FRS Florida Retirement System : Big Change in DROP (Palm Beach Post)

Lawmakers won't make state employees contribute to pension, but reduce early-out benefits
By Pat Beall
Palm Beach Post Staff Writer

Updated: 7:42 p.m. Monday, April 26, 2010

Posted: 6:02 p.m. Monday, April 26, 2010


State lawmakers jettisoned the idea of making employees start contributing to their pension, a proposal that had drawn united opposition from police, teachers, firefighters and thousands of other government employees.

However, lawmakers agreed to curb a popular early retirement program. The Deferred Retirement Option Program (DROP) allows workers to retire, but keep working for another five years. During that time, their pension is deposited in a tax-deferred retirement trust fund that earns 6.5 percent interest. After an employee gets out of the program, he can receive a lump-sum payment and start collecting retirement checks as well.

Lawmakers slashed the interest earned from 6.5 to 3 percent effective July 1, said Matt Puckett, deputy executive director for the Florida Police Benevolent Association. "What you will have is a rush on retirement and a lot of very angry people who cannot get (into the program) before July 1," predicted Puckett.

For the first time in more than a decade, the Florida Retirement System no longer has 100 percent of what is needed to pay all current and expected retiree benefits. Instead, it has about 88.5 cents for every dollar needed, according to the most recent annual report. But workers, said Puckett, "did not get us in the mess. It's not the fault of the police officer, so why are you punishing them?"

At one quarter of 1 percent of a worker's salary, the amount of money involved in retirement plan contributions was modest - $125 on a salary of $50,000 - but it would have marked the first time in about 30 years employees would have had to contribute.

Tweaking retirement contributions "wasn't about the money" lost by the Florida Retirement System's investments, said Doug Martin, legislative coordinator for the Florida chapter of the American Federation of State County and Municipal Employees AFL-CIO.

"It was setting up a way for them to jack up employee contributions. There's no doubt in anybody's mind that we would be seeing 1, 2, 3, 5 percent contributions within a year or two."

As for public criticism of pensions for government workers, "There are public employees who do make six figures but they are relatively few. Most do not," said Martin. In fact, workers who retired from Palm Beach County's participating employers averaged a pension of $17,732 last year, according to a Palm Beach Post investigation published Sunday. Half received less than $12,438.

An aide to State Sen. Mike Fasano, R-New Port Richey, said that Fasano, who has championed pension reform, was "disappointed" that the retirement contributions didn't get a green light, "given that it was such a small amount."

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