Gov. Scott Gathers Business Support for His Pension Reform Plan

Gov. Rick Scott touted the support of Florida business groups and fiscally conservative groups and think tanks Tuesday for his plan to reform the state's pension plans. He announced the formation of Floridians for Sustainable Pensions, a group made up of the Associated Industries of Florida, the Florida Chamber of Commerce, Florida TaxWatch, the National Federation for Independent Businesses, the James Madison Institute and other groups in favor of more strident pension reforms.

Scott included a 5 percent contribution rate for state employees in his budget proposal, as well as closing the defined benefit plan to new employees in favor of a defined contribution plan, akin to a 401(k) commonly used in the private sector. The state House and Senate plans for pension reform fall short of Scott's preferred solution, with a 3 percent flat contribution rate in the House and a sliding scale in the Senate, ranging from a 2 percent rate to a 6 percent contribution rate, depending on salary.

"I don't believe they go far enough," Scott said of the competing reform plans in the Legislature.

The Florida Retirement System is funded at 87 percent of liabilities, and Scott said his plan is the best way to get the state system, and other municipalities throughout the state whose pension plans are underfunded, to be more stable. The House and Senate plans do not close off the defined benefit pension plans, since they end up saving money in the long-term but would impose a short-term deficit. Scott said that measure is essential to the sustainability sought for the FRS.

"The right thing to do is exactly what the private sector has done, which is to put all the new employees into a defined contribution plan so you know exactly how much you're paying out," Scott said.

Full story to follow.