Retirement changes may mean less pay for government workers

It may not technically mean a pay cut, but police officers, teachers and other public employees in Florida may see their paychecks shrink under proposed changes to the state's retirement system being bandied about in Tallahassee.

The bottom line is the employees are likely to be required to help pay for their retirement pensions, as Gov. Rick Scott and the Legislature figure out how to balance a state budget that is starting out about $5 billion in the red.

The Herald/Times Tallahassee Bureau reports:

One proposal would require employees to contribute 5 percent of their salaries to the pension plan, saving the state $1.3 billion. For a state worker making $50,000 a year and receiving 9 percent of his salary in annual retirement benefits, the change would mean he or she would pay $2,000 after taxes in retirement fees and the state would pay $2,000.

Florida is the last state not to require employees to contribute to their own pension, while some states offer free retirement to only a limited class of workers.

Scott believes Florida's free retirement program is ``unfair to taxpayers'' working in the private sector.

Legislative leaders have also suggested that it's time to end the more expensive defined benefit program, which guarantees workers a fixed benefit upon retirement. The state could save millions, they say, by steering employees into a ``defined contribution'' retirement program, which allow employees to control the investment options but doesn't guarantee them a fixed benefit upon retirement -- similar to 401(k) plans in the private sector.

``This isn't a discussion about a flaw in the Florida Retirement System. This is about balancing the budget,'' said Doug Martin, the legislative director with the American Federation of State, County and Municipal Employees (AFSCME).

He argued that the state has already saved money by having no pay increases since 2006.

Scott and lawmakers are considering other options for saving money as well. Some want to raise the retirement age for new hires, others suggest capping the amount the state contributes to the pension fund and, if the fund's investments don't raise enough to pay for the expected benefits, employee contributions would make up the difference.

Scott acknowledges that teachers, police and other government workers may consider this a pay cut, but he believes it is needed to build up the reserves in the state retirement system and level the playing field between public and private sector jobs.

``I believe what's most important to them is they want to have a pension plan that they know will be there when they retire and that's what my focus is,'' Scott said last week. ``At the same time, I have to be fair to the taxpayers of the state.''

The Legislature is also to blame for some municipal pension problems. In years when revenue was flush, lawmakers frequently raised the local government contribution rate for workers in politically influential unions, such as police and fire.