(The Center Square) — A new bill that could change how Florida calculates its cost of living adjustment for retirees has been filed in the Legislature.
House Bill 151 is sponsored by state Rep. Demi Busatta Cabrera, R-Coral Gables, and is an act that would amend state law on state retiree COLAs.
For certain retirees and beneficiaries, how their respective benefits are calculated will be revised and the bill also provides a declaration of important state interest.
According to the Florida Retirement System website, those receiving a pension plan through the FRS have their benefits worked out as follows: FRS service time is multiplied by a retiree’s percentage value, then multiplied by the retiree’s average final compensation, then divided by 12.
Those percentages vary by membership class. For a regular membership, the percentage sits at 1.6%, while senior management sits at 2%. Supreme Court justices, district court of appeals, circuit court or county court judges percentages are 3.33%. Other elected officials have a current percentage rate of 3%.
In the bill text, it states that the benefit of each retiree and annuitant whose retirement date fell before July 1, 2011, will have an adjustment annually every July 1, the first day of the new fiscal year. This adjustment will depend on the retiree’s circumstances, but for those who have never had a COLA, their monthly benefit will be worked out by various factors.
Monthly benefits payable for the 12 months commencing on the adjustment date will be the retiree’s initial benefit and an additional benefit which is a percentage of the initial benefit.
To get this percentage, the bill states that the number of months a retiree receives a benefit is divided by twelve, and then the result is multiplied by three, working out to be 3% for a full 12 months.
According to the bill, for those retirees who have already received a COLA, the adjusted monthly benefit will be the amount the retiree received immediately before the adjustment date, with an additional 3% on top.
Currently, public pension COLAs vary in the amount of protection from inflation they offer and vary between states. Georgia links its COLA with inflation.
South Carolina’s pension plans with COLA rules have automatic fixed rates. Alabama’s pension funds follow similar rules to Florida, where they do not have COLA provisions or are dependent on legislative approval on an ad-hoc basis, which are dependent on revenues.