The following note
was received in response to my last post pertaining to the Florida Retirement
System which was also published
in the Tallahassee Democrat. While a
number of responses were received, this seemed to express a general sentiment
from an unbiased viewpoint:
Your letter
in the Tallahassee Democrat the other day was the first common sense I've seen
in print since FRS issues began bubbling a few years ago. This isn't my
dogfight but I've followed it with real interest both because pensions,
especially defined-benefit plans, matter to me and because the uproar has been
an educational look at the weirdness of Florida politics. For example, I was
flabbergasted that any legislature
would buy into a plan under which employees made no direct, identifiable
contribution to their own retirements. Equally astonishing have been the
enthusiasm of some legislators to transform the system without all the numbers
in hand and the failure of FRS or unions and their members to see
that sound numbers were available before the 2013 session. Like pregnancy
and childbirth, all of this has been pretty predictable (inevitable?) since
the last session. Preoccupation with the 3% withholding to the exclusion
of all else has meant that the kid has come home with no diapers in the
house. Perhaps more was going on but this is what it looks like from outside.
Legislative
moves toward defined-contribution plans aren't confined to Florida but nobody
in Tallahassee has mentioned that some other states have explored the
alternatives and are moving ahead with repairs to existing defined-benefit
plans along the lines you suggest in your letter. Although the deal isn't done,
recent news coverage from Montana implies likely passage of a rational, long
term fix for existing problems. It's true that Montana, with about one
inhabitant for every 19 Floridians and many other significant differences, is
different, but the process would work here. Montana still has a biennial
legislative session which allowed more time but the essential aspect was collaboration
between interim legislative committees, the governor's office, the retirement
system(s)*, unions and system beneficiaries, and willingness to meet the costs.
The switch to a 401 k plan was judged too costly. (*Montana has a Public
Employees' Retirement System and a Teachers' Retirement System which
includes university faculty. The piggy banks are different but the problems and
solutions were the same.) Montana salaries and wages in all sectors are
lower than in Florida but employees have contributed 7.15% all along and
the contribution will increase to 8.15% under the proposed plan. Other changes
in vesting, eligibility etc. are the sorts of things you suggested. Montana is
fiscally cautious--it was one of only four states in the black a few years
ago-- and it does have a stash not available everywhere. Part of
the Coal Severance Tax, and some of the interest on the untouchable
endowment portion of that fund, are being diverted from existing programs
to bolster the retirement systems. However, that never would have happened if
employees weren't willing to ante up as well........
I imagine you're getting responses to your good letter.
Andy Sheldon
Andy Sheldon is retired
and living in Crawfordville, Florida. He
is formerly of Mossoula, Montana where he was a professor at the University of
Montana.
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