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(a) Creation of Funds. Subject to Charter Section 1220(b), two entirely separate and distinct funds hereby are created and established for record keeping, actuarial and other administrative purposes related to this Tier 5, one of which shall be known as the “Fire and Police Tier 5 Service Pension Fund” and the other of which shall be known as the “Fire and Police Tier 5 General Pension Fund.”
(b) Fire and Police Tier 5 Service Pension Fund. The Fire and Police Tier 5 Service Pension Fund shall consist of:
(1) deductions made pursuant to Section 4.2014, from the salaries of Plan Members;
(2) all contributions and donations to the Fire Department, the Police Department or the Harbor Department for services by any Plan Members, except amounts of money donated to provide for any medal or permanent competitive award:
(3) all fines imposed upon Plan Members for violations of rules and regulations of the respective department in which they are Department Members;
(4) proceeds from the sale of unclaimed property as determined by the Board; and
(5) all interest, earnings and profits resulting from investments of such monies.
(c) Fire and Police Tier 5 General Pension Fund. The Fire and Police Tier 5 General Pension Fund shall consist of:
(1) all money appropriated to the fund by the Council; and
(2) all interest, earnings and profits resulting from investment of such monies.
(d) Use of Funds. The monies in the Fire and Police Tier 5 Service Pension Fund shall be used, other than for the investment thereof, exclusively for the payment of service pensions granted pursuant to Section 4.2004, for the refund of contributions as provided in this Tier 5 and such other uses as may be authorized by Charter Sections 1220(b) and (c). The monies in the Fire and Police Tier 5 General Pension Fund shall be used, other than for the investment thereof, exclusively for the payment of all pensions other than service pensions, such other benefits as may be provided pursuant to the provisions of this Tier 5, all administrative expenses of the Fire and Police Pension Plan - Tier 5 and such other uses as may be authorized by Charter Sections 1220(b) and (c).
(e) Authorized Transfer Between Funds. In the event that the monies in the Fire and Police Tier 5 Service Pension Fund should be insufficient, at any time, to pay all service pensions, then the Board shall have the power and authority to cause the Controller of the City to transfer to the fund sufficient monies therefor from the Fire and Police Tier 5 General Pension Fund.
(f) Benefits Shall be General Obligation of the City. The obligation to pay benefits pursuant to this Tier 5 shall be a general obligation of the City. Charter Section 1210 shall apply to this Tier 5 in a manner substantially identical to its application to Tier 3.
SECTION HISTORY
Added by Ord. No. 174,367, Eff. 12-19-01.
Amended by: Subsec. (b)(2) amended, Subsec. (b)(6) added, Ord. No. 177,214, Eff. 1-4-06.
(a) Actuarial Standards. The Fire and Police Pension Plan – Tier 5 shall be maintained on a reserve basis which, for the purposes of this Tier 5, shall mean one which provides for the accumulation and maintenance of the Fire and Police Tier 5 Service Pension Fund and the Fire and Police Tier 5 General Pension Fund which together will at all times be equal to the difference between the present value of the obligations assumed and the present value of the monies to be received for paying such obligations, where such present values are estimated in accordance with accepted actuarial methods and on the basis of an assumed rate of interest and the mathematical probabilities of the occurrence of such contingencies as affect both the payment of the assumed obligations and the receipt of monies with which they are to be paid in accordance with the provisions of Charter Section 1210(b)(3), applied as if the term “Tier 3" as used therein were “Tier 5", and Section 4.2014 of this Code.
(b) Actuarial Valuations. The Board shall secure an actuarial valuation showing the cost of maintaining the plan and funds on such reserve basis and, at intervals of not to exceed five years, shall cause to be made an actuarial investigation including, but not limited to, the mortality, service and salary experience of the Plan Members and other beneficiaries and shall further cause to be made annually an actuarial valuation of the assets and liabilities of the funds.
The Board, from time to time and with the advice of the investment counsel, shall establish such an assumed rate of interest for the purpose of actuarial valuations, as in its judgment seems proper in the light of the experience and prospective earnings on the investment of the funds.
(c) Retention of Actuary. The Board shall retain a competent consulting actuary for the purpose of making the necessary actuarial studies, reports, investigations and valuations and shall, with the advice of the actuary, adopt such actuarial assumptions as shall be necessary.
(d) Accounting for Unrealized Profits and Losses. With the advice of the consulting actuary and of the investment counsel, the Board, for the purpose of the actuarial valuations, may provide by rule for the manner and the extent to which any unrealized profits or losses in the equity type investments of the funds shall be taken into account.
