January 17, 2020
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HB 1271

1
A bill to be entitled
2An act relating to state financial matters; amending s.
3112.363, F.S.; specifying spouse at time of death as
4beneficiary for purposes of the retiree health insurance
5subsidy; providing an exception; amending s. 121.4501,
6F.S., relating to the Public Employee Optional Retirement
7Program; providing a definition; providing deadlines for
8certain employees for election and removal from the
9optional retirement program; requiring an employer to
10communicate retirement options to employees; authorizing
11certain employees to change retirement plans under certain
12circumstances; authorizing certain additional persons to
13participate in the optional retirement program under
14certain circumstances; amending s. 121.591, F.S., relating
15to benefits payable under the optional retirement program;
16authorizing the State Board of Administration and the
17Department of Management Services to cash out certain
18accounts under certain circumstances; removing the ability
19of a deceased disabled retiree's beneficiary to receive
20certain trust fund account balances; amending s. 121.78,
21F.S.; revising criteria for certain employer
22contributions; requiring certain participants to repay
23excess employer contributions under certain circumstances;
24amending s. 215.47, F.S.; providing criteria for certain
25fixed income obligations for investments; deleting a
26provision allowing certain general foreign government-
27backed investments; amending s. 215.475, F.S.; providing
28for a Florida Retirement System Defined Benefit Plan
29Investment Policy Statement instead of a plan; revising
30provisions to conform; amending s. 215.5601, F.S., to
31conform; providing an effective date.
32
33Be It Enacted by the Legislature of the State of Florida:
34
35     Section 1.  Paragraph (e) of subsection (3) of section
36112.363, Florida Statutes, is amended to read:
37     112.363  Retiree health insurance subsidy.--
38     (3)  RETIREE HEALTH INSURANCE SUBSIDY AMOUNT.--
39     (e)1.  Beginning July 1, 2001, each eligible retiree of the
40defined benefit program of the Florida Retirement System, or, if
41the retiree is deceased, his or her beneficiary who is receiving
42a monthly benefit from such retiree's account and who is a
43spouse, or a person who meets the definition of joint annuitant
44in s. 121.021(28), shall receive a monthly retiree health
45insurance subsidy payment equal to the number of years of
46creditable service, as defined in s. 121.021(17), completed at
47the time of retirement multiplied by $5; however, no eligible
48retiree or beneficiary may receive a subsidy payment of more
49than $150 or less than $30. If there are multiple beneficiaries,
50the total payment must not be greater than the payment to which
51the retiree was entitled. The health insurance subsidy amount
52payable to any person receiving the retiree health insurance
53subsidy payment on July 1, 2001, shall not be reduced solely by
54operation of this subparagraph.
55     2.  Beginning July 1, 2002, each eligible participant of
56the Public Employee Optional Retirement Program of the Florida
57Retirement System who has met the requirements of this section,
58or, if the participant is deceased, his or her spouse who is the
59participant's designated beneficiary, shall receive a monthly
60retiree health insurance subsidy payment equal to the number of
61years of creditable service, as provided in this subparagraph,
62completed at the time of retirement, multiplied by $5; however,
63no eligible retiree or beneficiary may receive a subsidy payment
64of more than $150 or less than $30. For purposes of determining
65a participant's creditable service used to calculate the health
66insurance subsidy, a participant's years of service credit or
67fraction thereof shall be based on the participant's work year
68as defined in s. 121.021(54). Credit shall be awarded for a full
69work year whenever health insurance subsidy contributions have
70been made as required by law for each month in the participant's
71work year. In addition, all years of creditable service retained
72under the Florida Retirement System defined benefit program
73shall be included as creditable service for purposes of this
74section. Notwithstanding any other provisions of this section,
75the participant's spouse at the time of the participant's death
76shall be the beneficiary unless such participant designates a
77different beneficiary subsequent to the participant's most
78recent marriage.
79     Section 2.  Paragraphs (j), (k), and (l) of subsection (2)
80of section 121.4501, Florida Statutes, are redesignated as
81paragraphs (k), (l), and (m), respectively, a new paragraph (j)
82is added to said subsection, subsection (4) and paragraph (c) of
83subsection (15) of said section are amended, paragraph (h) is
84added to subsection (10) of said section, and subsection (20) is
85added to said section, to read:
86     121.4501  Public Employee Optional Retirement Program.--
87     (2)  DEFINITIONS.--As used in this part, the term:
88     (j)  "Retiree" means a former participant of the Public
89Employee Optional Retirement Program of the Florida Retirement
90System who has terminated employment and has taken a distribution
91as provided in s. 121.591, except for a mandatory distribution of
92a de minimis account authorized by the state board.
93     (4)  PARTICIPATION; ENROLLMENT.--
94     (a)1.  With respect to an eligible employee who is employed
95in a regularly established position on June 1, 2002, by a state
96employer:
97     a.  Any such employee may elect to participate in the
98Public Employee Optional Retirement Program in lieu of retaining
99his or her membership in the defined benefit program of the
100Florida Retirement System. The election must be made in writing
101or by electronic means and must be filed with the third-party
102administrator by August 31, 2002, or, in the case of an active
103employee who is on a leave of absence on April 1, 2002, by
104August 31, 2002, or by the last business day of the 5th month
105following within 90 days after the conclusion of the leave of
106absence, whichever is later. This election is irrevocable,
107except as provided in paragraph (e). Upon making such election,
108the employee shall be enrolled as a participant of the Public
109Employee Optional Retirement Program, the employee's membership
110in the Florida Retirement System shall be governed by the
111provisions of this part, and the employee's membership in the
112defined benefit program of the Florida Retirement System shall
113terminate. The employee's enrollment in the Public Employee
114Optional Retirement Program shall be effective the first day of
115the month for which a full month's employer contribution is made
116to the optional program.
