Bill Text: FL S7082 | 2015 | Regular Session | Comm Sub
Bill Title: Death Benefits Under the Florida Retirement System
Spectrum: Committee Bill
Status: (Failed) 2015-04-28 - Died in Messages [S7082 Detail]
Download: Florida-2015-S7082-Comm_Sub.html
Florida Senate - 2015 CS for SB 7082 By the Committees on Appropriations; and Governmental Oversight and Accountability 576-04273-15 20157082c1 1 A bill to be entitled 2 An act relating to death benefits under the Florida 3 Retirement System; amending s. 121.091, F.S.; 4 authorizing payment of death benefits to the surviving 5 spouse or children of a Special Risk Class member 6 killed in the line of duty under specified 7 circumstances; specifying eligibility; amending s. 8 121.571, F.S.; conforming provisions to changes made 9 by the act; amending s. 121.591, F.S.; authorizing 10 payment of death benefits to the surviving spouse or 11 surviving children of a Special Risk Class member in 12 the investment plan; establishing qualifications and 13 eligibility requirements in order to receive such 14 benefits; prescribing the method of calculating the 15 benefit; specifying circumstances under which benefit 16 payments are terminated; creating s. 121.5912, F.S.; 17 providing legislative intent; requiring the State 18 Board of Administration or the Division of Retirement 19 to take certain action upon receipt of notification of 20 disqualification from the Internal Revenue Service; 21 authorizing the state board and the Department of 22 Management Services to adopt rules; creating s. 23 121.735, F.S.; providing for allocations for death 24 benefits authorized by the act; amending ss. 121.71, 25 121.74, and 121.75, F.S.; conforming cross-references 26 to changes made by the act; requiring the State Board 27 of Administration to transfer moneys to fund survivor 28 benefit payments under specified circumstances; 29 adjusting employer contribution rates in order to fund 30 changes made by the act; providing a directive to the 31 Division of Law Revision and Information; declaring 32 that the act fulfills an important state interest; 33 providing an appropriation; providing an effective 34 date. 35 36 Be It Enacted by the Legislature of the State of Florida: 37 38 Section 1. Paragraph (d) of subsection (7) of section 39 121.091, Florida Statutes, is amended, and paragraph (i) is 40 added to that subsection, to read: 41 121.091 Benefits payable under the system.—Benefits may not 42 be paid under this section unless the member has terminated 43 employment as provided in s. 121.021(39)(a) or begun 44 participation in the Deferred Retirement Option Program as 45 provided in subsection (13), and a proper application has been 46 filed in the manner prescribed by the department. The department 47 may cancel an application for retirement benefits when the 48 member or beneficiary fails to timely provide the information 49 and documents required by this chapter and the department’s 50 rules. The department shall adopt rules establishing procedures 51 for application for retirement benefits and for the cancellation 52 of such application when the required information or documents 53 are not received. 54 (7) DEATH BENEFITS.— 55 (d) Notwithstanding any other provision in this chapter to 56 the contrary, with the exception of the Deferred Retirement 57 Option Program, as provided in subsection (13): 58 1. The surviving spouse of any member killed in the line of 59 duty may receive a monthly pension equal to one-half of the 60 monthly salary being received by the member at the time of death 61 for the rest of the surviving spouse’s lifetime or, if the 62 member was vested, such surviving spouse may elect to receive a 63 benefit as provided in paragraph (b). Benefits provided by this 64 paragraph shall supersede any other distribution that may have 65 been provided by the member’s designation of beneficiary. 66 2. If the surviving spouse of a member killed in the line 67 of duty dies, the monthly payments which would have been payable 68 to such surviving spouse had such surviving spouse lived shall 69 be paid for the use and benefit of such member’s child or 70 children under 18 years of age and unmarried until the 18th 71 birthday of the member’s youngest child. Beginning July 1, 2015, 72 such monthly payments may be extended for a child of a member in 73 the Special Risk Class when killed on or after July 1, 2013, 74 until the 25th birthday of such child if the child is unmarried 75 and enrolled as a full-time student. 