STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WILLIAM H. CROCKET, )

)

Petitioner, )

)

vs. ) CASE NO. 78-2054

)

DIVISION OF RETIREMENT, )

STATE OF FLORIDA, )

)

Respondent. )

)

RECOMMENDED ORDER

This case was heard pursuant to notice on May 30, 1979, in Tallahassee, Florida, by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings. By stipulation of the parties, the time for filing of briefs and issuance of this Order was extended.

This case was presented on a petition by William H. Crockett for review of the determination of his retirement benefits made by the Division of Retirement. The parties prepared and submitted a stipulation containing the applicable facts prior to the hearing, and stipulated to submission of the legal issues to the Hearing Officer based on those facts. Although the facts to which the parties stipulated are seemingly complex, they may be summarized as follows:

The Petitioner was a member of State and County Officers and Employees Retirement System (SCOERS). He transferred on November 30, 1970, to Florida Retirement System (FRS). Crockett had been a regular member of SCOERS and became a special risk member of FRS. He retired at the normal retirement age for special risk members of 55 years with ten years of creditable service.

There is no controversy over his benefits earned while a member of FRS. The controversy centers over the computation of the benefits payable by FRS on Petitioner's service in SCOERS. The Division of Retirement computed Petitioner's benefits payable for SCOERS service as though he had reached age 62, the normal retirement age in FRS, then reduced those benefits for "early retirement" asserting that Section 121.091(2), Florida Statutes, required the benefits for special risk and regular service be computed separately, and because he had retired at age 55 years Petitioner's benefits should be reduced by 5/12 of one percent for each month or fraction thereof Petitioner was under the age of 62 years.

Petitioner asserts that his benefits should not be reduced at all, because it was fixed as of November 30, 1970, under the provisions of Section 121.091(1)(c), Florida Statutes, and that pursuant to the same statute, should it be determined that the benefits should be reduced, the age of normal retirement would be that of SCOERS (60 years) and not that of FRS.

The primary issue is whether the retirement benefits of a special risk member of FRS retiring at age 55 years, who transferred from an existing system, should be reduced by recomputation of the benefits brought forward into FRS from

the existing system, reducing said benefits for "early retirement." A collateral issue is whether the age from which reduction is computed would be taken from the FRS or the system of which Petitioner was a member.

APPEARANCES

For Petitioner: Richard A. Sicking, Esquire

1951 Northwest 17th Avenue Post Office Drawer 520337 Miami, Florida 33152

For Respondent: L. Keith Pafford, Esquire

Division of Retirement 2639 North Monroe Street Suite 207C, Box 81

Tallahassee, Florida 32303 FINDINGS OF FACT

The parties stipulated to the following facts:

1. The facts relating to the Petitioner's claim are:

   
   

   1. The Petitioner was born January 11, 1920 and was 55-1/2 years old at the time of his retirement on July 1, 1975.

      
      

   2. The Petitioner was employed by Metropolitan Dade County, a political subdivision of the State of Florida from June 27, 1947 to April 30, 1952 as a worker in the Department of Sanitation.

      
      

   3. The Petitioner was employed by Metropolitan Dade County, a political subdivision of the State of Florida, from May 1, 1952 through July 1, 1975 as a full-time, paid fire fighter (fireman).

      
      

   4. The Petitioner was at all times material a fully qualified member of the appropriate retirement system created by state statute from the date of his employment in 1947 to the date of his retirement in 1975, including the State and County Officers and Employees Retirement System (SCOERS), of which he had become a member prior to July 1, 1963, and he had at least 10 years service in the aggregate in such system, and to which he had made the appropriate and required contributions for more than 5 years; and including the Florida Retirement System (FRS) of which he was a special risk member from the time of its creation in 1970 and to which he had made the appropriate and required contributions

      
      

   5. The Petitioner's past service time prior to December 1, 1970 was recognized and credited by the Petitioner's employer, Metropolitan Dade County, and approved by the Respondent director-administrator, and during such period of time he was in the active employ of the employer prior to the date of his participation in FRS.

      
      

   6. From December, 1970, Petitioner was certified by the Respondent director as a special risk member of FRS.

      
      

   7. At the time of his retirement on July 1, 1975, the Petitioner had paid all required contributions to FRS, amount to $12,807.26.

