Gov. Rick Scott

Gov. Rick Scott unveiled his plan to reform the state’s employee pension system in Naples Tuesday, promising $2.8 billion in savings over the next two years.

The savings would be achieved, Scott said, by requiring state workers in the Florida Retirement System to contribute 5 percent of their salaries to the system and have new workers join a defined contribution plan akin to a 401(k) retirement plan.

Workers are currently afforded the option of joining a defined benefit plan with benefits accruing after five years. Florida is one of the only states in the nation that does not require some form of employee contribution to state pension plans.

“We need to bring Florida in line with the private sector and nearly every other state in the country by requiring government workers to contribute toward their retirement plans,” Scott said.

Legislators have warned that employee contributions to their plans were likely to be part of any pension reform package, but other parts of Scott’s plan, like ending the Deferred Retirement Option Program, or DROP, reducing the annual service credit and phasing out the cost of living adjustment, have not been a central part of pension talks in committees.

Scott’s plan would close the DROP to all employees on or after July 1. The DROP program has come under biting criticism in recent years as some employees used it to “double dip,” or receive a pension benefit and a salary at the same time.

The annual service credit, or percentage of an employee’s salary that is paid upon retirement, would be reduced from 3 percent to 1.6 percent for most workers, and 2 percent for “special risk” workers like police officers and firefighters, under Scott’s proposal. The cost of living adjustment, or COLA, would be ended by eliminating it for work done after July 1. Current retirees would continue to receive their 3 percent annual COLA, but those who retire after July 1 would only get it for work done before that date.

Sen. Jeremy Ring, D-Margate, who chairs the Governmental Oversight and Accountability Committee that deals with public pension reform, said he understands the need for reform but that it was too early to discuss the specifics of Scott’s plan.

“I certainly support the idea of employee contributions to their own pension plans,” Ring said.

Other aspects of Scott’s plan, however, may not have Ring's full backing.

“I think (DROP) needs reform. I never heard a discussion prior to this about ending the program,” Ring said.

Yet Ring realizes Florida must fill its $3.62 billion budget deficit -- which could rise to $5 billion if proposals to increase the state’s reserves are followed -- and public pension reform is one of the state’s dwindling options. Public-sector unions, however, point out that they haven’t received a raise in five years and contend that changes to the FRS are not needed.

“While we need to be sensitive to the fact that they haven’t gotten raises in five years, we’re in a $4 billion hole,” Ring said, adding that a Senate bill dealing with pension reform will be filed in the next two weeks.



Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.