Office of Program Policy Analysis and Government Accountability
Office of Program Policy Analysis and Government Accountability

Feasibility of Outsourcing Florida's Statewide Retirement Systems

Report 01-12, February 2001

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Report Summary

  • The Division of Retirement of the Department of Management Services serves 800,000 statewide retirement system members and oversees almost 500 local government retirement systems.
  • The feasibility of outsourcing depends upon generating competition among a sufficient number of bidders willing to provide the same or better services at lower cost combined with strong contract monitoring by the state.
  • The outlook for competition is good. Although none of the public retirement systems we examined have been outsourced, private companies are available that administer large private sector pension plans. In response to our inquiries, representatives of 12 companies indicated that their companies could provide most of the division's services. However, many of these companies do not wish to assume responsibility for oversight of local government retirement systems and handling benefit appeals; outsourcing these two functions may not be feasible or appropriate.
  • If the Legislature decides to outsource the Division of Retirement, the Department of Management Services should follow these steps: identify the services to be outsourced;
  • identify state costs for these services;
  • identify desired performance levels for the services;
  • issue a request for information (RFI);
  • review the RFI responses;
  • issue a request for proposal (RFP) using a managed competition approach;
  • assess the RFP responses;
  • establish a strong contract oversight mechanism; and
  • contract with a vendor or vendors.
  • The potential cost-effectiveness of outsourcing Division of Retirement Services can be determined only when vendors submit price bids that can be compared to current Division of Retirement costs.

Related Reports
  1. Outsourcing Pension Plan's Outreach Services Would Not Be Cost-Effective
    Report 03-61 November 2003
  2. Progress Report: Retirement Program Addresses Backlog, But It Defers Developing Re-Engineering Indicators
    Report 00-01 August 2000
  3. Assessing Privatization in State Agency Programs
    Report 98-64 February 1999
  4. Program Evaluation & Justification Review Retirement Program Administered by the Division of Retirement
    Report 97-75 April 1997
Copies of this report in print or alternate accessible format may be obtained by email OPPAGA@oppaga.fl.gov, telephone (850) 488-0021, or mail 111 W. Madison St., Room 312 Tallahassee, FL 32399-1475.
Copies of this report in print or alternate accessible format may be obtained by email OPPAGA@oppaga.fl.gov, telephone (850) 488-0021, or mail 111 W. Madison St., Room 312 Tallahassee, FL 32399-1475.
government, government support, retirement, pension plans, outsourcing, privatization, contracting, defined benefit