Information about Retirement Contribution Changes
The Governor of Florida has signed into law a bill pertaining to the Florida Retirement System
(Pension Plan/Investment Plan) and the Optional Retirement Program (ORP). While many are
unaffected, and others are fully aware of the new legislation, we believe it is important to provide
this explanation to all employees in the various retirement programs. The following information
will help you understand these important changes. The law will take effect on July 1, 2012, and
will impact both existing employees and new hires. Any new contribution rates, indicated
below, will start on the July 13, 2012 paycheck.
House Bill 5005 (contribution rates)
Investment Plan Contributions
Changes the amount paid into Investment Plan members' accounts effective July 1, 2012. No
change was made to the 3% mandatory contribution rate paid by employees. The current
employer contribution sent to Investment Plan members' accounts for regular class employees
is 6%. Effective July 1, 2012, that rate will drop to 3.3%.
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Optional Retirement Program Contributions
Changes the amount paid into ORP members' accounts effective July 1, 2012. No change was
made to the 3% mandatory contribution rate paid by employees. The current employer
contribution sent to ORP members' accounts is 7.42%. Effective July 1, 2012, that rate will drop
to 5.14%.
FREQUENTLY ASKED QUESTIONS:
What impact do these changes have if I am enrolled in the Pension Plan or DROP?
The Pension Plan and DROP are considered "defined benefit plans", which use factors such as
years of service and average annual salary earnings to determine monthly retirement benefits.
As such, changes in the contribution rates do not directly impact these benefits.
If I am enrolled in the Investment Plan, can I switch to the Pension Plan?
Possibly. During your entire career with the Florida Retirement System, you are given one
opportunity to switch between the Pension Plan and the Investment Plan. To inquire about this
option (known as the 2nd Election), it is recommended that you contact the MyFRS Financial
Guidance Line at 1-866-446-9377.
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If I am enrolled in the Investment Plan can I make up for the reduction in contributions?
No. You can't make up for the loss of contributions by contributing additional funds to your
Investment Plan account. However, you do have the option to enroll in and contribute an
additional dollar amount to a voluntary tax sheltered annuity 403(b) plan with one of the
University's approved provider companies or to enroll in the State of Florida Deferred
Compensation 457 plan.
If I am enrolled in ORP can I switch to the Pension Plan?
No. Once you are enrolled in ORP, there is no option to switch to another plan.
If I am in ORP can I make up for the reduction in contributions?
Yes. In the ORP, you can voluntarily contribute up to the amount FGCU is currently
contributing. This means, effective July 1, 2012, you can voluntarily contribute up to 5.14%,
pre-tax, on a bi- weekly basis.
If I am in ORP, and I am currently voluntarily contributing 7.42%, will my voluntary
contributions change?
Yes. Current law only allows for your voluntary contributions to be less than or equal to what
FGCU is contributing. Our system will automatically reduce any voluntary contributions
greater than 5.14% down to 5.14%.
What if I am in ORP and want to contribute more than the 5.14% that I am allowed to
voluntarily contribute, in order to reach the IRS contribution limits for 2012?
In addition to your voluntary ORP contributions, you have the option to enroll in and contribute
an additional dollar amount to a voluntary tax sheltered annuity 403(b) plan with one of the
University's approved provider companies.
If you have any additional questions please contact hr@fgcu.edu.
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Williams vs. Scott Ruling
On March 6, 2012, the Circuit Court of the Second Judicial Circuit issued an order striking down
Chapter 2011-68, Laws of Florida, as applied to individuals hired before July 1, 2011. This law
required employees in the Florida Retirement System and Optional Retirement Program (ORP)
to contribute 3% of their salary towards their retirements and reduced the cost-of-living
adjustment for benefits earned on or after July 1, 2011. The trial court’s decision has been
appealed to the appropriate Florida appellate court, which results in an immediate stay of the
order. Accordingly, while the stay remains in effect, no changes to benefits or deductions are
being made.
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