Q&A – Florida's Public Pension System

Today’s note comes from Christy: 

I am interested in your thoughts on what I call DOUBLE-DIPPING by government employees. Due to our debt and the way money is spent I wish there was a way to stop this. 

For example: Governor Scott will receive retirement from the State of Florida. He will also receive retirement from his Senate position. This is only one example of many. I am sure there are also TRIPLE-DIPPERS as well! I am not against Senator Scott only against our government paying these big double or triple retirements. Term limits and NO RETIREMENT would be the way to serve our country in my mind. Servant of the people not profit. How do all these government people become so RICH serving?

Bottom Line: It's great question to delve into. Generally, I think there’s a bit more awareness of public pensions, and the ability to double dip, because of the Brenda Snipes situation and to a lessor extent former BSO Deputy Scot Peterson. First, here are the minimum vesting requirements for public pensions in Florida. Prior to July 1st of 2011 it was 6 years and after July 1st of 2011 it turned to 8 years.

The one change that has been made in recent years in Florida has been to raise the threshold, so that’s something. I think most of us can agree that eight years on the job isn’t all that much to place taxpayers on the hook for a pension for potentially decades. The federal government is even more lax with tax payer funded pensions. One only has to work five full years to become vested. Let's go back to your example about Rick Scott. Yes, he vested in Florida and by virtue of winning a six-year term in the US Senate, he'll be vested for the federal pension benefits if he serves out his one term. 

In terms of double-dipping, there’s no restriction in Florida. If you’re fully vested in multiple pubic pensions, as Brenda Snipes was through the Florida Department of Education and through the State of Florida, you can collect one while still being employed for another department accruing another pension. As for what I’d prefer to see happen, pensions, public or private, are a form of legalized fraud and they have the potential to hurt the recipients in addition to those responsible for paying. In the case of public pensions, it'll be taxpayers. I categorize them as legalized fraud because they make baseless guarantees. There is no guarantee that any entity will be around in future decades to pay benefits as promised. As we’ve seen with numerous state and local governments benefits had been over-promised and eventually cut along with companies that became insolvent. The answer is to move to an individual retirement account standard. This removes the unfunded mandates, double-dipping, etc.

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Photo by: Ulrich Baumgarten via Getty Images

 

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