He’s called Florida’s pension system a “ticking time bomb” that will require a costly taxpayer bailout in the future.
But Florida House Speaker Will Weatherford’s aim to reform Florida’s current $136 billion pension plan, which has 145,000 member accounts, hinges on one key question. If you reform it, how much will it cost?
Plenty, says a 50-page study that was released late Friday. The study was done by Milliman, a Vienna, VA firm that is among the world’s largest providers of actuarial services. Weatherford asked the Department of Management Services to study the financial impact of closing the pension plan to new members effective Jan. 1, 2014
The study looked at what happens when new employees working for the state, school districts, counties, cities and community colleges would be required to enroll in a 401-k plan rather than the current pension that provides guaranteed benefits. Members who are currently enrolled in the state pension plan would be allowed to remain.
But the findings seem to undercut Weatherford’s assertion that reform doesn’t threaten the benefits of those currently enrolled in the system.
Earlier in the week, Weatherford said those in the pension plan will be protected from having to pay higher contribution rates.
“I think that we can protect the current benefits that people have,” Weatherford said. “This is not going to change any teacher, state employee’s pension that is in the system today. In fact, it will preserve it.”
The report states, however, that because future members couldn’t join the pension plan, that plan 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.