FL H7181

Establishes a new vesting tier for Florida Retirement System (FRS) pension plan members enrolled on or after July 1, 2015, requiring 10 years of creditable service (up from 8 years for 2011–2015 enrollees and 6 years for 2001–2011 enrollees), with corresponding increases to disability benefit eligibility requirements from 8 to 10 years for new enrollees.

Requires employees initially enrolled on or after July 1, 2015 in the Elected Officers' Class or Senior Management Service Class to participate in the investment plan (defined contribution), prohibiting pension plan membership and closing the Senior Management Service Optional Annuity Program to new members effective July 1, 2015.

Changes the default enrollment process for new employees hired on or after July 1, 2015: members have 8 months to elect between the pension and investment plans, after which they are automatically defaulted into the investment plan with contributions transferred to a default fund designated by the State Board of Administration.

Creates renewed membership provisions allowing retirees of the investment plan or optional retirement programs who retired before July 1, 2010 with fewer than 10 years of service and are reemployed on or after January 1, 2015 to rejoin as Regular Class investment plan members, though they earn no creditable service or contributions for employment between July 1, 2010 and December 31, 2014, and are ineligible for disability benefits.

Increases the minimum retirement benefit multiplier for both municipal firefighter (Chapter 175) and police officer (Chapter 185) pension plans from 2% to 2.75% of average final compensation per year of service, with grandfathering for plans below 2.75% as of July 1, 2014 that must maintain their current benefit level but cannot decrease below 2.75% once that threshold is reached.

Restructures insurance premium tax revenue distribution for firefighter and police pension plans, splitting additional premium tax revenues exceeding 2012 calendar year amounts 50/50 between funding defined benefit plan benefits and a new mandatory defined contribution plan component, with unallocated accumulations similarly divided between special benefits and unfunded actuarial liabilities.

Requires each firefighter and police officer pension plan sponsor to establish a defined contribution plan component within the local law plan by October 1, 2014 for noncollectively bargained service, or upon entering a collective bargaining agreement on or after July 1, 2014; new plans created after March 1, 2014 must split premium tax revenues 50/50 between defined benefit and defined contribution components.

Permits mutual consent deviations from statutory premium tax revenue usage rules through agreement between the collective bargaining representative (or majority of plan members) and the municipality, provided minimum benefits and standards continue to be met; existing arrangements in special act plans or supplemental plan municipalities are deemed approved deviations as of July 1, 2014.

Provides transition protection for municipalities that implemented or proposed local law plan changes between August 14, 2012 and March 4, 2014 in reliance on Department of Management Services interpretations, allowing continuation of those changes until the earlier of October 1, 2017 or the effective date of a contrary collective bargaining agreement.

The act, effective July 1, 2014, declares fulfillment of an important state interest in ensuring governmental retirement benefits are fair, adequate, and actuarially sound under Article X, Section 14 of the State Constitution and Part VII of Chapter 112.