117     b.  Any such employee who fails to elect to participate in
118the Public Employee Optional Retirement Program within the
119prescribed time period is deemed to have elected to retain
120membership in the defined benefit program of the Florida
121Retirement System, and the employee's option to elect to
122participate in the optional program is forfeited.
123     2.  With respect to employees who become eligible to
124participate in the Public Employee Optional Retirement Program
125by reason of employment in a regularly established position with
126a state employer commencing after April 1, 2002:
127     a.  Any such employee shall, by default, be enrolled in the
128defined benefit retirement program of the Florida Retirement
129System at the commencement of employment, and may, by the last
130business day end of the 5th month following the employee's month
131of hire, elect to participate in the Public Employee Optional
132Retirement Program. The employee's election must be made in
133writing or by electronic means and must be filed with the third-
134party administrator. The election to participate in the optional
135program is irrevocable, except as provided in paragraph (e).
136     b.  If the employee files such election within the
137prescribed time period, enrollment in the optional program shall
138be effective on the first day of employment. The employer
139retirement contributions paid through the month of the employee
140plan change shall be transferred to the optional program, and,
141effective the first day of the next month, the employer shall
142pay the applicable contributions based on the employee
143membership class in the optional program.
144     c.  Any such employee who fails to elect to participate in
145the Public Employee Optional Retirement Program within the
146prescribed time period is deemed to have elected to retain
147membership in the defined benefit program of the Florida
148Retirement System, and the employee's option to elect to
149participate in the optional program is forfeited.
150     3.  With respect to employees who become eligible to
151participate in the Public Employee Optional Retirement Program
152pursuant to s. 121.051(2)(c)3., any such employee may elect to
153participate in the Public Employee Optional Retirement Program
154in lieu of retaining his or her participation in the State
155Community College Optional Retirement Program. The election must
156be made in writing or by electronic means and must be filed with
157the third-party administrator. This election is irrevocable,
158except as provided in paragraph (e). Upon making such election,
159the employee shall be enrolled as a participant of the Public
160Employee Optional Retirement Program, the employee's membership
161in the Florida Retirement System shall be governed by the
162provisions of this part, and the employee's participation in the
163State Community College Optional Retirement Program shall
164terminate. The employee's enrollment in the Public Employee
165Optional Retirement Program shall be effective the first day of
166the month for which a full month's employer contribution is made
167to the optional program.
168     4.  For purposes of this paragraph, "state employer" means
169any agency, board, branch, commission, community college,
170department, institution, institution of higher education, or
171water management district of the state, which participates in
172the Florida Retirement System for the benefit of certain
173employees.
174     (b)1.  With respect to an eligible employee who is employed
175in a regularly established position on September 1, 2002, by a
176district school board employer:
177     a.  Any such employee may elect to participate in the
178Public Employee Optional Retirement Program in lieu of retaining
179his or her membership in the defined benefit program of the
180Florida Retirement System. The election must be made in writing
181or by electronic means and must be filed with the third-party
182administrator by November 30, or, in the case of an active
183employee who is on a leave of absence on July 1, 2002, by
184November 30, 2002, or by the last business day of the 5th month
185following within 90 days after the conclusion of the leave of
186absence, whichever is later. This election is irrevocable,
187except as provided in paragraph (e). Upon making such election,
188the employee shall be enrolled as a participant of the Public
189Employee Optional Retirement Program, the employee's membership
190in the Florida Retirement System shall be governed by the
191provisions of this part, and the employee's membership in the
192defined benefit program of the Florida Retirement System shall
193terminate. The employee's enrollment in the Public Employee
194Optional Retirement Program shall be effective the first day of
195the month for which a full month's employer contribution is made
196to the optional program.
197     b.  Any such employee who fails to elect to participate in
198the Public Employee Optional Retirement Program within the
199prescribed time period is deemed to have elected to retain
200membership in the defined benefit program of the Florida
201Retirement System, and the employee's option to elect to
202participate in the optional program is forfeited.
203     2.  With respect to employees who become eligible to
204participate in the Public Employee Optional Retirement Program
205by reason of employment in a regularly established position with
206a district school board employer commencing after July 1, 2002:
207     a.  Any such employee shall, by default, be enrolled in the
208defined benefit retirement program of the Florida Retirement
209System at the commencement of employment, and may, by the last
210business day end of the 5th month following the employee's month
211of hire, elect to participate in the Public Employee Optional
212Retirement Program. The employee's election must be made in
213writing or by electronic means and must be filed with the third-
214party administrator. The election to participate in the optional
215program is irrevocable, except as provided in paragraph (e).
216     b.  If the employee files such election within the
217prescribed time period, enrollment in the optional program shall
218be effective on the first day of employment. The employer
219retirement contributions paid through the month of the employee
220plan change shall be transferred to the optional program, and,
221effective the first day of the next month, the employer shall
222pay the applicable contributions based on the employee
223membership class in the optional program.
