1996 Retirement Legislation
John P. Kruczek, University Controller
The 1996 Florida Legislature passed several bills amending retirement laws of the Florida Retirement System (FRS). These changes will become effective July 1, 1996. A summary of changes follows:
Maximum Compensation Limit. For employees who first become members of the FRS on and after July 1, 1996, no retirement contributions will be paid on annual compensation that exceeds limits established by federal law [$150,000 in fiscal year 1996/97 (July – June) – indexed by a cost-of living index in increments of $10,000]. Employees who were first members of a Florida state-administered retirement system prior to July 1, 1996 (includes members of the Florida Retirement System, State University System Optional Retirement Program, Senior Management Service Optional Annuity Program, State and County Officers and Employees’ Retirement System, and the Teachers’ Retirement System) will be subject to the existing “so called” $200,000 maximum annual compensation limit, which was established on July 1, 1990. This limit is indexed annually by a cost-of-living index that is calculated differently than the index discussed above and has increased to a current limit of $245,000 and will increase to $250,000 on July 1, 1996.
Employer Contributions to a Deferred Compensation Plan. Any public funds paid by an employer on an employee’s behalf into an employee’s salary reduction, deferred compensation, or tax-sheltered annuity plan on or after July 1, 1990 [the date all FRS employers were notified in writing by the Division of Retirement to stop making contributions to the System Trust Fund based on these amounts] are considered a fringe benefit and are not compensation for retirement purposes.
Out of State Service Revisions. Language was added to clarify existing provisions that allow a member to purchase retirement credit for service earned in another state’s public pension system. The out-of-state service must have been covered by a retirement or pension plan in the other state, and must have been performed before a period of membership in the FRS. A member must complete at least one year of FRS in order to purchase FRS credit for out-of-state public service performed after leaving the FRS. Out-of-state service cannot be applied toward the number of years required to vest.
In addition to the above, the retirement contribution rates were changed as listed in the table below and are effective July 1, 1996. Personnel who prepare financial projections and budgets will need this information.
|Retirement Code||Retirement Description||Current Contribution Rate||Contribution Rate Effective 7-1-96|
|HA||FL Retirement Regular Member||17.66%||17.43%|
|HB||FL Retirement Special Risk||27.50%||27.10%|
|HJ||Admn Class Special Risk||18.46%||17.86%|
|HM||Senior Mgnt Svc Class||24.80%||22.24%|
|NF||Federal Supplemental Retirement||6.82%||5.64%|
|ON||Optional Retirement without FICA||17.66%||17.43%|
|OP||Optional Retirement Program||17.66%||17.43%|
|RA||FL Reemployed Retirement Member||17.66%||17.43%|
Please direct questions regarding Payroll processing and departmental charges to Murphy Miller at 392-1231. Questions regarding retirement programs and how these changes affect you, should be directed to Joanne Dice at 392-4941.