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Council approves offering Florida Retirement System option to city employees; department costs estimated and rollout planned
Summary
The City of Destin will offer employees the option to enroll in the Florida Retirement System after the council voted 6‑0 to direct staff to implement the program, acknowledging higher employer costs and mandatory employee payroll contributions.
The Destin City Council voted 6‑0 to authorize staff to offer all city employees the option to move from the city's current Thrift Savings Plan to the Florida Retirement System (FRS), subject to employee election and vesting rules.
Staff described the existing retirement arrangement (a Thrift Savings Plan in lieu of Social Security) that the city currently funds with a 7.5% employer contribution plus a possible 5% employer match when employees contribute to their 457 accounts. Under the FRS option, staff said employees who elect the system would pay a mandatory 3% employee contribution to FRS and would also be subject to Social Security payroll contributions (6.2%), reducing take‑home pay by about 9.2% for those employees. Employer contributions to FRS are currently estimated at 13.63% and the city would also pay the employer share of Social Security (6.2%) for those employees.
City staff presented pro forma figures showing a possible incremental cost if all employees switched: approximately $448,214 for additional FICA (Social Security) employer costs and $261,880 for the city retirement contribution, for a total hypothetical difference of $710,093. Staff noted that not all employees are expected to opt in, and the budget as presented anticipates partial uptake. The council and staff discussed vesting schedules (FRS pension vesting 8 years; FRS investment plan 1 year), employee payroll impacts, and recruitment/retention goals.
Councilman Bagby moved and the council approved a motion to direct staff to implement the FRS option effective January 1, 2026 (as presented). The vote was 6‑0. Staff will implement the administrative steps required to allow employees to elect FRS and return with final budget adjustments and any required personnel notices.