76 3. If a member killed in the line of duty leaves no 77 surviving spouse but is survived by a child or children under 18 78 years of age, the benefits provided by subparagraph 1., normally 79 payable to a surviving spouse, shall be paid for the use and 80 benefit of such member’s child or children under 18 years of age 81 and unmarried until the 18th birthday of the member’s youngest 82 child. Beginning July 1, 2015, such monthly payments may be 83 extended for a child of a member in the Special Risk Class when 84 killed on or after July 1, 2013, until the 25th birthday of such 85 child if the child is unmarried and enrolled as a full-time 86 student. 87 4. The surviving spouse of a member whose benefit 88 terminated because of remarriage shall have the benefit 89 reinstated beginning July 1, 1993, at an amount that would have 90 been payable had the benefit not been terminated. 91 (i) Notwithstanding any other provision in this chapter to 92 the contrary, with the exception of the Deferred Retirement 93 Option Program, as provided in subsection (13), for a member in 94 the Special Risk Class when killed in the line of duty on or 95 after July 1, 2013, the following benefits are payable in 96 addition to the benefits provided in paragraph (d) beginning on 97 or after July 1, 2015: 98 1. The surviving spouse may receive a monthly pension equal 99 to one-half of the monthly salary being received by the member 100 at the time of death for the rest of the surviving spouse’s 101 lifetime or, if the member was vested, such surviving spouse may 102 elect to receive a benefit as provided in paragraph (b). 103 Benefits provided by this paragraph shall supersede any other 104 distribution that may have been provided by the member’s 105 designation of beneficiary. 106 2. If the surviving spouse dies, the monthly payments which 107 would have been payable to such surviving spouse had such 108 surviving spouse lived shall be paid for the use and benefit of 109 such member’s child or children under 18 years of age and 110 unmarried until the 18th birthday of the member’s youngest 111 child. Such monthly payments may be extended beyond this period 112 until the 25th birthday of the member’s child if the child is 113 unmarried and enrolled as a full-time student. 114 3. If the member leaves no surviving spouse but is survived 115 by a child or children under 18 years of age, the benefits 116 provided by subparagraph 1., normally payable to a surviving 117 spouse, shall be paid for the use and benefit of such member’s 118 child or children under 18 years of age and unmarried until the 119 18th birthday of the member’s youngest child. Such monthly 120 payments may be extended beyond this period until the 25th 121 birthday of the member’s child if the child is unmarried and 122 enrolled as a full-time student. 123 Section 2. Subsection (2) of section 121.571, Florida 124 Statutes, is amended to read: 125 121.571 Contributions.—Contributions to the Florida 126 Retirement System Investment Plan shall be made as follows: 127 (2) CONTRIBUTION RATES GENERALLY.—Contributions to fund the 128 retirement,anddisability, and line-of-duty death benefits 129 provided under this part must be based on the uniform 130 contribution rates established by s. 121.71 and on the 131 membership class or subclass of the member. Such contributions 132 must be allocated as provided in ss. 121.72,and121.73, and 133 121.735. 134 Section 3. Subsection (3) of section 121.591, Florida 135 Statutes, is amended, present subsection (4) of that section is 136 redesignated as subsection (5), and a new subsection (4) is 137 added to that section, to read: 138 121.591 Payment of benefits.—Benefits may not be paid under 139 the Florida Retirement System Investment Plan unless the member 140 has terminated employment as provided in s. 121.021(39)(a) or is 141 deceased and a proper application has been filed as prescribed 142 by the state board or the department. Benefits, including 143 employee contributions, are not payable under the investment 144 plan for employee hardships, unforeseeable emergencies, loans, 145 medical expenses, educational expenses, purchase of a principal 146 residence, payments necessary to prevent eviction or foreclosure 147 on an employee’s principal residence, or any other reason except 148 a requested distribution for retirement, a mandatory de minimis 149 distribution authorized by the administrator, or a required 150 minimum distribution provided pursuant to the Internal Revenue 151 Code. The state board or department, as appropriate, may cancel 152 an application for retirement benefits if the member or 153 beneficiary fails to timely provide the information and 154 documents required by this chapter and the rules of the state 155 board and department. In accordance with their respective 156 responsibilities, the state board and the department shall adopt 157 rules establishing procedures for application for retirement 