Retirement, Pensions, Benefits & Investing

We strongly urge readers to visit the Division of Retirement's website for detailed information on the 2011 legislative changes to the Florida Retirement System:



The 2011 Legislature amended the Florida Retirement System in 6 important ways (link to Senate Bill 2100, 3rd engrossed). An actuarial study to the combined impact of all the changes made by SB 2100 was completed on July 1, 2011.

FINAL Actuarial Study on SB 2100


The study above was not available during the legislative session when the bill was passed. The relevant studies (of particular aspects of the bill or of similar proposals) that were available are provided below.

1. Mandatory employee contribution.

Current and new employees must contribute 3% of their pay to their retirement beginning 7/1/11. This offsets a portion of what had previously been employer contributions. For most employees covered by the FRS (regular class), this will reduce the employer contribution to 4.91%.

The actuarial studies reflect the impact of requiring 3% employee contributions only for new members initially enrolled after 7/1/2011.

Actuarial study of 3% contribution by new members

Blended rates for 3% contribution by new members

2. Average final compensation.

FRS "average final compensation" retirement calculations for employees enrolled beginning 7/1/11, will be based on the average of the highest 8 years of compensation. Previously it had been 5 years.

Actuarial study of 8-year AFC (from 2010, using the 2009 valuation)

Blended rates (from 2010, using the 2009 valuation)

3. Vesting.

Employees enrolled in the pension plan beginning 7/1/11 will vest in their employer contributions after 8 years. Previously it had been 6 years.

Actuarial study of 8-year DB vesting (from 2010, using the 2009 valuation)

Blended rates for 8-year DB vesting (from 2010, using the 2009 valuation)

4. Normal retirement age.

Normal retirement age and years of service requirements for employees enrolled beginning 7/1/11 increase from age 62 to age 65 and from 30 years of service to 33 years of service. (For special risk employees the increase is from age 55 to age 60 and from 25 to 30 years of service.)

Actuarial study

Blended rates

5. DROP.

Employees who DROP beginning 7/1/11 will earn interest at 1.3%. The previous rate is 6.5%.

Two pairs of actuarial studies shed light on this change. The first pair is from 2011 and estimate the impact of a change in the DROP accrual rate from 6.5% to 3.0% for new DROP participants, effective July 1, 2011.

Actuarial study of a decrease to 3%

Blended rates for a decrease to 3%

The second pair of studies is from 2009 and estimate the impact of a change in the DROP accrual rate from 6.5% to 1.3% for new DROP participants, effective July 1, 2010.

Actuarial study of a decrease to 1.3%

Blended rates for a decrease to 1.3%

6. COLA.

For current and new employees, the COLA (cost-of-living-adjustment) is eliminated for service earned on or after 7/1/11. (If the Legislature specifically funds the COLA, it will be reinstated in 2016.)

Actuarial study

Blended rates


The changes above were made amid calls for closing the FRS pension plan altogether. In July 2010, a study was completed to reflect the impact of closing the FRS pension plan, including projected blended rates for the following 30 years.

Study on closing the FRS pension plan


As further background, the Actuarial Assumption Estimating Conference on the Florida Retirement System used (in the Fall of 2010) the following key economic assumptions:

FRS investment earnings                 7.75%

General wage increase                   4.00%

Post-retirement benefit increase     3.00%

Growth in membership                    0.00%

These assumptions underlie the annual actuarial valuation of the FRS:

Florida Retirement System: Actuarial Valuation as of July 1, 2010

The actual performance of the FRS pension and investment plans, through March 31, 2011, is available:

FRS pension plan performance

FRS investment plan performance


A second bill, dealing with local pension plans, also passed during the 2011 legislative session. (CS/CS/SB 1128). It makes a number of changes including:

  1. Local government pension plan surpluses may not be used outside the plan.
  2. Contributions that are required to fund normal costs may not be reduced.
  3. The actuarial reports on local plans must estimate the present value of all benefits using a standardized rate of return.
  4. Retirement benefit calculations may not include sick leave or annual leave. They may include up to 300 hours of overtime.
  5. Police and firefighter plans may, with member approval, increase member contributions without increasing member benefits.
  6. A 5-year history of the funded ration for each plan will be maintained on the DMS website.
  7. Local plan websites must link to the DMS website.
  8. DMS must recommend a way to provide standardized ratings of the financial strength of local government pension plans.
  9. A new task force must make recommendations on the statutory presumption related to disability.
Link to CS/CS/SB 1128