Updated October 2, 2026. Quick answer: A Florida Retirement System member is in one of two plans: the Pension Plan, a formula benefit with a cost-of-living adjustment and DROP, or the Investment Plan, an account that pays whatever it has accumulated. The first choice is final except for one later opportunity to move in either direction, and both directions cost something: moving to the Investment Plan cancels the Pension Plan service credit in exchange for a present-value transfer, and moving back to the Pension Plan means paying in a present-value sum from the Investment Plan account and other employee money. An employee hired on or after January 1, 2018 who makes no choice in the eight-month window is placed in the Investment Plan, except Special Risk Class employees, who default into the Pension Plan; an employee hired after the initial election period but before that date stays in the Pension Plan if no choice is made (s. 121.4501(4)).
What each plan pays
The Pension Plan pays a defined benefit set by formula. The handbook says Pension Plan retirees, including DROP participants, get “an annual COLA in their July benefit payment of each year”, and that “Your individual COLA is calculated when you retire based on your years of service before July 1, 2011, divided by your total years of service at retirement.” The statute behind the COLA is s. 121.101. For a retiree whose effective retirement date is on or after July 1, 2011, subsection (4)(c) says: “This factor shall equal the product of 3 percent multiplied by the quotient of the sum of the member’s service credit earned for service before July 1, 2011, divided by the sum of the member’s total service credit earned.” For a retiree whose effective retirement date is before July 1, 2011, subsection (3)(b) says: “For those retirees and annuitants who have received a cost-of-living adjustment under this subsection, the adjusted monthly benefit shall be the amount of the monthly benefit being received on June 30 immediately preceding the adjustment date plus an amount equal to 3 percent of this benefit.” Subsection (5) makes the end of the subsection (4) formula conditional on funding: “Subject to the availability of funding and the Legislature enacting sufficient employer contributions specifically for the purpose of funding the expiration of the cost-of-living adjustment specified in subsection (4), in accordance with s. 14, Art. X of the State Constitution, the cost-of-living adjustment formula provided for in subsection (4) shall expire effective June 30, 2016, and the benefit of each retiree and annuitant shall be adjusted on each July 1 thereafter, as provided in subsection (3).” Whether that condition has been met is not settled by the statute alone, and this page did not research it. The Investment Plan works the other way. The handbook says “The benefit amount at retirement is the sum that accumulates in the member’s account, based on contributions made and investment earnings/losses.” It defines the cost-of-living adjustment as “An annual increase in the FRS Pension Plan retirement benefit.” The sources read for this page state no cost-of-living adjustment for the Investment Plan either way.
| Pension Plan | Investment Plan | |
|---|---|---|
| Benefit | A formula benefit paid for life | The balance the account has accumulated |
| Cost-of-living adjustment | Yes, an annual July increase | Not stated in the sources read |
| DROP | Open to vested members at normal retirement date | Not available |
| Employee contribution | Required rate set by the handbook (see below) | 3.00% of gross compensation in every membership class since July 1, 2011, the same as the Pension Plan (s. 121.71(3)) |
| Who carries the investment risk | The system | The member |
The handbook’s employee contribution line for the Pension Plan reads: “As of July 1, 2011, the required employee contribution rate is 3%. Employee contributions made on or after July 1, 2011, are paid on a pre-tax basis.” For the Investment Plan the statute says contributions are “The employee and employer shall make the required contributions to the investment plan based on a percentage of the employee’s gross monthly compensation”. The employee rate is in s. 121.71(3), which reads: “Required employee retirement contribution rates for each membership class and subclass of the Florida Retirement System for both retirement plans are as follows:” The table that follows lists 3.00 percent of gross compensation, effective July 1, 2011, for the Regular Class, the Special Risk Class, the Special Risk Administrative Support Class, the Senior Management Service Class and each Elected Officers’ Class, and 0.00 percent for DROP. Subsection (2) adds: “Beginning July 1, 2011, each employee shall contribute the contributions required in subsection (3).”
Vesting is different in each plan
Pension Plan vesting depends on when the member was first enrolled. The handbook says: “If you are initially enrolled in the FRS on or after July 1, 2011, you will be vested in the Pension Plan after eight years of creditable service, regardless of your membership class.” For earlier members it says: “If you are initially enrolled in the FRS before July 1, 2011, you will be vested in the Pension Plan after six years of service unless your covered employment ended before July 1, 2001.” Members who stopped covered work before the older cutoff had class-specific periods: Regular, Special Risk and Special Risk Administrative Support Class members vested after 10 years of creditable service, EOC members after eight and SMSC members after seven (handbook, vesting section).