224     c.  Any such employee who fails to elect to participate in
225the Public Employee Optional Retirement Program within the
226prescribed time period is deemed to have elected to retain
227membership in the defined benefit program of the Florida
228Retirement System, and the employee's option to elect to
229participate in the optional program is forfeited.
230     3.  For purposes of this paragraph, "district school board
231employer" means any district school board that participates in
232the Florida Retirement System for the benefit of certain
233employees, or a charter school or charter technical career
234center that participates in the Florida Retirement System as
235provided in s. 121.051(2)(d).
236     (c)1.  With respect to an eligible employee who is employed
237in a regularly established position on December 1, 2002, by a
238local employer:
239     a.  Any such employee may elect to participate in the
240Public Employee Optional Retirement Program in lieu of retaining
241his or her membership in the defined benefit program of the
242Florida Retirement System. The election must be made in writing
243or by electronic means and must be filed with the third-party
244administrator by February 28, 2003, or, in the case of an active
245employee who is on a leave of absence on October 1, 2002, by
246February 28, 2003, or by the last business day of the 5th month
247following within 90 days after the conclusion of the leave of
248absence, whichever is later. This election is irrevocable,
249except as provided in paragraph (e). Upon making such election,
250the employee shall be enrolled as a participant of the Public
251Employee Optional Retirement Program, the employee's membership
252in the Florida Retirement System shall be governed by the
253provisions of this part, and the employee's membership in the
254defined benefit program of the Florida Retirement System shall
255terminate. The employee's enrollment in the Public Employee
256Optional Retirement Program shall be effective the first day of
257the month for which a full month's employer contribution is made
258to the optional program.
259     b.  Any such employee who fails to elect to participate in
260the Public Employee Optional Retirement Program within the
261prescribed time period is deemed to have elected to retain
262membership in the defined benefit program of the Florida
263Retirement System, and the employee's option to elect to
264participate in the optional program is forfeited.
265     2.  With respect to employees who become eligible to
266participate in the Public Employee Optional Retirement Program
267by reason of employment in a regularly established position with
268a local employer commencing after October 1, 2002:
269     a.  Any such employee shall, by default, be enrolled in the
270defined benefit retirement program of the Florida Retirement
271System at the commencement of employment, and may, by the last
272business day end of the 5th month following the employee's month
273of hire, elect to participate in the Public Employee Optional
274Retirement Program. The employee's election must be made in
275writing or by electronic means and must be filed with the third-
276party administrator. The election to participate in the optional
277program is irrevocable, except as provided in paragraph (e).
278     b.  If the employee files such election within the
279prescribed time period, enrollment in the optional program shall
280be effective on the first day of employment. The employer
281retirement contributions paid through the month of the employee
282plan change shall be transferred to the optional program, and,
283effective the first day of the next month, the employer shall
284pay the applicable contributions based on the employee
285membership class in the optional program.
286     c.  Any such employee who fails to elect to participate in
287the Public Employee Optional Retirement Program within the
288prescribed time period is deemed to have elected to retain
289membership in the defined benefit program of the Florida
290Retirement System, and the employee's option to elect to
291participate in the optional program is forfeited.
292     3.  For purposes of this paragraph, "local employer" means
293any employer not included in paragraph (a) or paragraph (b).
294     (d)  Contributions available for self-direction by a
295participant who has not selected one or more specific investment
296products shall be allocated as prescribed by the board. The
297third-party administrator shall notify any such participant at
298least quarterly that the participant should take an affirmative
299action to make an asset allocation among the optional program
300products.
301     (e)  After the period during which an eligible employee had
302the choice to elect the defined benefit program or the Public
303Employee Optional Retirement Program, or the month following the
304date the eligible employee's plan selection became effective, if
305sooner, the employee or terminated vested employee shall have
306one opportunity, at the employee's discretion during his or her
307lifetime, to choose to move from the defined benefit program to
308the Public Employee Optional Retirement Program or from the
309Public Employee Optional Retirement Program to the defined
310benefit program. This paragraph shall be contingent upon
311approval from the Internal Revenue Service for including the
312choice described herein within the programs offered by the
313Florida Retirement System.
314     1.  If the employee chooses to move to the Public Employee
315Optional Retirement Program, the applicable provisions of this
316section shall govern the transfer.
317     2.  If the employee chooses to move to the defined benefit
318program, the employee must transfer from his or her Public
319Employee Optional Retirement Program account and from other
320employee moneys as necessary, a sum representing the present
321value of that employee's accumulated benefit obligation
322immediately following the time of such movement, determined
323assuming that attained service equals the sum of service in the
324defined benefit program and service in the Public Employee
325Optional Retirement Program. Benefit commencement occurs on the
326first date the employee would become eligible for unreduced
327benefits, using the discount rate and other relevant actuarial
328assumptions that were used to value the Florida Retirement
329System defined benefit plan liabilities in the most recent
330actuarial valuation. For any employee who, at the time of the
331second election, already maintains an accrued benefit amount in
332the defined benefit plan, the then-present value of such accrued
333benefit shall be deemed part of the required transfer amount
334described in this subparagraph. The division shall ensure that
335the transfer sum is prepared using a formula and methodology
336certified by an enrolled actuary.
