The state should ensure that excessive resources are not committed to funding teachers' pension systems.
As of July 1, 2010, the most recent date for which an actuarial valuation is available, Florida's teacher defined benefit pension plan is 86.59 percent funded and has an amortization period of less than 30 years. This means that if the plan earns its assumed rate of return and maintains current contribution rates, it would take the state less than 30 years to pay off its unfunded liabilities. Both levels are better than regulatory recommendations, and Florida's system is financially sustainable according to actuarial benchmarks. Further, Florida's defined contribution plan is fully funded and sustainable. Employers make mandatory payments credited to teachers' individual accounts.
Florida does not commit excessive resources toward its teachers' retirement system. The current employer contribution rate of 3.77 percent to the defined benefit plan and 6 percent to the defined contribution plan are both reasonable, in light of the fact that local districts must also contribute 6.2 percent to Social Security. The rate is determined according to statutory requirements, which mandate that the employer contribution rate must be equal to an actuarially determined rate in order to provide sufficient assets to pay benefits when due. As of July 1, 2011, all employees contribute 3 percent to the defined benefit pension system. Previously, there was no employee contribution.
The Florida Retirement System did not respond to repeated requests to review NCTQ's analyses related to teacher pensions.