158 benefits and for the cancellation of such application if the 159 required information or documents are not received. The state 160 board and the department, as appropriate, are authorized to cash 161 out a de minimis account of a member who has been terminated 162 from Florida Retirement System covered employment for a minimum 163 of 6 calendar months. A de minimis account is an account 164 containing employer and employee contributions and accumulated 165 earnings of not more than $5,000 made under the provisions of 166 this chapter. Such cash-out must be a complete lump-sum 167 liquidation of the account balance, subject to the provisions of 168 the Internal Revenue Code, or a lump-sum direct rollover 169 distribution paid directly to the custodian of an eligible 170 retirement plan, as defined by the Internal Revenue Code, on 171 behalf of the member. Any nonvested accumulations and associated 172 service credit, including amounts transferred to the suspense 173 account of the Florida Retirement System Investment Plan Trust 174 Fund authorized under s. 121.4501(6), shall be forfeited upon 175 payment of any vested benefit to a member or beneficiary, except 176 for de minimis distributions or minimum required distributions 177 as provided under this section. If any financial instrument 178 issued for the payment of retirement benefits under this section 179 is not presented for payment within 180 days after the last day 180 of the month in which it was originally issued, the third-party 181 administrator or other duly authorized agent of the state board 182 shall cancel the instrument and credit the amount of the 183 instrument to the suspense account of the Florida Retirement 184 System Investment Plan Trust Fund authorized under s. 185 121.4501(6). Any amounts transferred to the suspense account are 186 payable upon a proper application, not to include earnings 187 thereon, as provided in this section, within 10 years after the 188 last day of the month in which the instrument was originally 189 issued, after which time such amounts and any earnings 190 attributable to employer contributions shall be forfeited. Any 191 forfeited amounts are assets of the trust fund and are not 192 subject to chapter 717. 193 (3) DEATH BENEFITS.—Under the Florida Retirement System 194 Investment Plan: 195 (a) Survivor benefits are payable in accordance with the 196 following terms and conditions, except as provided in subsection 197 (4): 198 1. To the extent vested, benefits are payable only to a 199 member’s beneficiary or beneficiaries as designated by the 200 member as provided in s. 121.4501(20). 201 2. Benefits shall be paid by the third-party administrator 202 or designated approved providers in accordance with the law, the 203 contracts, and any applicable state board rule or policy. 204 3. To receive benefits, the member must be deceased. 205 (b) Except as provided in subsection (4), in the event of a 206 member’s death, all vested accumulations as described in s. 207 121.4501(6), less withholding taxes remitted to the Internal 208 Revenue Service, shall be distributed, as provided in paragraph 209 (c) or as described in s. 121.4501(20), as if the member retired 210 on the date of death. No other death benefits are available for 211 survivors of members, except for benefits, or coverage for 212 benefits, as are otherwise provided by law or separately 213 provided by the employer, at the employer’s discretion. 214 (c) Except as provided in subsection (4), upon receipt by 215 the third-party administrator of a properly executed application 216 for distribution of benefits, the total accumulated benefit is 217 payable by the third-party administrator to the member’s 218 surviving beneficiary or beneficiaries, as: 219 1. A lump-sum distribution payable to the beneficiary or 220 beneficiaries, or to the deceased member’s estate; 221 2. An eligible rollover distribution, if permitted, on 222 behalf of the surviving spouse of a deceased member, whereby all 223 accrued benefits, plus interest and investment earnings, are 224 paid from the deceased member’s account directly to the 225 custodian of an eligible retirement plan, as described in s. 226 402(c)(8)(B) of the Internal Revenue Code, on behalf of the 227 surviving spouse; or 228 3. A partial lump-sum payment whereby a portion of the 229 accrued benefit is paid to the deceased member’s surviving 230 spouse or other designated beneficiaries, less withholding taxes 231 remitted to the Internal Revenue Service, and the remaining 232 amount is transferred directly to the custodian of an eligible 233 retirement plan, if permitted, as described in s. 402(c)(8)(B) 234 of the Internal Revenue Code, on behalf of the surviving spouse. 