Tensions are rising between politicians and opponents of a newly proposed pension plan for state employees.
A Florida House of Representatives subcommittee has approved a bill that will change the pension plan for state employees to a 401(k)-style plan, instead of the fixed amount of money currently being put into retirement funds.
Rep. Jason Brodeur, a Republican from Sanford, said the changes would only affect new employees or anyone who began working for the state after Jan. 1, 2014, by making their retirement options “self-directed.”
“A lot of people who rely on our current pension system have made a lot of life choices over the years based on what they believed they were going to receive,” he said. “Because we are addressing this early enough, we don’t have to make any changes for them.”
Brodeur said voting on the bill now and making minimal changes will prevent the need for major changes later on. Still, critics of the bill believe the current defined-benefit plan already supports employees and retirees.
The defined-benefit plan is more cost-effective, said Diane Oakley, executive director of the National Institute on Retirement Security.
A concern with the defined-contribution plan, or 401(k)-style plan, is that it will require more money from the employee to equal the same amount of benefit the current pension plan has.
“The person that actually contributes to it has to put in at least $14,000 a year to get the same benefit that he would get on the defined-benefit plan,” said Ray Edmondson, CEO of the Florida Public Pension Trustees Association.
Gary Rainey, president of Florida Professional Firefighters, said the new plan would have many consequences for those in the first-responder field.
“If a firefighter is killed in the line of duty, or disabled permanently in the line of duty, his surviving spouse and/or children will receive a refund of his contributions, and that is it,” Rainey said. “There will be no other support for the family, for someone who has made that sacrifice.”
The bill will be voted on during this legislative session and would take effect in January 2014.
Branden Snodgrass contributed reporting.