The statute behind these periods is s. 121.021(45). Paragraph (b) says: “Any member initially enrolled in the Florida Retirement System on or after July 1, 2011, shall be vested in the pension plan upon completion of 8 years of creditable service.” Paragraph (a)3. says: “Any member initially enrolled in the Florida Retirement System on July 1, 2001, through June 30, 2011, shall be deemed vested upon completion of 6 years of creditable service.” For a member not employed in a covered position on July 1, 2001, paragraph (a)2. adds: “However, a member is not required to complete more years of creditable service than would have been required for that member to vest under retirement laws in effect before July 1, 2001.” The class-specific periods the handbook lists for those members are not in that paragraph; the sentence points to the earlier retirement laws, which this page did not read.
Investment Plan vesting is faster. On the member’s own contributions the statute says “fully and immediately vested in all employee contributions”, and on the employer’s it says “a member is vested after completing 1 work year with an employer, including any service while the member was a member of the pension plan”. The trade is a forfeiture rule: unvested employer money is held in a suspense account and “shall be forfeited, including accompanying service credit, by the member if the member is not reemployed as an eligible employee within 5 years after termination.” A member who takes a distribution at termination faces a related rule: “the member shall forfeit all nonvested employer contributions, and accompanying service credit, paid on behalf of the member to the investment plan.”
The figures in one place
| Item | Figure |
|---|---|
| Pension Plan vesting, first enrolled on or after July 1, 2011 | 8 years of creditable service |
| Pension Plan vesting, first enrolled before July 1, 2011 | 6 years of service (pre-2001 exception above) |
| Investment Plan, employee contributions | Vested at once |
| Investment Plan, employer contributions | Vested after 1 work year |
| Unvested employer money is forfeited if the member is not reemployed within | 5 years after termination |
| Time to choose a plan after the month of hire | Until the last business day of the eighth month if hired on or after January 1, 2018; the fifth month, to choose the Investment Plan, if hired earlier |
| Pension Plan employee contribution rate (handbook, as of July 1, 2011) | 3% |
| DROP maximum participation period | 96 months |
The first choice, and what happens if you do not make one
Section 121.4501 starts every eligible employee in the Pension Plan and gives a limited window to choose: “any such employee shall be enrolled in the pension plan at the commencement of employment and may, by the last business day of the eighth month following the employee’s month of hire, elect to participate in the pension plan or the investment plan.” The statute is blunt about the finality: “The election to participate in the pension plan or investment plan is irrevocable, except as provided in paragraph (f).”
If the employee does nothing, the default depends on the hire date and the job. The eight-month window above and the default below are the rule for employees hired on or after January 1, 2018. Section 121.4501(4)(b)1. says: “With respect to employees who become eligible to participate in the investment plan by reason of employment in a regularly established position commencing on or after January 1, 2018, or who did not complete an election window before January 1, 2018, any such employee shall be enrolled in the pension plan at the commencement of employment and may, by the last business day of the eighth month following the employee’s month of hire, elect to participate in the pension plan or the investment plan.” For most employees: “the employee is deemed to have elected the investment plan and shall default into the investment plan retroactively to the employee’s date of employment.” The contributions made before the default are not left idle. The statute says they “shall be placed in a default fund as designated by the State Board of Administration. The employee may move the contributions once an account is activated in the investment plan.” For Special Risk Class employees the default is the other way: “the employee is deemed to have elected the pension plan and shall default into the pension plan retroactively to the employee’s date of employment.”
An employee hired after the first election period closed but before January 1, 2018 gets a different rule. Section 121.4501(4)(a)1. says: “With respect to an eligible employee who did not participate in the initial election period or who is initially employed in a regularly established position after the close of the initial election period but before January 1, 2018, such employee shall, by default, be enrolled in the pension plan at the commencement of employment and may, by the last business day of the 5th month following the employee’s month of hire, elect to participate in the investment plan.” Paragraph (4)(a)1.b. then adds: “An employee who fails to elect to participate in the investment plan within the prescribed time period is deemed to have elected to retain membership in the pension plan, and the employee’s option to elect to participate in the investment plan is forfeited.”