   8. Following his retirement on July 1, 1975, and continuing to the present, the Petitioner has received a retirement benefit from FRS in the amount of $587.14 per month which was calculated as follows:

   
   

   1. Average final compensation: $15,404.07.

      
      

   2. He was given credit for 23.42 years

      of service prior to 1956 (sic) at 2 percent of average final compensation, that is 46.84 percent of average final compensation; he was given credit for 3.83 years of special risk ser-

      vice prior to October 1, 1974 at 2 percent of average final compensation that is 1.66 percent of average final compensation.

      
      

   3. He was given credit for .75 years of special risk service subsequent to

      October 1, 1974 at 3 percent of average final compensation, that is 2.25 percent of average final compensation.

      
      

   4. He was given credit for 3.90 years

      of military service at 1.60 percent of average final compensation, that is 6.24 percent of aver- age final compensation.

      
      

   5. He was therefore given credit for

      31.90 total years of service and 62.99 percent of average final compensation.

      
      

   6. 62.99 percent of average final compensation is $9,703.02 per year, or $808.59 per

   month.

   
   

   1. However, the Respondents have not given $808.59 per month to the Petitioner. Instead, he was given early retirement benefit by the following calculation:

      
      

      REGULAR SERVICE (SCOERS AND MILITARY) PERCENT OF AFC

      
      

      1. 23.42 Years prior to 12/1/70

         at 2 percent per year 46.84 percent

         
         

      2. 3.90 Years Military Service

      at 1.60 percent per year 6.24 percent

      
      

      27.32 Years SCOERS and Military 53.08 percent

      
      

      1. Retirement Benefit SCOERS and Military Service:

         
         

         Early Retirement Annual AFC x Percent Factor x Factor-Age 55-1/2 = Benefit

         
         

         $15,404.07 x 53.08 percent x 67.5 percent = $5,519.12

         
         

      2. 3.83 Years Special Risk Service

         12/1/70 to 10/1/74 at 2 percent 7.66 percent

         0.75 Years Special Risk Service

         After 10/1/74 at 3 percent 2.25 percent

         
         

         4.58 Years Special Risk Service

         After 12/1/70 9.91 percent

         
         

      3. Retirement Benefit Special Risk Service (No Early Retirement Factor:

         AFC	x	percent Factor	=	Annual Benefit
         $15,404.07	x	9.91 percent	=	$1,526.54

         
         

      4. Early Retirement Benefit SCOERS & MIL. + Normal Retirement Benefit Special Risk = Total Retirement Benefit

      
      

      $5,519.12 + $1,526.54 = $7,045.66 Per Year

      
      

      or $587.14 Per Month

      
      

   2. The early retirement factor-age 55-1/2 which was used was 67.50 percent of the normal retirement allowance for creditable service prior to December 1, 1970. It was computed by reducing such normal retirement allowance by 5/12 of 1 percent for each complete month from the Petitioner's retirement date of July 1, 1975 through his 62nd birthday. However, the net reduction was to 72.613 percent of the normal retirement allowance because the Respondents used a dual calculation method for computing retirement ages for regular members versus special risk members.

   
   

2. If the Petitioner were entitled only to an early-retirement and if that early retirement should have been calculated from age 60 instead of age 62, the factor should have been 77.5 percent instead of 67.5 percent producing the following:

   
   

   Annual benefit - SCOERS and military service of $6,336.77 plus FRS Special Risk Service of

   $1,526.54, a total of $7,863.31 per year or

   $655.27 per month since July 1, 1975.

   
   

3. The parties further stipulate and agree that Exhibits A and B attached to the Petition for Hearing, together with a letter of February 6, 1976 from B.

   M. Kelley, which is attached to the Petition for Hearing, be admitted into evidence together with this Stipulation.

   
   

   CONCLUSIONS OF LAW

   
   

4. The instant controversy appears unduly complicated; however, when reduced to its basics it centers around the interpretation to be given Section 121.091(1), specifically subparagraph (c), Florida Statutes. This section provides in pertinent part as follows:

   
   

   "(c) C is the normal retirement benefit credit brought forward as of November 30, 1970, by a former member of an existing system. Such normal retirement benefit credit shall be determined as the product of A and B when A is the percentage of

   average final compensation which the member would have been eligible to receive if he had attained his normal retirement date as of November 30, 1970, all in accordance with the existing system under which the member is covered on November 30, 1970, and B is average monthly compensation as defined in s. 121.021(25)." (Emphasis supplied)

   
   

5. To arrive at the member's benefit it is necessary to first determine what benefit the member brought forward into the Florida Retirement System according to the formula cited above. The section quoted provides that for purposes of computing the benefit brought forward it is assumed that the member had reached "normal retirement date" as of November 30, 1970. Reference to the definition of normal retirement date in Section 121.021(29), Florida Statutes, shows several combinations of age and length of service. Further, the language "all in accordance with the existing system" would relate maximum age to that of SCOERS, age 60 years. Therefore, for purposes of Section 121.091(1)(c), supra, "normal retirement date" means only that in computing the benefit brought forward it is assumed that the member had reached the maximum age and years of service for retirement.

