of the measure say it will allow workers to keep their contributions if they leave public employment before the eight-year vesting period required by the pension plan. But Democrats say the pension system is financially healthy and shouldn’t be changed.
The plan now goes to the Senate, where it could very well end up being one of the bargaining chips during House and Senate budget negotiations.
The Florida Retirement System currently has about 630,000 active members and 400,000 retirees, and more than half of them are educators.
Lynda Russell, public policy advocate with the Florida Education Association, fears this bill would be the nail in the coffin for teaching in a state that already struggles to retain qualified educators.
“Do we want to encourage them to stay, or do we simply want to help them pack?” she asked. “I mean, we don’t want to give them any pay, we don’t want them to have job security, and now we are saying we want them to have no hope of even a reasonable retirement.”
Under the current system, a teacher hired today who works 35 years in Florida would retire with a modest pension of roughly $24,000 a year, but under the 401(k) plan, that drops to just $9,600.
The proposal is wrapped in an appropriations bill that lawmakers must pass in order to keep the Florida Retirement System solvent in the long run.
Public News Service – FL
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