FRS update 2/4/2011

FRS update 2/4/2011

February 8th, 2011 // 1:37 pm @

Greetings,

As you all know the next few months will be filled with bills and proposals to make changes to the FRS. As I have stated in previous updates I will do my best to continue to keep you in the loop on what is going on and what my thoughts are on any bills or budget proposals.

Below I have attached a article about Gov. Scott’s budget proposal concerning the FRS. This is something that I am currently following VERY closely and will give you more details in the week ahead. In my last update (1/31/2011) about the end of proposed HB-303, I had stated that I was not worried about that bill at all and knew it would not pass. However, I am worried about this budget proposal and currently I believe that we could see some of the following changes:

– End of new participants into DROP effective 7/1/2011 (HIGHLY LIKELY). If you are already in DROP you will be ok, if not you will have to enter by 6/1/11

– Employees will contribute 5% of their salaries to the retirement system (HIGHLY LIKELY that employees will start to contribute, I am not sold on the 5% yet).

– New employee’s will only have the investment plan as a option (HIGHLY LIKELY). For those of you who know me well, you know that I have been predicting this one for several years. As much as I don’t like to see it for the new educators, I think this is a very smart move and will help protect everyone who is currently in the pension plan. Since I do retirement plans for people outside of education I see this all the time; no one offers traditional pensions anymore. Everyone has seen what happened to the auto industry due to all those pensions, and companies don’t want to follow down that same path. People are living longer, many of the educators that are retiring will almost collect a pension for as many years as the worked.

– Cost of Living (COL) adjustment will be eliminated effective 7/1/2011 (Likely). If this happens it will be even more important for educators to save using a 403(b) or a 457 to help make up the difference.

– Cost of Living (COL_ adjustment elimination will not effect retirees (HIGHLY LIKELY).

My advice is that if you think that these changes could effect your decision on when to retire or when to enter DROP, PLEASE email me ASAP to schedule a time to meet and discuss. We want to make EDUCATED decisions to make sure you have to best retirement possible.

If you know anyone who would benefit from my FRS updates please forward my email on to them OR send me their name and email address and I will add them to my email list.

Read the Article:

Governor Rick Scott Announces Budget Proposals That Will Save $2.8

Billion Over Two Years by Modernizing the Florida Retirement System

Keeping in line with his 7-7-7 plan and his plan to modernize the Florida Retirement System, Governor Rick Scott announced today that he would send the Legislature a budget proposal that better aligns government workers’ pensions with those in the private sector and saves taxpayers $2.8 billion over two years.

Governor Scott announced that the savings would be realized by requiring government employees to contribute five percent of their salaries to the system and requiring new employees to enroll in investment plans similar to private sector 401(k)s. “We must bring Florida in line with the private sector and nearly every other state in the country by requiring government workers to contribute towards their own retirement,” said Governor Scott.

The Governor also announced his intention to close the Deferred Retirement Option Program to new participants as of July 1, 2011, and to reduce the annual service credit to 1.6 percent for most members (special risk class members, to two percent).

Governor Scott said the Cost of Living Adjustment on retirement benefits will be eliminated for all service earned after July 1, 2011. Current retirees will be unaffected. Those members retiring after July 1, 2011, will receive a three percent Cost of Living Adjustment on the retirement benefit attributable to the service earned prior to July 1, 2011, and no cost of living adjustment for service earned after July 1, 2011.

“Government workers, like private sector employees, deserve the opportunity to save for the future, but taxpayers shouldn’t be asked to foot that bill alone.” Governor Scott said that modernizing the Florida Retirement System would help reduce spending and help get government back to its core missions.

Governor Scott will send his full budget proposals to the Legislature on Monday, February 7th.

Respectfully yours,

Gary Cucchi
Agency Owner, Horace Mann Ins.
DBA: Florida Educator Ins., LLC
Now with two locations
-Wesley Chapel: Ph: 813.600.3268 Fx: 813.600.5348
-St. Petersburg: Ph: 727.576.5555 Fx: 727.576.5560
www.garycucchi.com

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