The one-time second election
The statute then gives one more chance. “the employee shall have one opportunity, at the employee’s discretion, to choose to move from the pension plan to the investment plan or from the investment plan to the pension plan.” To use it, “Eligible employees may elect to move between plans only if they are earning service credit in an employer-employee relationship”. The move is effective on the first of the following month: “such elections are effective on the first day of the month following the receipt of the election by the third-party administrator”.
| Direction | What moves | What it costs |
|---|---|---|
| Pension Plan to Investment Plan | A present-value transfer from the Pension Plan into the Investment Plan account | All Pension Plan service credit is nullified for a future Pension Plan benefit |
| Investment Plan to Pension Plan | The member pays in a present-value sum from the Investment Plan account, and other employee money if needed | Employee money above what would have accrued in the Pension Plan cannot be refunded |
Going to the Investment Plan, the statute says the employee “may elect to transfer to the investment plan a sum representing the present value of the employee’s accumulated benefit obligation under the pension plan”, and “Upon transfer, all service credit earned under the pension plan is nullified for purposes of entitlement to a future benefit under the pension plan.”
Coming back is the costly direction. The statute says the employee “must transfer from his or her investment plan account, and from other employee moneys as necessary, a sum representing the present value of that employee’s accumulated benefit obligation”. For employees who first became eligible for the Investment Plan after the original start dates in the statute, the amount is different: they “must transfer from his or her investment plan account, and from other employee moneys as necessary, a sum representing the employee’s actuarial accrued liability.” The same section limits the other side of the trade: “A refund of any employee contributions or additional member payments made which exceed the employee contributions that would have accrued had the member remained in the pension plan and not transferred to the investment plan is not permitted.” Anything left over is not lost, but the same paragraph limits when it can leave the Investment Plan: “If the employee chooses to transfer from the investment plan to the pension plan and retains an excess account balance in the investment plan after satisfying the buy-in requirements under this paragraph, the excess may not be distributed until the member retires from the pension plan.” On the other side it says: “The excess account balance may be rolled over to the pension plan and used to purchase service credit or upgrade creditable service in the pension plan.”
The amount in either direction is computed by the division using a formula certified by an actuary, from the member’s own service and pay, so it cannot be estimated from this page. The handbook read for this page has no separate section on the second election; the statute is the authority.
DROP, and why it matters to the choice
The handbook’s DROP questions answer who can use it: “All vested members of the FRS Pension Plan who have reached their normal retirement date are eligible to participate.” The same list names who cannot: “Renewed members of the FRS Pension Plan and members of the FRS Investment Plan.” So a member who moves to the Investment Plan gives up DROP, and the handbook explains what DROP does for a Pension Plan member: “your monthly retirement benefits accumulate in the FRS Trust Fund, earning tax-deferred interest, while you continue to work and earn a salary but no additional retirement service credit.” The statute caps it, with exceptions: “Except as provided in this paragraph, an eligible member may elect to participate in DROP for a period not to exceed a maximum of 96 calendar months.” The paragraph then lets certain school instructional personnel “Extend DROP participation beyond the initial 96-calendar-month period” and limits an elected officer who defers the election: “An elected officer who exercises this option may participate in DROP for up to 96 calendar months or no longer than the succeeding term of office, whichever is less.” The same paragraph has further extension rules for some K-12 administrative personnel and for elected officers; check s. 121.091(13)(b) if any of these applies. At the end the handbook says “you must terminate all employment with all FRS employers or forfeit your DROP benefits”.
DROP is covered across systems on the DROP explainer, and the existing FRS page is FRS retirement decisions.
Pension Plan payment options, if you stay
A Pension Plan member who retires chooses a payment option. The statute fixes the finality: “The option selected or determined for payment of benefits as provided in this section shall be final and irrevocable at the time a benefit payment is cashed or deposited or credited to the Deferred Retirement Option Program as provided in subsection (13).” Two rules let a retiree who chose one of the joint-annuitant options in s. 121.091(6)(a)3. or 4. change the survivor designation after payments start. Paragraph (6)(d)1. says: “A retired member may change his or her designation of a joint annuitant only twice.” And (6)(d)2. says: “In the event of the dissolution of marriage of a retired member and a joint annuitant, such member may make an election to nullify the joint annuitant designation of the former spouse, unless there is an existing qualified domestic relations order preventing such action.” The handbook describes the first options. “Option 1: Provides a monthly benefit payment to you for your lifetime. Option 1 does not provide a continuing benefit to a beneficiary.” “Option 2: Provides a reduced monthly benefit payment to you for your lifetime.” The handbook adds that “if you die within 10 years (120 months) of your effective retirement date, your beneficiary will receive a monthly benefit payment in the same amount you were receiving”. “Option 3: Provides a reduced monthly benefit payment to you for your lifetime and a continuing benefit to your surviving joint annuitant.” And the price of a survivor benefit: “If you select Option 2, Option 3, or Option 4, your benefit will be actuarially reduced from the Option 1 amount.”
