Fasano Says Goodbye to Pesions, Hello to Savings

Fasano, Republican Senator form New Port Richey wants to get state government out of the pension business. He has re-filed his bill that would rename the Public Employee Optional Retirement Program the "Retirement Investment Program" for public workers. The name change signals a new pension philosophy — leaving the safe, relatively low-paying assurance of a "defined benefit" pension for the market-driven, possibly more profitable "defined contribution" retirement system.

Under Fasano's 91-page bill (SB 660), all new employees would have to join the defined contribution plan after Jan. 1, 2011. All current Florida Retirement System members, whether they work for the state or one of the hundreds of school boards and local governmental units whose pension funds are invested by the State Board of Administration (SBA), would still be guaranteed their regular pension benefits.

So why does Fasano, an investments executive by trade, want everybody to put everybody in the market? Two reasons — he figures the state, counties, school boards and other public employers will be able to reduce their contribution rates, eventually, and the SBA will have some cushion on its necessary investment earnings rates.

Fasano was the sponsor of this year's law, taking effect next year, forbidding more "double dippers" to retire and go back to work for the state while drawing pensions. His new bill, he said, will phase out the Deferred Retirement Option Plan, once every employee is in the investment system.

The Senator filed the bill last session but didn't move it. He said he wanted an actuarial study of what it would mean, which will be completed before the 2010 session in March.

http://www.tallahassee.com/article/20091116/COLUMNIST03/911160305/-1/NLETTER07?source=nletter-news