State pension’s funding gap widens, data suggests

By JAMES L. ROSICA
Tribune staff

Though a final report isn’t due until next month, preliminary estimates show the state pension pool’s funding gap has jumped almost $2 billion, from about $19 billion to $21 billion.

That gap, or "unfunded liability," is the difference between the money the Florida Retirement System has and the money it needs to cover current and future payouts.

Put another way, the pension fund is now only 86 percent funded, though financial experts generally agree that pension plans are healthy if they’re at least 80 percent funded.

For the 2012-13 fiscal year, the system’s return on investments was "strong" at 13 percent, according to an October report by the state’s Actuarial Assumption Estimating Conference.

The year before, however, the return was an anemic 0.22 percent, "well below" the desired 7.75 percent.

The pension plan "invests for the long term," said John Kuczwanski, spokesman for the State Board of Administration, which manages the fund. "Downturns in markets don’t scare us."

But that funding gap is why Florida House Speaker Will Weatherford, R-Wesley Chapel, wants to shut down the state’s pension fund to new hires and force them into 401(k)-style investment plans.

"While it’s too early to comment on a study that has not been released, the fact is that taxpayers spent $500 million this year to shore up a so-called ‘great’ pension system," Weatherford said in an email Wednesday. "Reform for this system is long overdue."

Workers now can pick between a pension, called a "defined benefit" plan, or a 401(k)-style plan. A House study predicted the plan would save the state nearly $10 billion over 30 years.

During the last legislative session, Weatherford backed a plan to grandfather in current pension fund members and steer new hires into what are called investment, or "defined contribution," plans.

His plan passed the House but later died in the Senate, with eight Republicans voting against it. A competing Senate proposal kept pensions but would have made 401(k)-style plans the default option for new employees.

Weatherford has said he’ll try again during the next legislative session, which starts in March.

Also, Sen. Jeff Brandes, R-St. Petersburg, filed a bill for the 2014 session that would require elected officials — including senators and representatives — to be in the state’s investment retirement plan, rather than the traditional pension.

More than 900,000 current employees and retirees are now in the pension plan. State workers comprise about a quarter of its members. The rest are teachers and local government workers, including police and fire.

"We expect to be around for a long time," Kuczwanski said, adding, "unless someone tells us differently."

jrosica@tampatrib.com

(850) 765-0807

Twitter: @jlrosicaTBO