337     3.  Notwithstanding subparagraph 2., an employee who
338chooses to move to the defined benefit program and who became
339eligible to participate in the Public Employee Optional
340Retirement Program by reason of employment in a regularly
341established position with a state employer after June 1, 2002; a
342district school board employer after September 1, 2002; or a
343local employer after December 1, 2002, must transfer from his or
344her Public Employee Optional Retirement Program account and,
345from other employee moneys as necessary, a sum representing that
346employee's actuarial accrued liability.
347     4.  Employees' ability to transfer from the Florida
348Retirement System defined benefit program to the Public Employee
349Optional Retirement Program pursuant to paragraphs (a) through
350(d), and the ability for current employees to have an option to
351later transfer back into the defined benefit program under
352subparagraph 2., shall be deemed a significant system amendment.
353Pursuant to s. 121.031(4), any such resulting unfunded liability
354arising from actual original transfers from the defined benefit
355program to the optional program shall be amortized within 30
356plan years as a separate unfunded actuarial base independent of
357the reserve stabilization mechanism defined in s. 121.031(3)(f).
358For the first 25 years, no direct amortization payment shall be
359calculated for this base. During this 25-year period, such
360separate base shall be used to offset the impact of employees
361exercising their second program election under this paragraph.
362It is the legislative intent that the actuarial funded status of
363the Florida Retirement System defined benefit plan is neither
364beneficially nor adversely impacted by such second program
365elections in any significant manner, after due recognition of
366the separate unfunded actuarial base. Following this initial 25-
367year period, any remaining balance of the original separate base
368shall be amortized over the remaining 5 years of the required
36930-year amortization period.
370     5.  Notwithstanding the provisions of this section, any
371terminated vested employee who is a participant in the Public
372Employee Optional Retirement Program or the defined benefit
373program may use his or her one-time opportunity to change
374retirement plans as provided in this paragraph without having to
375return to employment with an employer participating in the
376Florida Retirement System.
377     (10)  EDUCATION COMPONENT.--
378     (h)  Pursuant to paragraph (8)(a), all Florida Retirement
379System employers have an obligation to regularly communicate the
380existence of the two Florida Retirement System plans and the plan
381choice in the natural course of administering their personnel
382functions using the educational materials supplied by the state
383board and the Department of Management Services.
384     (15)  STATEMENT OF FIDUCIARY STANDARDS AND
385RESPONSIBILITIES.--
386     (c)  Subparagraph (8)(b)4. and paragraph (15)(b)
387incorporate the federal law concept of participant control,
388established by regulations of the United States Department of
389Labor under s. 404(c) of the Employee Retirement Income Security
390Act of 1974 (ERISA). The purpose of this paragraph is to assist
391employers and the State Board of Administration in maintaining
392compliance with s. 404(c), while avoiding unnecessary costs and
393eroding participant benefits under the Public Employee Optional
394Retirement Program. Pursuant to 29 C.F.R. s. 2550.404c-
3951(b)(2)(i)(B)(1)(viii), the State Board of Administration or its
396designated agents shall deliver to participants of the Public
397Employee Optional Retirement Program a copy of the prospectus
398most recently provided to the plan and, pursuant to 29 C.F.R. s.
3992550.404c-1(b)(2), or shall provide such participants an
400opportunity to obtain this information, except that:
401     1.  The requirement to deliver a prospectus shall be deemed
402to be satisfied by delivery of a fund profile that contains the
403information that would be included in a summary prospectus as
404described by Rule 498 under the Securities Act of 1933, 17
405C.F.R. s. 230.498. When the transaction fees, expense
406information or other information provided by a mutual fund in
407the prospectus does not reflect terms negotiated by the State
408Board of Administration or its designated agents, the
409aforementioned requirement is deemed to be satisfied by delivery
410of a separate document described by Rule 498 substituting
411accurate information; and
412     2.  Delivery shall be deemed to have been effected if
413delivery is through electronic means and the following standards
414are satisfied:
415     a.  Electronically-delivered documents are prepared and
416provided consistent with style, format, and content requirements
417applicable to printed documents;
418     b.  Each participant is provided timely and adequate notice
419of the documents that are to be delivered and their significance
420thereof, and of the participant's right to obtain a paper copy
421of such documents free of charge;
422     c.(I)  Participants have adequate access to the electronic
423documents, at locations such as their worksites or public
424facilities, and have the ability to convert the documents to
425paper free of charge by the State Board of Administration, and
426the board or its designated agents take appropriate and
427reasonable measures to ensure that the system for furnishing
428electronic documents results in actual receipt, or
429     (II)  Participants have provided consent to receive
430information in electronic format, which consent may be revoked;
431and
432     d.  The State Board of Administration, or its designated
433agent, actually provides paper copies of the documents free of
434charge, upon request.
435     (20)  PARTICIPATION BY VESTED TERMINATED FLORIDA RETIREMENT
436SYSTEM MEMBERS.--Eligible employees shall include persons who are
437vested in the defined benefit retirement plan offered under the
438Florida Retirement System in compliance with the vesting
439provisions in effect at the time of their termination, who
440terminated covered employment prior to the establishment of the
441Public Employee Optional Retirement Program, and who may not
442otherwise be eligible to participate in the Public Employee
443Optional Retirement Program pursuant to subsection (4). The State
444Board of Administration shall not be responsible for locating
445those persons who may be eligible to participate in the Public
446Employee Optional Retirement Program under this subsection.
