Q&A of the day – About Florida’s public pension system
It’s the Q&A of the day. Each day I’ll feature a listener question that’s been submitted by one of these methods.
Facebook: Brian Mudd https://www.facebook.com/brian.mudd1
Today’s note comes from Christy:
Thank you for your cheat sheet notes on all the corruption going on in our state and country.
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: Hi Christy, its great question/topic 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 (his wasn’t double-dipping) former BSO Deputy Scot Peterson. Simply put, I view pensions as legalized fraud and believe they should all be replaced, corporate or public, by personal retirement accounts. I'll come back to that point but first here are the minimum vesting requirements for public pensions in Florida:
- Prior to July 1st of 2011 – 6 years
- After July 1st of 2011 – 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. 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 simply 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). For that matter, you can collect one while still being employed for another department accruing another pension as Brenda Snipes successfully managed to do. 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 (taxpayers in the case of public pensions). 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.