Renewed push for the Legislature to move new employees into 401(k)-style defined-contribution plans

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A coalition of business groups and conservative think tanks reiterated calls on Thursday for the Legislature to move new employees into 401(k)-style defined-contribution plans, days after lawmakers approved a pension-reform plan that allows state workers to remain in the defined-benefit program. On a conference call hosted by Floridians for Sustainable Pensions, an organization formed to back Gov. Rick Scott? call for a significant overhaul of the state? retirement system, experts working with the group pushed for the Legislature return to the volatile topic in 2012? election-year session. The group acknowledged that the Florida Retirement System, which is close to 90 percent funded, is not in any imminent danger of running short of the money needed to pay the bills. But they said closing off the defined-benefit plan could avoid the temptation politicians might face to trade off long-term costs for saving money in the short term. ?t? always too easy to offer future benefits rather than paying people now,?said Randall Holcombe, an economics professor at Florida State University and a senior fellow at the free-market James Madison Institute. While lawmakers pushed through a series of reforms to the FRS, including requiring employees to contribute 3 percent of their income to their own retirements and increasing retirement ages, more is needed, particularly in relation to the local funds, the group said. Bill Mattox, a resident fellow at James Madison, compared the efforts so far to cleaning up the oil that had already spilled during last summer? Deepwater Horizon disaster. ?t some point, you?e really got to cap the well if you?e really going to fix the issue,?Mattox said. Florida TaxWatch, another member of the coalition, also supports the Legislature pushing through a required defined-contribution plan. A third member of the group that joined the call, the LeRoy Collins Institute, has not taken a stance on the potential move, officials said. But the idea of a defined-contribution plan is running into resistance from lawmakers who spearheaded the push to reform the system in 2011 and organized labor, which views any attempts to change the plan as a way of balancing state budgets on the backs of workers. ?onsidering we just had months and months of intense discussions of the pension issue and they extracted $1.1 billion out of nearly 800,000 public employees, I? not sure what these folks want,?said Doug Martin, legislative director for the American Federation of State, County and Municipal Employees. ?bsolute destruction?? Unions also point to a 2010 study commissioned by the state based on legislation that year that would have closed the defined-benefit plan to new employees this year. That study, by consulting firm Milliman, showed the plan? unfunded liability ballooning to $26.1 billion in the 2025-26 fiscal year before beginning to decline. Rep. Ritch Workman, the Melbourne Republican who spearheaded pension reform for the House this session, said he decided to set aside the idea of a defined-contribution plan in part because of the current unfunded liabilities. Workman has repeatedly called for waiting until FRS is funded at 100 percent and has a small surplus before pushing new employees into a defined- contribution plan and diverting their contributions away from the FRS. ?n my opinion, while there? this huge unfunded liability, that [defined-contribution] option? not open,?Workman said. And while Workman said he would be open to looking into a defined-contribution plan once the current program is fully funded, he added: ? well-managed defined-benefit plan is not the anti-Christ.?]>

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including SaintPetersBlog.com, FloridaPolitics.com, ContextFlorida.com, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.