447     Section 3.  Section 121.591, Florida Statutes, is amended
448to read:
449     121.591  Benefits payable under the Public Employee
450Optional Retirement Program of the Florida Retirement
451System.--Benefits may not be paid under this section unless the
452member has terminated employment as provided in s.
453121.021(39)(a) or is deceased and a proper application has been
454filed in the manner prescribed by the state board or the
455department. The state board or department, as appropriate, may
456cancel an application for retirement benefits when the member or
457beneficiary fails to timely provide the information and
458documents required by this chapter and the rules of the state
459board and department. In accordance with their respective
460responsibilities as provided herein, the State Board of
461Administration and the Department of Management Services shall
462adopt rules establishing procedures for application for
463retirement benefits and for the cancellation of such application
464when the required information or documents are not received. The
465State Board of Administration and the Department of Management
466Services, as appropriate, are authorized to cash out a de
467minimis account of a participant who has been terminated from
468Florida Retirement System covered employment for a minimum of 6
469calendar months. A de minimis account is an account containing
470employer contributions and accumulated earnings of not more than
471$5,000 made under the provisions of this chapter. Such cash-out
472must either be a complete lump-sum liquidation of the account
473balance, subject to the provisions of the Internal Revenue Code,
474or a lump-sum direct rollover distribution paid directly to the
475custodian of an eligible retirement plan, as defined by the
476Internal Revenue Code, on behalf of the participant.
477     (1)  NORMAL BENEFITS.--Under the Public Employee Optional
478Retirement Program:
479     (a)  Benefits in the form of vested accumulations as
480described in s. 121.4501(6) shall be payable under this
481subsection in accordance with the following terms and
482conditions:
483     1.  To the extent vested, benefits shall be payable only to
484a participant.
485     2.  Benefits shall be paid by the third-party administrator
486or designated approved providers in accordance with the law, the
487contracts, and any applicable board rule or policy.
488     3.  To receive benefits under this subsection, the
489participant must be terminated from all employment with all
490Florida Retirement System employers, as provided in s.
491121.021(39).
492     (b)  If a participant elects to receive his or her benefits
493upon termination of employment, the participant must submit a
494written application to the third-party administrator indicating
495his or her preferred distribution date and selecting an
496authorized method of distribution as provided in paragraph (c).
497The participant may defer receipt of benefits until he or she
498chooses to make such application, subject to federal
499requirements.
500     (c)  Upon receipt by the third-party administrator of a
501properly executed application for distribution of benefits, the
502total accumulated benefit shall be payable to the participant,
503as:
504     1.  A lump-sum distribution to the participant;
505     2.  A lump-sum direct rollover distribution whereby all
506accrued benefits, plus interest and investment earnings, are
507paid from the participant's account directly to the custodian of
508an eligible retirement plan, as defined in s. 402(c)(8)(B) of
509the Internal Revenue Code, on behalf of the participant; or
510     3.  Periodic distributions, as authorized by the state
511board.
512     (2)  DISABILITY RETIREMENT BENEFITS.--Benefits provided
513under this subsection are payable in lieu of the benefits which
514would otherwise be payable under the provisions of subsection
515(1). Such benefits shall be funded entirely from employer
516contributions made under s. 121.571, transferred participant
517funds accumulated pursuant to paragraph (a), and interest and
518earnings thereon. Pursuant thereto:
519     (a)  Transfer of funds.--To qualify to receive monthly
520disability benefits under this subsection:
521     1.  All moneys accumulated in the participant's Public
522Employee Optional Retirement Program accounts, including vested
523and nonvested accumulations as described in s. 121.4501(6),
524shall be transferred from such individual accounts to the
525Division of Retirement for deposit in the disability account of
526the Florida Retirement System Trust Fund. Such moneys shall be
527separately accounted for. Earnings shall be credited on an
528annual basis for amounts held in the disability accounts of the
529Florida Retirement System Trust Fund based on actual earnings of
530the Florida Retirement System Trust Fund.
531     2.  If the participant has retained retirement credit he or
532she had earned under the defined benefit program of the Florida
533Retirement System as provided in s. 121.4501(3)(b), a sum
534representing the actuarial present value of such credit within
535the Florida Retirement System Trust Fund shall be reassigned by
536the Division of Retirement from the defined benefit program to
537the disability program as implemented under this subsection and
538shall be deposited in the disability account of the Florida
539Retirement System Trust Fund. Such moneys shall be separately
540accounted for.
541     (b)  Disability retirement; entitlement.--
542     1.  A participant of the Public Employee Optional
543Retirement Program who becomes totally and permanently disabled,
544as defined in s. 121.091(4)(b), after completing 8 years of
545creditable service, or a participant who becomes totally and
546permanently disabled in the line of duty regardless of his or
547her length of service, shall be entitled to a monthly disability
548benefit as provided herein.
549     2.  In order for service to apply toward the 8 years of
550service required to vest for regular disability benefits, or
551toward the creditable service used in calculating a service-
552based benefit as provided for under paragraph (g), the service
553must be creditable service as described below:
554     a.  The participant's period of service under the Public
555Employee Optional Retirement Program will be considered
556creditable service, except as provided in subparagraph d.
557     b.  If the participant has elected to retain credit for his
558or her service under the defined benefit program of the Florida
559Retirement System as provided under s. 121.4501(3)(b), all such
560service will be considered creditable service.
