FRS Pension Plan
Summary Plan Description*
How It Works
The FRS Pension Plan is a defined benefit plan, in which you are promised a benefit at retirement if you meet certain criteria. The amount of your future benefit is determined by a formula, based on your earnings, length of service, and membership class, and may be adjusted by a cost-of-living increase each July (adjustment only applicable for FRS service earned prior to July 1, 2011). If you are initially enrolled in the Pension Plan on or after July 1, 2011 you will not have a cost-of-living increase after retirement. Your benefit is pre-funded by contributions paid by your employer. The Florida Retirement System must ensure that sufficient funds are available when your benefits are due and bears the market risk and investment decisions.
Why the FRS Is Offering This Plan
The Pension Plan has been offered to employees for over 40 years. It is primarily designed to serve longer-service employees who will be with the FRS for most of their career. Older employees and those employees who do not want to control their retirement plan may also prefer the Pension Plan.
Who's Eligible for the FRS Pension Plan?
All FRS employees are eligible for the Pension Plan except:
Mandatory State University System Optional Retirement Program (SUSORP) members. (This is not an FRS plan.)
Teachers' Retirement System members. (This plan is closed.)
How Your Benefit Accumulates
In the Pension Plan, your benefits are generally back-loaded, which means that you accumulate benefits slowly at first and then at a faster rate the longer you stay. This is different from the Investment Plan, where benefits are earned more or less evenly over your career (subject to fluctuations in the financial markets and your investment strategy).
When You Own Your Benefit
You will be eligible for a Pension Plan benefit (i.e. be vested) when you complete six years of service (if you enrolled in the FRS prior to July 1, 2011) or eight years of service (if you enrolled in the FRS on or after July 1, 2011). If you terminated FRS-covered employment before July 1, 2001, vesting varied based on membership class:
Members of the Regular Class, Special Risk Class and Special Risk Administrative Support Class vested in the FRS Pension Plan after completing 10 years of creditable service.
Members of the Elected Officers' Class vested in the FRS Pension Plan after completing eight years of creditable service.
Members of the Senior Management Service Class vested in the FRS Pension Plan after completing seven years of creditable service.
If you use your 2nd Choice option to transfer from the FRS Investment Plan to the FRS Pension Plan, you will be able to count your Investment Plan service toward the vesting requirement.
(To transfer from the Investment Plan to the Pension Plan, you will need to "buy in" to the Pension Plan by paying an amount from your Investment Plan account balance, plus any necessary amount from your personal resources. If you have previous Pension Plan service prior to joining the Investment Plan, the buy in cost will be calculated as the present value of the "accrued" FRS Pension Plan benefit. If you do not have previous Pension Plan service, the buy in cost will be the actuarial accrued liability, or total cost, of the "accrued" Pension Plan benefit. The buy in cost could be a substantial amount and could make transferring to the Pension Plan unaffordable.)
If You Change Employers
Under the Pension Plan, if you leave FRS-covered employment and go to a non-FRS employer, your Pension Plan benefit is frozen until you return at a later date to continue your FRS-covered employment or begin receiving your early or normal retirement benefit.
Benefit Paid at Retirement
Under the Pension Plan, your retirement benefit is based on a formula comprised of your age, length of FRS service, and membership class. The amount of your benefit payments is affected by the retirement income option you choose.
Retirement Income Options
Under the Pension Plan, you may choose to receive your benefit in retirement under one of four lifetime benefit options and may include an annual benefit increase each July (adjustment only applicable for FRS service earned prior to July 1, 2011). If you are initially enrolled in the Pension Plan on or after July 1, 2011 you will not have a cost-of-living increase after retirement. Option 1 provides a monthly benefit for your lifetime, but does not provide a continuing benefit to a beneficiary. Option 2 provides a reduced monthly benefit for your lifetime, with a guarantee that your beneficiary will be eligible for a continuing benefit for 10 years from the date you retire. After 10 years of retirement, no benefits are payable to your beneficiary, in the event of your death.
Options 3 and 4 provide a continuing benefit to your spouse or other dependent beneficiary who is your joint annuitant. Option 3 provides a reduced benefit to both you and your joint annuitant in the same amount for as long as you or they are living. Option 4 provides an adjusted monthly benefit for you and your joint annuitant and is reduced upon the death of either.
In the Pension Plan, your vested benefit will be paid to your beneficiary or in accordance to Florida law if you die prior to retiring.
You may participate in the Deferred Retirement Option Program (DROP) once you have reached normal retirement age or date. See more DROP information here.
Health Insurance Subsidy (HIS)
The Health Insurance Subsidy (HIS) is a monthly supplemental payment that you may be eligible to receive if you have health insurance coverage (Cover Florida Health Care Access Program, Medicare and TRICARE coverage are accepted). This monthly payment, which you must apply for, is calculated by multiplying your total years of service at retirement (up to a maximum of 30 years) by $5. The HIS is only available after you have six years of service (if enrolled in the FRS prior to July 1, 2011) or eight years (if enrolled in the FRS on or after July 1, 2011). You will receive the HIS as part of your early or normal retirement benefit after you have provided proper documentation certifying that you have health insurance coverage. The HIS, which is paid monthly, is $5 for each year of creditable service, with a minimum HIS payment of $30 per month and a maximum HIS payment of $150 per month.
*Information obtained through the MyFRS website (https://www.myfrs.com/FRSPro_Pension.htm)
W.M. Durham Associates LLC is not affiliated with or endorsed by the Florida Retirement System (FRS), Department of Management Services Division of Retirement or any other government agency.
W.M. Durham Associates LLC is an independent financial services firm that creates retirement strategies using a variety of investment and insurance products. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Any references to protection benefits or lifetime income generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. WM Durham Associates LLC nor any of its employees provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
All material should be regarded as general information.