Pension changes mean government employees must now contribute to their retirement

Florida Gov. Rick Scott didn't get all of the pension reforms he wanted for state employees during the 2011 legislative session.

But he got a lot.

For the first time in decades, state employees will be required to redirect part of their salaries to pay for part of their retirement benefits. Beginning July 1, 2011, all state employees will be required to put 3 percent of their salaries toward retirement.

Scott signed the pension reforms into law May 26, 2011, which puts Florida more in line with other states. (PolitiFact Florida recently found that only state employees in Tennessee and Utah are not being required to contribute salary toward their own retirement).

The law, SB 2100, affects about 655,000 current state and local government employees, and includes Tallahassee-based government workers along with teachers and many police officers and firefighters throughout the state.

The Miami Herald's Mary Ellen Klas provided an easy-to-understand summary of the changes. Along with making workers contribute salary toward their retirement, the changes include:

• Eliminating service credits for cost-of-living adjustments for workers between July 1, 2011, and July 1, 2016. Workers currently receive annual credits that help determine cost-of-living adjustments upon retiring. Suspending those credits will change the cost-of-living adjustments retirees receive.

• Reducing the interest future retirees receive if they decide to enter the Deferred Retirement Option Program, or DROP. DROP allows workers nearing retirement age to accumulate five years' worth of retirement pay, while they continue to work so that they can gather a lump sum upon retirement. The new law lowers the amount of interest retirees earn on that money from 6.5 percent to 1.3 percent.

• Raising the retirement age for new workers. Workers hired after July 1 will vest into the state retirement system after eight years, instead of five. Employees hired after July 1 who are regular class, senior management class and elected officials class can receive normal retirement benefits if they retire after 65 years of age or 33 years of service (current law is 62 years old, or 30 years of service). Special-risk class like police officers and firefighters hired after July 1 can retire after 60 years of age or 30 years of service or, if they have served four years in the U.S. military, they can retire after 57 years of age and 30 years of service (current law is 55 years old, or 25 years of service).

The changes, while significant, are not as drastic as what Scott first proposed. Scott wanted employees to contribute 5 percent of their salary to their retirement, proposed ending DROP all together, and called for ending the traditional defined benefit retirement plan. Scott wanted workers to join a new defined contribution, or 401(k)-style, retirement plan.

Still, the changes to the retirement system will save about $1.18 billion for state and local governments. (Scott said his plan would have saved about $1.4 billion.)

When considering the breadth of the change, the difference in dollar amounts isn't enough to dock Scott points. He consistently pushed for a plan that would require government employees to contribute part of their salary toward their retirement, as is common in most other states. He got that plan passed. We rate this Promise Kept.