235 The proportions must be specified by the member or the surviving 236 beneficiary. 237 238 This paragraph does not abrogate other applicable provisions of 239 state or federal law providing for payment of death benefits. 240 (4) DEATH BENEFITS FOR SPECIAL RISK CLASS MEMBERS.—Benefits 241 are provided under this subsection to the spouse and child or 242 children of members in the Special Risk Class when killed in the 243 line of duty and are payable in lieu of the benefits that would 244 otherwise be payable under the provisions of subsection (1) or 245 subsection (3). Benefits provided by this subsection shall 246 supersede any other distribution that may have been provided by 247 the member’s designation of beneficiary. Such benefits must be 248 funded from employer contributions made under s. 121.571, 249 transferred employee contributions and funds accumulated 250 pursuant to paragraph (a), and interest and earnings thereon. 251 (a) Transfer of funds.—To qualify to receive monthly 252 benefits under this subsection: 253 1. All moneys accumulated in the member’s account, 254 including vested and nonvested accumulations as described in s. 255 121.4501(6), must be transferred from such individual accounts 256 to the division for deposit in the survivor benefit account of 257 the Florida Retirement System Trust Fund. Moneys in the survivor 258 benefit account must be accounted for separately. Earnings must 259 be credited on an annual basis for amounts held in the survivor 260 benefit account of the Florida Retirement System Trust Fund 261 based on actual earnings of the trust fund. 262 2. If the member has retained retirement credit earned 263 under the pension plan as provided in s. 121.4501(3), a sum 264 representing the actuarial present value of such credit within 265 the Florida Retirement System Trust Fund shall be transferred by 266 the division from the pension plan to the survivor benefit 267 retirement program as implemented under this subsection and 268 shall be deposited in the survivor benefit account of the trust 269 fund. 270 (b) Survivor retirement; entitlement.—An investment plan 271 member who is in the Special Risk Class at the time the member 272 is killed in the line of duty on or after July 1, 2013, 273 regardless of length of creditable service, may have survivor 274 benefits paid as provided in s. 121.091(7)(d) and (i) to: 275 1. The surviving spouse for the spouse’s lifetime; or 276 2. If there is no surviving spouse or the surviving spouse 277 dies, the member’s child or children under 18 years of age and 278 unmarried until the 18th birthday of the member’s youngest 279 child. Such payments may be extended until the 25th birthday of 280 the member’s child if the child is unmarried and enrolled as a 281 full-time student as provided in s. 121.091(7)(d) and (i). 282 (c) Survivor benefit retirement effective date.—The 283 effective retirement date for the surviving spouse or eligible 284 child of a Special Risk Class member who is killed in the line 285 of duty shall be: 286 1. The first of the month following the member’s death if 287 the member dies on or after July 1, 2015. 288 2. July 1, 2015, for a member of the Special Risk Class 289 when killed in the line of duty on or after July 1, 2013, but 290 before July 1, 2015, if the application is received before July 291 1, 2015; or the first of the month following the receipt of the 292 application. 293 294 If the investment plan account balance has already been paid out 295 to the surviving spouse or the eligible unmarried dependent 296 child or children, the benefit payable shall be actuarially 297 reduced by the amount of the payout. 298 (d) Line-of-duty death benefit.—The surviving spouse, or if 299 no surviving spouse or the surviving spouse dies, the member’s 300 child or children under 18 years of age and unmarried until the 301 18th birthday of the member’s youngest child, or until the 25th 302 birthday of the member’s child if the child is unmarried and 303 enrolled as a full-time student, is eligible to receive a 304 retirement benefit under s. 121.091(7)(d) and (i) if the 305 member’s account balance is surrendered and an application is 306 received and approved. Such surviving spouse or such child or 307 children shall receive a monthly survivor benefit that begins 308 accruing on the first day of the month of survivor benefit 309 retirement, as approved by the division, and is payable on the 310 last day of that month and each month thereafter during the 311 surviving spouse’s lifetime or on behalf of the unmarried 312 children until the 18th birthday of the youngest child, or until 313 the 25th birthday of any of the member’s children enrolled as 314 full-time students. All survivor benefits must be paid out of 315 the survivor benefit account of the Florida Retirement System 316 Trust Fund established under this subsection. 