The Florida state Senate has passed a bill that would eliminate the option for nearly all new state employees to participate in a defined benefit (DB) plan, instead requiring them to join a defined contribution (DC) plan.

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The bill, which was sponsored by Republican Sen. Ray Rodrigues, would require new hires as of July 1, 2022, to enroll in a 401(k)-style investment plan. Employees are currently given the option to participate in either the DB plan or the DC plan. The bill excludes “special risk class” employees such as firefighters and police officers.

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Senate Republicans lauded the bill, saying it “modernizes” the Florida Retirement System (FRS) and cited as a need for the legislation the system’s $36 billion in unfunded actuarial liabilities reported by the state actuary.

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“The rising costs of pension obligations crowd out funding for other priority issues such as education, transportation, security, and assistance to the most vulnerable among us,” Rodrigues said in a statement. “Traditional pension plans place investment risk for changes in economic conditions that impact the retirement plan’s funded status squarely on the taxpayers.”

However, the plan was panned by labor organizations and teachers’ associations, which said it is unnecessary and would hurt state workers’ retirement savings as well as the state’s ability to attract top employees.

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