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AFL-CIO group says report bolsters case against Weatherford's pension reform

The Florida Retirement Security Coalition issued a stinging rebuke on Saturday of Florida House Speaker Will Weatherford’s efforts to reform Florida’s pension system.

Ok, that’s hardly news coming from an outfit managed by the AFL-CIO. It’s no secret the group opposes HB 7011, which would force all public employees hired by agencies enrolled in the state’s $136 billion pension plan to sign-up instead with 401-k plans after January 2014. The coalition has even published a 19-page report arguing that the plan is fiscally sound and needs no major overhaul.

But the group pegged Saturday’s lament on a report released Friday that had been ordered by Weatherford to study the economic impact of the reform. It surely wasn’t Weatherford’s hope that the report would be used as ammo against his proposal.

The study was done by Milliman, a Vienna, VA firm that is among the world’s largest providers of actuarial services.  It warned that the traditional pension plan, which Weatherford has vowed would remain intact, would rely on a shrinking payroll base on which contributions to retirees are made. This would require the contribution rates to increase as a share of payroll. 

How to pay for the growing gap? Workers could pay more in contributions, which are now capped at 3 percent, or local governments and agencies would need to kick in the difference. They might have to kick in more money to make the plan fiscally sound because of the plan’s diminished capability of making long-term investments as the number of contributors erode over time, the report surmised.

That was the opening the coalition needed.

“There is clearly a significant cost associated with this plan,” said Gary Rainey, president of Florida Firefighters. “But the legislature apparently thinks price is no object – probably because they don’t intend to be the ones footing the bill.

“Not only does the legislature want to eliminate retirement security for thousands of public servants like school teachers, firefighters and police but they are likely to expect local governments to shoulder the financial burden,” Rainey added.

There will be other interpretations of the 49-page report, which is mostly actuarial tables, but the coalition was the first one to officially react to it.

Here’s the release:

Florida Retirement Security Coalition’s Response to the Actuarial Analysis

(STATEWIDE, FL) In response to the actuarial analysis of the plan to shutter the state’s public pension system, the Florida Retirement Security Coalition released the following statement:

Florida’s public pension system is financially sound. The plan to end this system and move all new employees into 401(k) plans is clearly not, as the study released yesterday shows.

Last week, in a stunningly irresponsible move, the legislative committee charged with “studying this issue” rammed through a bill before they had any idea what it would cost.

Why would the Florida Legislature even consider a proposal that will pass along huge costs to local governments and taxpayers?

“There is clearly a significant cost associated with this plan,” said Gary Rainey, president of Florida Firefighters. “But the legislature apparently thinks price is no object – probably because they don’t intend to be the ones footing the bill.

“Not only does the legislature want to eliminate retirement security for thousands of public servants like school teachers, firefighters and police but they are likely to expect local governments to shoulder the financial burden,” Rainey added.

The bottom line is this: “Under the current proposal, Florida taxpayers will pay more for retirees to get less,” said Alan Stonecipher, director of the Florida Retirement Security Coalition. “It’s a bad deal for taxpayers and a bad deal for workers.”

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