317 318 If the investment plan account balance has already been paid out 319 to the surviving spouse or the eligible unmarried dependent 320 child or children, the benefit payable shall be actuarially 321 reduced by the amount of the payout. 322 (e) Computation of survivor benefit retirement benefit.—The 323 amount of each monthly payment must be calculated as provided 324 under s. 121.091(7)(d) and (i). 325 (f) Death of the surviving spouse or children.— 326 1. Upon the death of a surviving spouse, the monthly 327 benefits shall be paid through the last day of the month of 328 death and shall terminate or be paid on behalf of the unmarried 329 child or children until the 18th birthday of the youngest child, 330 or the 25th birthday of any of the member’s unmarried children 331 enrolled as full-time students. 332 2. If the surviving spouse dies and the benefit is being 333 paid on behalf of the unmarried children under 18 years of age 334 until the youngest, unmarried child reaches his or her 18th 335 birthday, or the 25th birthday of any of the member’s unmarried 336 children enrolled as full-time students, benefits shall be paid 337 through the last day of the month until the later of the month 338 the youngest, unmarried child reaches his or her 18th birthday, 339 the month of the 25th birthday of any of the member’s unmarried 340 children enrolled as full-time students, or the month of the 341 death of the youngest child. 342 Section 4. Section 121.5912, Florida Statutes, is created 343 to read: 344 121.5912 Survivor benefit retirement program; qualified 345 status; rulemaking authority.—It is the intent of the 346 Legislature that the survivor benefit retirement program for 347 Special Risk Class members of the Florida Retirement System 348 investment plan meet all applicable requirements for a qualified 349 plan. If the state board or the division receives notification 350 from the Internal Revenue Service that this program or any 351 portion of this program will cause the retirement system, or any 352 portion thereof, to be disqualified for tax purposes under the 353 Internal Revenue Code, the portion that will cause the 354 disqualification does not apply. Upon such notice, the state 355 board or the division shall notify the presiding officers of the 356 Legislature. The state board and the department may adopt any 357 rules necessary to maintain the qualified status of the survivor 358 benefit retirement program. 359 Section 5. Section 121.735, Florida Statutes, is created to 360 read: 361 121.735 Allocations for member line-of-duty death benefits; 362 percentage amounts.— 363 (1) The allocations established in subsection (3) shall be 364 used to provide line-of-duty death benefit coverage for Special 365 Risk Class members in the investment plan and shall be 366 transferred monthly by the Division of Retirement from the 367 Florida Retirement System Contributions Clearing Trust Fund to 368 the survivor benefit account of the Florida Retirement System 369 Trust Fund. 370 (2) The allocations are stated as a percentage of each 371 investment plan member’s gross compensation for the calendar 372 month. A change in a contribution percentage is effective the 373 first day of the month for which retirement contributions may be 374 made on or after the beginning date of the change. Contribution 375 percentages may be modified by general law. 376 (3) Effective July 1, 2015, allocations from the Florida 377 Retirement System Contributions Clearing Trust Fund to provide 378 line-of-duty death benefits for Special Risk Class members in 379 the investment plan, and to offset the costs of administering 380 said coverage, are as follows: 381 382 383 Membership Class Percentage of Gross Compensation 384 385 Special Risk Class 0.82% 386 387 Section 6. Subsection (1) of section 121.71, Florida 388 Statutes, is amended to read: 389 121.71 Uniform rates; process; calculations; levy.— 390 (1) In conducting the system actuarial study required under 391 s. 121.031, the actuary shall follow all requirements specified 392 to determine, by Florida Retirement System employee membership 393 class, the dollar contribution amounts necessary for the next 394 fiscal year for the pension plan. In addition, the actuary shall 395 determine, by Florida Retirement System membership class, based 396 on an estimate for the next fiscal year of the gross 397 compensation of employees participating in the investment plan, 398 the dollar contribution amounts necessary to make the 399 allocations required under ss. 121.72,and121.73, and 121.735. 