TALLAHASSEE, Fla.-- Scrapping the state’s retirement system isn’t on the table, but defaulting workers into an investment plan is gaining support. Many are worried change could push the current system into collapse.
Law enforcement, teachers, and other public workers came out in full force. The state workers were strongly opposed to tweaking their defined benefit retirement system.
State pension strategist Ash Williams says the 87 percent funded current system is one of the nation’s strongest because of three main reasons. “First of all it has to have reasonable benefits, it has to have responsible funding, and it has to have prudent investment.”
But some lawmakers say it costs too much. They want an individual investment plan. A Senate proposal would give new workers the option of either plan. Or default them into the investment plan after a certain amount of time. That doesn’t sit well with the AFL CIO
Rich Templin of the Florida AFL-CIO, “By hook or by crook a little bit by trickery, get people into the riskier investment plan, 401k type plan as opposed to the define benefit pension plan.
The state workers main concern was that tweaking the plan would ultimately lead to the defined system collapsing.
Former State Senator Ron Silver says the math is simple. “If you have less money coming in, that destabilizes the plan.”
But Senator Rob Bradley voted for the plan. He says that the collapse is overstated, and comparisons to a ponzi scheme are extreme. “It’s not as dependent on new people coming in as is sometimes characterized because, as you know, the definition of a ponzi scheme is full dependent on new money that is coming in to pay the people who are already there.”
Supporters of the investment plan option say it could save the state 60 billion over 30 years. State workers say that they will earn less in the end because of the state contributing less.
Last year, the Florida House passed a bill that would have closed the current plan. That proposal died in the Senate.