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Florida Retirement System


The Florida Retirement System (FRS) offers two retirement plans for state employees: a pension plan for long-term workers and a defined contribution plan for shorter-service workers (or people who do not plan on working for the state for more than six years). The FRS also oversees the retirement plans for state university and community colleges and for local police and firefighters. With so many plans and employee accounts under its management, FRS is the fourth largest public system in the country. If you are overwhelmed trying to sort out your retirement options, a financial advisor can help you with both your employer-sponsored plan and your personal investments.

Types of Retirement Systems in Florida

The state of Florida’s retirement system is massive. Still, its plans are pretty straightforward. All state employees are eligible for either the pension plan or the defined contribution plan (also called the Investment Plan). The exceptions are members of the Mandatory State University System Optional Retirement Program (SUSORP) and the Teachers’ Retirement System. Also, participants in the Deferred Retirement Option Program (DROP) are not eligible for the Investment Plan. Here are all the plans under the FRS umbrella and eligible employees:

– Senior managers employed by the state of Florida, the Florida State Board of Administration, the Judicial Branch, the Legislature, the Executive Director of the Ethics Commission and the Auditor General

Florida Retirement Systems

Plan TitleEligible Employees
Florida Retirement System Investment Plan– All full- and part-time employees of the state of Florida
Florida Retirement System Pension Plan– All full- and part-time employees of the state of Florida
State University System Optional Retirement Program (SUSORP)– The president of each state university
– The chancellor of the Division of Colleges and Universities of the State Board of Education
Senior Management Service Optional Annuity Program (SMSOAP)
Deferred Retirement Option Program– FRS Pension Plan members

Overview of Florida’s Retirement Systems

SmartAsset: Florida Retirement System

Florida Retirement System Investment Plan – This is a defined contribution plan, where both the employer and the employee make contributions. How much is pre-determined by law. But employees choose their investments from 22 funds, and how much they’ll have when they retire depends on how the investments do. Employees own their contributions, of course, while employer-contributions vest after one year.

Florida Retirement System Pension Plan – Employees are eligible after six years of service. As with other pensions, it is funded entirely by the employer. Your average overall compensation, service time and membership class within Florida’s state employee system are the combining factors that dictate your retirement distributions. Those who were enrolled in this program prior to 7/1/2011 will receive an additional cost-of-living increase every July as well.

Deferred Retirement Option Program (DROP) – This program was created as a temporary alternative to the FRS Pension Plan. It enables participants to transfer their retirement assets to DROP so they can earn interest in the FRS Trust Fund. Once you decide to cancel this, the money will be rolled over back to you likely as a lump sum.

State University System Optional Retirement Program – The Florida Department of Management Services built SUSORP as a defined contribution plan, where the employer and employee make contributions (5.14% and 3.00%, respectively). Investment options include mutual companies and annuities offered by five providers:  MetLife, TIAA, AXA, VALIC and VOYA.

Senior Management Service Optional Annuity Program – SMSOAP is essentially the same system as SUSORP, just for a different group of eligible employees. Annuities and mutual funds again make up the vast majority of  investment choices. However, products are available only from TIAA, AXA, VALIC and VOYA.

Retirement Taxes in Florida


While you’re working, any funds placed into a pension plan on your behalf are not subject to the federal income tax. However, once you begin withdrawing that money, it counts as taxable income. Depending on your preference, you can pay the IRS either through regular withholding or via estimated tax payments.

Withholding is likely how you’ve been paying taxes your entire working life, as money gets pulled from your regular checks as needed based on your exemptions and legal status. But if you choose to make estimated tax payments, you’ll need to calculate what you owe and pay quarterly.

In some cases, you may be able to rollover your pension distributions into another one of your retirement accounts, like an individual retirement account (IRA). Doing this will again shield you from federal income taxes, but not forever. Once you withdraw this money from the secondary account, income tax will kick in. This will hold true, unless you have a Roth IRA, for which you pay taxes beforehand.


Because Florida does not impose a state income tax, what you receive from your pension each month will be taxed only by the federal government. Not surprisingly, the state has the highest percentage of senior residents in the U.S.. It’s also considered one of the best places to retire.

Current Financial Health of the Florida Retirement System

SmartAsset: Florida Retirement System

The FRS and its pension fund investment decisions have performed consistently above benchmark for over the last 20 years. It manages around $228 billion across over one million members and retirees who are receiving benefits.

For its pension fund, Florida generally invests in fixed income securities, real estate, global equities, private equities, cash and cash equivalents. There is nothing out of the norm about these investments, although diversification is key to maintaining success.

Tips to Adequately Prepare for Retirement

  • When most people think of retirement, they imagine a time that involves relaxing and enjoying their family. But to be sure that’s what you’re doing, you not only need to save for retirement. You also need to grow your savings through investing. Unfortunately, the interest you can earn from a bank account or certificate of deposit probably isn’t going to be enough.
  • A financial advisor can advise you on investing and manage your portfolio. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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