400 For each employee membership class and subclass, the actuarial 401 study must establish a uniform rate necessary to fund the 402 benefit obligations under both Florida Retirement System 403 retirement plans by dividing the sum of total dollars required 404 by the estimated gross compensation of members in both plans. 405 Section 7. Section 121.74, Florida Statutes, is amended to 406 read: 407 121.74 Administrative and educational expenses.—In addition 408 to contributions required to fund member accounts under s.ss.409 121.71and 121.73, effective July 1, 2010, through June 30, 410 2014, employers participating in the Florida Retirement System 411 shall contribute an employer assessment amount equal to 0.03 412 percent of the payroll reported for each class or subclass of 413 Florida Retirement System membership. Effective July 1, 2014, 414 the employer assessment is 0.04 percent of the payroll reported 415 for each class or subclass of membership. The amount assessed 416 shall be transferred by the divisionof Retirementfrom the 417 Florida Retirement System Contributions Clearing Trust Fund to 418 the State Board of Administration’s Administrative Trust Fund to 419 offset the costs of administering the investment plan and the 420 costs of providing educational services to members of the 421 Florida Retirement System. Approval of the trustees is required 422 before the expenditure of these funds. Payments for third-party 423 administrative or educational expenses shall be made only 424 pursuant to the terms of the approved contracts for such 425 services. 426 Section 8. Section 121.75, Florida Statutes, is amended to 427 read: 428 121.75 Allocation for pension plan.—After making the 429 transfers required pursuant to ss. 121.71, 121.72, 121.73, 430 121.735, and 121.74, the monthly balance of funds in the Florida 431 Retirement System Contributions Clearing Trust Fund shall be 432 transferred to the Florida Retirement System Trust Fund to pay 433 the costs of providing pension plan benefits and plan 434 administrative costs under the pension plan. 435 Section 9. For the 2015-2016 fiscal year only, upon 436 notification by the Department of Management Services that 437 sufficient funds are not available to make survivor benefit 438 payments authorized by this act, the State Board of 439 Administration shall transfer, to the extent necessary, moneys 440 in the Administrative Trust Fund to the survivor benefits 441 account in the Florida Retirement System Trust Fund to ensure 442 the timely payment of survivor benefits. 443 Section 10. (1) In order to fund the benefit changes 444 provided in this act, the required employer contribution rates 445 for members of the Florida Retirement System established in s. 446 121.71(4), Florida Statutes, must be adjusted as follows: 447 (a) The Special Risk Class must be increased by 0.45 448 percentage point; and 449 (b) The Deferred Retirement Option Program must be 450 increased by 0.06 percentage point. 451 (2) In order to fund the benefit changes provided in this 452 act, the required employer contribution rate for the unfunded 453 actuarial liability of the Florida Retirement System established 454 in s. 121.71(5), Florida Statutes, for the Special Risk Class is 455 increased by 0.13 percentage point. 456 (3) The adjustments provided in subsections (1) and (2) 457 shall be in addition to all other changes to such contribution 458 rates which may be enacted into law to take effect on July 1, 459 2015. The Division of Law Revision and Information is directed 460 to adjust accordingly the contribution rates provided in s. 461 121.71, Florida Statutes. 462 Section 11. The Legislature finds that a proper and 463 legitimate state purpose is served when employees and retirees 464 of the state and of its political subdivisions, and the 465 dependents, survivors, and beneficiaries of such employees and 466 retirees, are extended the basic protections afforded by 467 governmental retirement systems that provide fair and adequate 468 benefits that are managed, administered, and funded in an 469 actuarially sound manner, as required by s. 14, Article X of the 470 State Constitution and part VII of chapter 112, Florida 471 Statutes. Therefore, the Legislature determines and declares 472 that this act fulfills an important state interest. 473 Section 12. For the 2015-2016 fiscal year, the recurring 474 sums of $5,445,537 from the General Revenue Fund and $1,062,991 475 from trust funds are appropriated to Administered Funds in order 476 to fund the increased employer contribution rates to be paid 477 under this act by state agencies, state universities, state 478 colleges, and school districts. 479 Section 13. This act shall take effect July 1, 2015.