561     c.  If the participant has elected to transfer to his or
562her participant accounts a sum representing the present value of
563his or her retirement credit under the defined benefit program
564as provided under s. 121.4501(3)(c), the period of service under
565the defined benefit program represented in the present value
566amounts transferred will be considered creditable service for
567purposes of vesting for disability benefits, except as provided
568in subparagraph d.
569     d.  Whenever a participant has terminated employment and
570has taken distribution of his or her funds as provided in
571subsection (1), all creditable service represented by such
572distributed funds is forfeited for purposes of this subsection.
573     (c)  Disability retirement effective date.--The effective
574retirement date for a participant who applies and is approved
575for disability retirement shall be established as provided under
576s. 121.091(4)(a)2. and 3.
577     (d)  Total and permanent disability.--A participant shall
578be considered totally and permanently disabled if, in the
579opinion of the division, he or she is prevented, by reason of a
580medically determinable physical or mental impairment, from
581rendering useful and efficient service as an officer or
582employee.
583     (e)  Proof of disability.--The division, before approving
584payment of any disability retirement benefit, shall require
585proof that the participant is totally and permanently disabled
586in the same manner as provided for members of the defined
587benefit program of the Florida Retirement System under s.
588121.091(4)(c).
589     (f)  Disability retirement benefit.--Upon the disability
590retirement of a participant under this subsection, the
591participant shall receive a monthly benefit that shall begin to
592accrue on the first day of the month of disability retirement,
593as approved by the division, and shall be payable on the last
594day of that month and each month thereafter during his or her
595lifetime and continued disability. All disability benefits
596payable to such member shall be paid out of the disability
597account of the Florida Retirement System Trust Fund established
598under this subsection.
599     (g)  Computation of disability retirement benefit.--The
600amount of each monthly payment shall be calculated in the same
601manner as provided for members of the defined benefit program of
602the Florida Retirement System under s. 121.091(4)(f). For such
603purpose, creditable service under both the defined benefit
604program and the Public Employee Optional Retirement Program of
605the Florida Retirement System shall be applicable as provided
606under paragraph (b).
607     (h)  Reapplication.--A participant whose initial
608application for disability retirement has been denied may
609reapply for disability benefits in the same manner, and under
610the same conditions, as provided for members of the defined
611benefit program of the Florida Retirement System under s.
612121.091(4)(g).
613     (i)  Membership.--Upon approval of an application for
614disability benefits under this subsection, the applicant shall
615be transferred to the defined benefit program of the Florida
616Retirement System, effective upon his or her disability
617retirement effective date.
618     (j)  Option to cancel.--Any participant whose application
619for disability benefits is approved may cancel his or her
620application for disability benefits, provided that the
621cancellation request is received by the division before a
622disability retirement warrant has been deposited, cashed, or
623received by direct deposit. Upon such cancellation:
624     1.  The participant's transfer to the defined benefit
625program under paragraph (i) shall be nullified;
626     2.  The participant shall be retroactively reinstated in
627the Public Employee Optional Retirement Program without hiatus;
628     3.  All funds transferred to the Florida Retirement System
629Trust Fund under paragraph (a) shall be returned to the
630participant accounts from which such funds were drawn; and
631     4.  The participant may elect to receive the benefit
632payable under the provisions of subsection (1) in lieu of
633disability benefits as provided under this subsection.
634     (k)  Recovery from disability.--
635     1.  The division may require periodic reexaminations at the
636expense of the disability program account of the Florida
637Retirement System Trust Fund. Except as otherwise provided in
638subparagraph 2., the requirements, procedures, and restrictions
639relating to the conduct and review of such reexaminations,
640discontinuation or termination of benefits, reentry into
641employment, disability retirement after reentry into covered
642employment, and all other matters relating to recovery from
643disability shall be the same as are set forth under s.
644121.091(4)(h).
645     2.  Upon recovery from disability, any recipient of
646disability retirement benefits under this subsection shall be a
647compulsory member of the Public Employee Optional Retirement
648Program of the Florida Retirement System. The net difference
649between the recipient's original account balance transferred to
650the Florida Retirement System Trust Fund, including earnings,
651under paragraph (a) and total disability benefits paid to such
652recipient, if any, shall be determined as provided in sub-
653subparagraph a.
654     a.  An amount equal to the total benefits paid shall be
655subtracted from that portion of the transferred account balance
656consisting of vested accumulations as described under s.
657121.4501(6), if any, and an amount equal to the remainder of
658benefit amounts paid, if any, shall then be subtracted from any
659remaining portion consisting of nonvested accumulations as
660described under s. 121.4501(6).
661     b.  Amounts subtracted under sub-subparagraph a. shall be
662retained within the disability account of the Florida Retirement
663System Trust Fund. Any remaining account balance shall be
664transferred to the third-party administrator for disposition as
665provided under sub-subparagraph c. or sub-subparagraph d., as
666appropriate.
667     c.  If the recipient returns to covered employment,
668transferred amounts shall be deposited in individual accounts
669under the Public Employee Optional Retirement Program, as
670directed by the participant. Vested and nonvested amounts shall
671be separately accounted for as provided in s. 121.4501(6).
672     d.  If the recipient fails to return to covered employment
673upon recovery from disability:
674     (I)  Any remaining vested amount shall be deposited in
675individual accounts under the Public Employee Optional
676Retirement Program, as directed by the participant, and shall be
677payable as provided in subsection (1).
678     (II)  Any remaining nonvested amount shall be held in a
679suspense account and shall be forfeitable after 5 years as
680provided in s. 121.4501(6).
