Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
Jan. 26--Have you considered a career in local or state politics?
If you succeed in the profession, you may find a pot of gold waiting for you at the finish line.
"Elected official" is a pretty good gig in Florida ... especially if, after years of service as a state lawmaker or county commissioner you are able to parlay your political experience into a full-time constitutional position (sheriff, property appraiser, tax collector, elections supervisor, clerk of courts, schools superintendent).
The compensation is excellent, with salaries in excess of $100,000 a year, and the benefits ... oh, the benefits!
Five Treasure Coast constitutional officers -- and a former one -- beefed up their pension compensation after serving previously in elected positions that paid lower salaries (and correspondingly lower pension benefits).
The member of this group most familiar to readers is St. Lucie County Property Appraiser Ken Pruitt, former president of the Florida Senate. After 19 years of service in the part-time state House and Senate, Pruitt was entitled to state pension payments of less than $20,000 a year. However, when Pruitt completes his second term as property appraiser in 2016, his pension payments will rise to more than $98,000 a year.
How is this possible? The answer lies in a little known pension-funding formula -- one established by elected officials to benefit elected officials.
The key factors in determining a public official's annual pension payments under the state system are: 1) an average of the official's five highest-paid years; 2) total years of service; and 3) a multiplier based on number of years worked and highest salary.
The multiplier for Supreme Court justices, district court of appeal judges, and circuit and county court judges is 3.33 percent. It is 3 percent for other elected officials, but a mere 1.6 percent for most state employees. The higher the multiplier, the quicker the accrual rate and the higher the final pension calculations.
The 3 percent multiplier for elected officials is particularly noxious. Why should elected officials receive this overly generous benefit? It defies logic.
The short answer is, "because they can."
State legislators make the rules -- and the rules clearly benefit them.
In 2011, former Sen. Mike Fasano, R-New Port Richey, introduced a bill that would have brought greater equity to the calculation of retirement benefits. Fasano proposed reducing the multiplier to 2 percent of the average compensation for all elected officials.
The bill gained little traction in Tallahassee.
The truth is, past members of the Florida Legislature established a pension system that is extremely beneficial to themselves -- a system current members appear to be eager to protect (or, at the very least, reluctant to change).
Sen. Joe Negron, R-Stuart, expressed little interest in confronting this issue during the upcoming session.
"That's not a proposal I'm going to personally introduce as a bill this session, given my other responsibilities," Negron said.
This is disappointing coming from Negron, who has demonstrated a willingness in the past to confront pay and benefit inequities in the Legislature. After all, it was Negron in 2012 who spearheaded changes to health insurance premiums for state lawmakers.
Incredibly, until then, legislators were paying a miserly $8.34 a month for individual coverage and $30 a month for family coverage -- far below the cost for rank-and-file state employees ($50 per month for individuals; $180 per month for families).
Through Negron's efforts, Senate members were required to pay the same amount as other state employees. The Florida House followed suit in 2013.
Negron and his colleagues now must turn their attention to another glaring inequity in the Legislature: the 3 percent multiplier for elected officials.
Let's be clear: The impetus to change health insurance premiums for state lawmakers didn't begin with Negron. Instead, it arose following public outrage over this egregious disparity. When taxpayers learned of the health insurance inequity, they bombarded legislators with calls for reform.
The state retirement system exists in its current form, in part, because taxpayers have allowed it to happen. Either through ignorance or indifference, we have allowed lawmakers to perpetuate a system beneficial to themselves and costly to taxpayers.
Groundwork is being laid to reform the state's retirement system during the 2014 Legislature. Proposals being discussed include requiring new state employees to enroll in 401(k)-style plans, and allowing employees to take pensions as a lump sum or an annuity.
But who in Tallahassee is advocating changes in the way elected officials accrue pension benefits?
The silence is deafening.
It's time for the public, once again, to make some noise.
(c)2014 the Treasure Coast Newspapers (Stuart, Fla.)
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