If you leave before retiring
A terminated Pension Plan member who paid employee contributions can take a refund. The handbook lists it as the choice to “Take a refund of your employee contributions and lose the associated service credit;”, and adds: “If you choose to take a refund of your employee contributions all service credit represented by the refund is cancelled.” A returning member can buy the service back: “you must be employed for one work year before you can purchase your refunded service by repaying the contributions refunded to you, plus interest, to restore the service credit.” A member who took a refund keeps the earlier plan choice. The statute: “a member of the pension plan who obtains a refund of employee contributions retains his or her prior plan choice upon return to employment”.
The statute adds conditions the handbook lines above do not state. Section 121.091(5)(a) says: “Effective July 1, 2011, upon termination of employment from all participating employers for 3 calendar months as defined in s. 121.021(39)(c) for any reason other than retirement, a member may receive a refund of all contributions he or she has made to the pension plan, subject to the restrictions otherwise provided in this chapter.” It continues: “The refund may not include any interest earnings on the contributions for a member of the pension plan.” “Employer contributions made on behalf of the member are not refundable.” “A member may not receive a refund of employee contributions if a pending or an approved qualified domestic relations order is filed against his or her retirement account.”
An Investment Plan member who takes a distribution is treated as retired for reemployment purposes: “A member of the investment plan who takes a distribution of any contributions from his or her investment plan account is considered a retiree.” That affects a later return to FRS work, so the rule is worth reading before a withdrawal.
What this page could not settle
- The employee rate for the Investment Plan is quoted above from s. 121.71(3); the Investment Plan’s employer contribution allocations are in sections of Chapter 121 that this page did not read, so none is stated.
- No cost-of-living adjustment for the Investment Plan is stated in the statute or handbook read; the handbook defines a COLA only as a Pension Plan feature.
- The rollover and withdrawal options for a terminated Investment Plan member are in a section this page did not read; only the retiree-on-distribution rule is quoted.
- The class-specific vesting periods for members whose covered employment ended before July 1, 2001 are in laws in effect before that date, which this page did not read; the handbook’s figures for them are quoted.
- The FRS plan-comparison pages on myfrs.com could not be retrieved, so nothing here is taken from them.
Common mistakes
- Treating the first plan election as reversible. The statute makes it irrevocable except for one later opportunity.
- Assuming a choice you never made cannot happen. A new hire who does nothing in the window is defaulted, and the default differs by class and by hire date.
- Using the second election without pricing it. Both directions turn on a present-value sum the division calculates from your own record.
- Moving to the Investment Plan and expecting DROP. DROP is a Pension Plan feature.
- Taking an Investment Plan distribution without reading the reemployment rule for retirees.
Related on this site: the FRS retirement decisions page, how DROP plans work, public pension retirement decisions by system and Florida retirement taxes.
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Answer againSources
- Fla. Stat. 121.4501, Florida Retirement System Investment Plan (2025 Florida Statutes, Florida Senate): https://www.flsenate.gov/Laws/Statutes/2025/121.4501
- Florida Division of Retirement, FRS Pension Plan Member Handbook, 2026 Edition: https://frs.fl.gov/forms/member_handbook.pdf
- Fla. Stat. 121.091, Benefits payable under the system (2025 Florida Statutes, Florida Senate): https://www.flsenate.gov/Laws/Statutes/2025/121.091
- Fla. Stat. 121.021, definitions, including vested and normal retirement date (2025 Florida Statutes, Florida Senate): https://www.flsenate.gov/Laws/Statutes/2025/121.021
- Fla. Stat. 121.101, cost-of-living adjustment of benefits (2025 Florida Statutes, Florida Senate): https://www.flsenate.gov/Laws/Statutes/2025/121.101
- Fla. Stat. 121.71, uniform rates and procedures for contributions (2025 Florida Statutes, Florida Senate): https://www.flsenate.gov/Laws/Statutes/2025/121.71
Sources: the primary documents linked above, read on October 2, 2026, except the added passages from Fla. Stat. 121.021, 121.091, 121.101, 121.4501 and 121.71 on hire-date defaults, the cost-of-living adjustment, vesting, contribution rates, joint-annuitant changes, refunds, the Investment Plan excess balance and the DROP term, which were read in the 2025 Florida Statutes on October 24, 2026. General information from each system’s own published materials, not legal, tax or financial advice. Your own member statement and the system’s current rules decide your benefit, and a pension counsellor at the system or a fee-only adviser is the right place to confirm anything consequential.