681     3.  If present value was reassigned from the defined
682benefit program to the disability program of the Florida
683Retirement System as provided under subparagraph (a)2., the full
684present value amount shall be returned to the defined benefit
685account within the Florida Retirement System Trust Fund and the
686affected individual's associated retirement credit under the
687defined benefit program shall be reinstated in full. Any benefit
688based upon such credit shall be calculated as provided in s.
689121.091(4)(h)1.
690     (l)  Nonadmissible causes of disability.--A participant
691shall not be entitled to receive a disability retirement benefit
692if the disability results from any injury or disease sustained
693or inflicted as described in s. 121.091(4)(i).
694     (m)  Disability retirement of justice or judge by order of
695Supreme Court.--
696     1.  If a participant is a justice of the Supreme Court,
697judge of a district court of appeal, circuit judge, or judge of
698a county court who has served for 6 years or more as an elected
699constitutional judicial officer, including service as a judicial
700officer in any court abolished pursuant to Art. V of the State
701Constitution, and who is retired for disability by order of the
702Supreme Court upon recommendation of the Judicial Qualifications
703Commission pursuant to the provisions of Art. V of the State
704Constitution, the participant's Option 1 monthly disability
705benefit amount as provided in s. 121.091(6)(a)1. shall be two-
706thirds of his or her monthly compensation as of the
707participant's disability retirement date. Such a participant may
708alternatively elect to receive an actuarially adjusted
709disability retirement benefit under any other option as provided
710in s. 121.091(6)(a), or to receive the normal benefit payable
711under the Public Employee Optional Retirement Program as set
712forth in subsection (1).
713     2.  If any justice or judge who is a participant of the
714Public Employee Optional Retirement Program of the Florida
715Retirement System is retired for disability by order of the
716Supreme Court upon recommendation of the Judicial Qualifications
717Commission pursuant to the provisions of Art. V of the State
718Constitution and elects to receive a monthly disability benefit
719under the provisions of this paragraph:
720     a.  Any present value amount that was transferred to his or
721her program account and all employer contributions made to such
722account on his or her behalf, plus interest and earnings
723thereon, shall be transferred to and deposited in the disability
724account of the Florida Retirement System Trust Fund; and
725     b.  The monthly benefits payable under this paragraph for
726any affected justice or judge retired from the Florida
727Retirement System pursuant to Art. V of the State Constitution
728shall be paid from the disability account of the Florida
729Retirement System Trust Fund.
730     (n)  Death of retiree or beneficiary.--Upon the death of a
731disabled retiree or beneficiary thereof who is receiving monthly
732benefits under this subsection, the monthly benefits shall be
733paid through the last day of the month of death and shall
734terminate, or be adjusted, if applicable, as of that date in
735accordance with the optional form of benefit selected at the
736time of retirement. The deceased disabled retiree's beneficiary
737shall also receive the amount of the participant's remaining
738account balance, if any, in the Florida Retirement System Trust
739Fund. The Department of Management Services may adopt rules
740necessary to administer this paragraph.
741     (3)  DEATH BENEFITS.--Under the Public Employee Optional
742Retirement Program:
743     (a)  Survivor benefits shall be payable in accordance with
744the following terms and conditions:
745     1.  To the extent vested, benefits shall be payable only to
746a participant's beneficiary or beneficiaries as designated by
747the participant. If a participant designates a primary
748beneficiary other than the participant's spouse, the
749participant's spouse shall be notified of the designation. This
750requirement shall not apply to the designation of one or more
751contingent beneficiaries to receive any benefits remaining upon
752the death of the primary beneficiary or beneficiaries.
753     2.  Benefits shall be paid by the third-party administrator
754or designated approved providers in accordance with the law, the
755contracts, and any applicable board rule or policy.
756     3.  To receive benefits under this subsection, the
757participant must be deceased.
758     (b)  In the event of a participant's death, all vested
759accumulations as described in s. 121.4501(6), less withholding
760taxes remitted to the Internal Revenue Service, shall be
761distributed, as provided in paragraph (c), to the participant's
762designated beneficiary or beneficiaries, or to the participant's
763estate, as if the participant retired on the date of death. No
764other death benefits shall be available for survivors of
765participants under the Public Employee Optional Retirement
766Program, except for such benefits, or coverage for such
767benefits, as are otherwise provided by law or are separately
768afforded by the employer, at the employer's discretion.
769     (c)  Upon receipt by the third-party administrator of a
770properly executed application for distribution of benefits, the
771total accumulated benefit shall be payable by the third-party
772administrator to the participant's surviving beneficiary or
773beneficiaries, as:
774     1.  A lump-sum distribution payable to the beneficiary or
775beneficiaries, or to the deceased participant's estate;
776     2.  An eligible rollover distribution on behalf of the
777surviving spouse of a deceased participant, whereby all accrued
778benefits, plus interest and investment earnings, are paid from
779the deceased participant's account directly to the custodian of
780an eligible retirement plan, as described in s. 402(c)(8)(B) of
781the Internal Revenue Code, on behalf of the surviving spouse; or
782     3.  A partial lump-sum payment whereby a portion of the
783accrued benefit is paid to the deceased participant's surviving
784spouse or other designated beneficiaries, less withholding taxes
785remitted to the Internal Revenue Service, and the remaining
786amount is transferred directly to the custodian of an eligible
787retirement plan, as described in s. 402(c)(8)(B) of the Internal
788Revenue Code, on behalf of the surviving spouse. The proportions
789must be specified by the participant or the surviving
790beneficiary.
