When you joined the school district, you chose between two retirement options: the Pension Plan or the Investment Plan.

Pension Plan: Offers a guaranteed monthly benefit for life upon retirement. The vesting period varies based on your hire date, and no investment decisions are required.

Investment Plan: Similar to a 401(k), this plan lets you choose how contributions are invested. It has a shorter vesting period, giving you more control but also exposing you to market risks.

Vesting means becoming eligible to receive your retirement benefit. Your vesting period depends on your hire date:

Hired before July 1, 2011: You vest after 6 years of service.

Hired on or after July 1, 2011: You vest after 8 years of service.

To receive full retirement benefits, the requirements also vary by hire date:

Hired before July 1, 2011: You need 30 years of service or must be age 62.

Hired on or after July 1, 2011: You need 33 years of service or must be age 65.

If you’re vested but leave Florida or switch to a non-FRS employer, you can wait until retirement age to receive your benefit or may be able to request it early with a penalty.

Vesting means becoming eligible to receive your retirement benefit.

For the Investment Plan, you are fully vested after one year of service, entitling you to all contributions made by you and the school district.

If you leave Florida or switch to a non-FRS employer, you can roll over your Investment Plan funds into a personal retirement savings account.

D.R.O.P. (Deferred Retirement Option Program) is available only to teachers and school staff enrolled in the Pension Plan.

This program allows you to retire early while continuing to work, ideal if you’ve reached retirement age or years of service but wish to keep working.

You can participate in D.R.O.P. for up to 8 years, with special incentives for instructional positions.

You must enroll within a specific window upon reaching retirement age or years of service. During D.R.O.P., your pension payments are deposited into a special savings account, and you no longer contribute to FRS from your paycheck.

Upon full retirement, you receive the accumulated savings, and your pension payments begin directly.

All teachers and school staff are enrolled in the Florida Retirement System (FRS).

Whether you choose the Pension Plan or the Investment Plan, you contribute 3% of your salary to FRS. The school district also makes contributions on your behalf.

Yes, the Florida Retirement System (FRS) allows a one-time switch between the Pension Plan and the Investment Plan.

From Pension Plan to Investment Plan: FRS will transfer the value of your pension into your Investment Plan account.

From Investment Plan to Pension Plan: The value of your Investment Plan account must match the value of the pension benefit for your years of service. If your investment account is worth less, you must pay the difference to switch.

The Florida Retirement System (FRS) offers a valuable retirement benefit, but your contribution is only 3% of your salary.

With 30 years of service, whether in the Pension Plan or Investment Plan, your retirement income may be approximately half of your working salary.

For many, this significant reduction in income is not sustainable.

To help you save more for retirement, school districts offer supplemental retirement plans to provide additional tax-deferred savings opportunities.

School districts partner with providers to offer supplemental retirement plans, such as 403(b), 457, or 401(k) plans. These are IRS tax codes that allow your contributions to grow tax-deferred.

The plans offered by school districts typically fall into three options:

Option 1: Guaranteed Interest (Low Risk)

-Provides fixed, low interest with no risk of market loss.

-Ideal for employees nearing retirement who want to protect their savings from market declines.

Option 2: Market-Based (Higher Risk, Higher Reward)

-Offers the highest potential returns through market investments but carries the risk of loss during market downturns.

-Suitable for employees comfortable with risk and with ample time before retirement to recover from potential losses.

-Typically includes fees.

Option 3: Index-Linked (Balanced Approach)

-Interest is tied to a market index, offering average market returns without the risk of market loss or fees.

-Ideal for employees seeking a secure option with no fees, suitable for both those nearing retirement and those planning for long-term growth.

The stock market naturally fluctuates, and downturns pose risks to your retirement savings.

When the market drops, recovering your losses requires gains larger than the percentage lost.

For example:

-If you have $10,000 and lose 10% ($1,000), your balance becomes $9,000.

-A 10% gain the next month ($900) brings your balance to $9,900, still $100 short of your original amount.

-To fully recover a 10% loss, you need an 11.11% gain. Similarly, a 20% loss requires a 25% gain to break even.

This effect is magnified with larger savings, such as $100,000 or $500,000.

For instance, the 2008/2009 market crash took approximately six years for many portfolios to recover.

Choosing a retirement plan option with no market loss is critical, especially as you approach retirement, to protect your savings from significant downturns.