   
   

6. It is argued by the Division of Retirement that Section 121.091(2), Florida Statutes, would permit recomputation of the benefit brought forward if the member had dual retirement ages by virtue of being a special risk member in the FRS and not having been a special risk member in his old system.

   
   

7. Although this section is applicable to persons with dual retirement ages, in the instant case there would be no change in benefit because the Petitioner is deemed to have reached maximum retirement age as to his benefit brought forward and did reach maximum retirement age as a special risk member of FRS. The problem arises when the Division applies the reduction formula of Section 121.091(3) to the computation required by Section 121.091(2). The benefits applicable to service brought forward would not be computed separately and reduced for early retirement pursuant to Section 121.091(2) because Section 121.091(1)(c) assumed the member had reached the maximum age and years of service necessary to retire as of November 30, 1970. There is no authority or rationale to go behind the statutory assumption and to recompute the benefits brought forward applying the reduction formula in Section 121.091(3) to the computation of C. Support for this interpretation is found within Section 121.091(2), which provides that the benefits will be computed separately with respect to each of the retirement ages of the member. As to members transferring to FRS, their prior service benefit is already computed separately pursuant to Section 121.092(1)(c).

   
   

8. In that computation, it is assumed the transferee reached maximum age for retirement as a regular member. Therefore, Section 121.091(3) would not be applicable because the Petitioner reached normal retirement age as a special risk member and is assumed to have reached maximum retirement age in the separate computation of his benefit brought forward. Clearly, Section 121.091(2) is not applicable to transferees with dual retirement ages because there has already been a separate calculation of benefit as to credit brought forward. This section is applicable only to dual service within FRS.

   
   

9. Further, if benefits were to be reduced in this manner, the reduction of the benefits brought forward would be 25 percent if one uses the SCOERS maximum age of 60 years, which is the applicable age. Such a reduction of the benefit brought forward makes the benefits of early retirement as a special risk

   member in FRS illusory. The only recourse for the member is to work until FRS normal retirement age of 62 years is reached. This is not only contrary to the public purpose of providing early retirement benefits for special risk members, but actually increases by two years the age to which one must work. Although this provision may appear to give an unearned benefit, it should be remembered that incentives were provided to encourage members of existing systems to transfer to FRS as a means of permitting the early closeout of the multiple retirement systems then in existance and consolidation into the Florida Retirement System.

   
   

10. Applying Section 121.091(1) as construed above to the stipulated facts, A times B would equal 9.91 percent, and the final average compensation,

$15,404.07. This would result in a benefit earned while a member of FRS of

$1,526.54. The years of service for purposes of computing C would be a total of

27.32 years for 53.08 percent. The final average compensation would be the best five of ten years worked prior to November 30, 1970, multiplied by 53.08 percent. The figure of $15,404.07 was apparently based on the member's best five of ten years as of the date of his retirement, and presumably this would not be the same as the best five of ten years as of November 30, 1970, for purposes of computing C as is required by Section 121.091(1)(c), Florida Statutes. The member's final average compensation as of November 30, 1970, would have to be computed from available data. This figure would be multiplied by 53.08 percent and the result added to $1,526.54. The member would be entitled to 1/12 of that total as a monthly benefit.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer would recommend that the Petitioner receive a retirement benefit based upon the computations as outlined in the Conclusions of Law above.

DONE and ORDERED this 13th day of July, 1979, in Tallahassee, Leon County, Florida.

STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

COPIES FURNISHED:

L. Keith Pafford, Esquire Division of Retirement 2639 North Monroe Street Suite 207C - Box 81

Tallahassee, Florida 32303

Richard A. Sicking, Esquire 1951 NW 17th Avenue

Post Office Drawer 520337 Miami, Florida 33152

Docket for Case No: 78-002054

Orders for Case No: 78-002054