791
792This paragraph does not abrogate other applicable provisions of
793state or federal law providing for payment of death benefits.
794     (4)  LIMITATION ON LEGAL PROCESS.--The benefits payable to
795any person under the Public Employee Optional Retirement
796Program, and any contributions accumulated under such program,
797are not subject to assignment, execution, attachment, or any
798legal process, except for qualified domestic relations orders by
799a court of competent jurisdiction, income deduction orders as
800provided in s. 61.1301, and federal income tax levies.
801     Section 4.  Paragraph (b) of subsection (3) of section
802121.78, Florida Statutes, is amended to read:
803     121.78  Payment and distribution of contributions.--
804     (3)
805     (b)  If contributions made by an employer on behalf of
806participants of the optional retirement program or accompanying
807payroll data are not received within the calendar month they are
808due, including, but not limited to, contribution adjustments as
809a result of employer errors or corrections, and if that
810delinquency results in market losses to participants, the
811employer shall reimburse each participant's account for market
812losses resulting from the late contributions. In the event a
813participant has terminated employment and taken a distribution,
814the participant is responsible for returning any excess
815contributions erroneously provided by employers, adjusted for
816any investment gain or loss incurred during the period such
817excess contributions were in the participant's Public Employee
818Optional Retirement Program account. The State Board of
819Administration, or its designated agent, shall communicate to
820terminated participants any obligation to repay such excess
821contribution amounts, but the State Board of Administration, its
822designated agent, or the Public Employee Optional Retirement
823Program Trust Fund shall not incur any loss or gain as a result
824of employers' correcting such excess contributions. The third-
825party administrator, hired by the board pursuant to s.
826121.4501(8), shall calculate the market losses for each affected
827participant. When contributions made on behalf of participants
828of the optional retirement program or accompanying payroll data
829are not received within the calendar month due, the employer
830shall also pay the cost of the third-party administrator's
831calculation and reconciliation adjustments resulting from the
832late contributions. The third-party administrator shall notify
833the employer of the results of the calculations and the total
834amount due from the employer for such losses and the costs of
835calculation and reconciliation. The employer shall remit to the
836division the amount due within 10 working days after the date of
837the penalty notice sent by the division. The division shall
838transfer said amount to the third-party administrator, who shall
839deposit proceeds from the 1-percent assessment and from
840individual market losses into participant accounts, as
841appropriate. The board is authorized to adopt rules to implement
842the provisions regarding late contributions, late submission of
843payroll data, the process for reimbursing participant accounts
844for resultant market losses, and the penalties charged to the
845employers.
846     Section 5.  Paragraphs (g) and (i) of subsection (2) of
847section 215.47, Florida Statutes, are amended to read:
848     215.47  Investments; authorized securities; loan of
849securities.--Subject to the limitations and conditions of the
850State Constitution or of the trust agreement relating to a trust
851fund, moneys available for investments under ss. 215.44-215.53
852may be invested as follows:
853     (2)  With no more than 25 percent of any fund in:
854     (g)  Fixed-income obligations not otherwise authorized by
855this section issued by foreign governments, or political
856subdivisions or agencies thereof, supranational agencies,
857foreign corporations, or foreign commercial entities, provided
858the obligations are rated investment grade by at least one
859nationally recognized rating service General obligations backed
860by the full faith and credit of a foreign government which has
861not defaulted on similar obligations for a minimum period of 25
862years prior to purchase of the obligation and has met its
863payments of similar obligations when due.
864     (i)  Obligations of agencies of the government of the
865United States, provided such obligations have been included in
866and authorized by the Florida Retirement System Defined Benefit
867Total Fund Investment Plan Investment Policy Statement
868established in s. 215.475.
869     Section 6.  Section 215.475, Florida Statutes, is amended
870to read:
871     215.475  Investment policy statement plan.--
872     (1)  In making investments for the System Trust Fund
873pursuant to ss. 215.44-215.53, the board shall make no
874investment which is not in conformance with the Florida
875Retirement System Defined Benefit Total Fund Investment Plan
876Investment Policy Statement, hereinafter referred to as "the
877statement plan," as developed by the executive director and
878approved by the board. The statement plan must include, among
879other items, the investment objectives of the System Trust Fund;
880permitted types of securities in which the board may invest; and
881evaluation criteria necessary to measure the investment
882performance of the fund. As required from time to time, the
883executive director of the board may present recommended changes
884in the statement plan to the board for approval.
885     (2)  Prior to any recommended changes in the statement plan
886being presented to the board, the executive director of the
887board shall present such changes to the Investment Advisory
888Council for review. The council shall present the results of its
889review to the board prior to the board's final approval of the
890statement plan or changes in the statement plan.
891     Section 7.  Paragraph (a) of subsection (4) of section
892215.5601, Florida Statutes, is amended to read:
893     215.5601  Lawton Chiles Endowment Fund.--
894     (4)  ADMINISTRATION.--
895     (a)  The board may invest and reinvest funds of the
896endowment in accordance with s. 215.47 and consistent with an
897investment policy statement plan developed by the executive
898director and approved by the board.
899     Section 8.  This act shall take effect July 1, 2004.


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