(e) Unfunded Liabilities. The unfunded liabilities of the Fire and Police Pension Plan – Tier 5 shall be funded in accordance with the actuarial funding method adopted by the Board upon the advice of its consulting actuary. Any unfunded liabilities resulting from amendment of the provisions of this Tier 5 or by ordinance as authorized by this Tier 5 shall be amortized over a 30 year period. Actuarial experience gains and losses shall be amortized over a 15 year period.
(f) Members of the Airport Department. The determination of one hundred percent (100%) funded status and the one percent (1%) payment by the City of Tier 5 employee contributions pursuant to Charter Section 1222 and Section 4.2014 of this chapter shall be made without regard to any impact resulting from the inclusion of Members of the Airport Department in Tier 6 of the Plan, as authorized by Charter Section 1700(f).
SECTION HISTORY
Added by Ord. No. 174,367, Eff. 12-19-01.
Amended by: Subsec. (f) added, Ord. No. 184,853, Eff. 4-6-17.
(a) Contribution Amount. Each Tier 5 Plan Member shall contribute to the Fire and Police Pension Plan – Tier 5 by salary deduction at the rate of 9% of the amount of the Plan Member’s salary, except that further contributions to the Plan shall not be required from a Plan Member who has served as a Plan Member more than 33 years. The City however shall pay 1% of this contribution contingent on the Fire and Police Pension Plan remaining at least 100% actuarially funded for pension benefits. For purposes of determining the amount of the deduction, Salary shall mean those elements of a Plan Member’s compensation which would be included in calculating Final Average Salary. The administrative head of the Fire Department or the Police Department shall cause to be shown on each and every payroll of such department a deduction of 8% of the amount of salary of each Plan Member whose name appears thereon. In the event that the plan is not at least 100% actuarially funded for pension benefits, the deduction shall be increased to 9%.
In the event Section 1220 of the Charter becomes inoperative, employee contributions shall increase by one-half the increase in the Normal Cost of Tier 5 over the Normal Cost of Tier 3, immediately prior to the inception of Tier 5, as defined by the Plan’s actuary.
(b) Member Accounts. The Board shall maintain an individual account of the contributions by or for each Plan Member, as hereinabove provided. Regular interest shall be credited to such individual accounts as of the last day of June and December of each year at such rate as the Board may deem proper in light of the Fire and Police Pension Plan’s earnings, exclusive of profits and losses on principal heretofore or hereafter resulting from sales of securities. No such interest shall be credited at any other time or to the individual account of any person who is not a Plan Member but such interest shall be credited to the end of the pay period preceding termination, using the last interest rate used for the preceding June or December for crediting the Plan Member’s individual accounts.
(c) Payroll Deduction. Each Tier 5 Plan Member shall be deemed to consent and agree to each deduction made as provided for herein and the payment of each payroll check to such Plan Member shall be a full and complete discharge and acquittance of all claims and demands whatever for the services rendered by each member during the period covered by such payroll, except such claims as such Plan Member has to the benefits or payments provided for in this Tier 5.
(d) Election of Refund Forfeits Right to Benefits. Tier 5 Plan Members or beneficiaries thereof who elect to receive a refund of contributions, forfeit the right to benefits provided in this Tier 5. After payment of any pension benefit has commenced, the Tier 5 Plan Member or beneficiaries forfeit the right to a refund of the Plan Member’s contributions. Tier 5 Plan Members who return to active duty from a disability pension may not thereafter have their contributions refunded. A terminated Tier 5 Plan Member who had elected to have contributions returned, but who re-enters service and again becomes a Plan Member, shall have the privilege of regaining the prior service credit by repaying the amount of the Plan Member’s previously refunded contributions and interest and an amount calculated as interest which would have been earned between the date of original termination of status as a Tier 5 Plan Member and the date of re-entry into service as a Department Member.
(e) Assuring Full Member Contributions. The Board shall have rule-making authority to insure that the Fire and Police Pension Plan – Tier 5 receives member contributions for all periods of credited service, except that the Board shall not have authority to require contributions for service credit for military service and for periods while a Tier 5 Plan Member is receiving a disability pension, or full pay for Injury On Duty. Tier 5 Plan Members, however, may elect to make contributions for periods of Injury On Duty compensated at the rate provided by general law in order to acquire credit for Years of Service for such period. Such contributions shall be at the contribution rate herein provided and shall be based on the salary the Plan Member would have received if the Plan Member had not occupied Injury On Duty status.
(f) Time Contributions Commence. Members who transfer into Tier 5 from Tiers 2, 3, or 4 shall pay contributions in accordance with subsection (a) from the date of the Tier’s inception unless and until the member has 33 years of service.
SECTION HISTORY
Added by Ord. No. 174,367, Eff. 12-19-01.
(a) Determination of Cost of Living Adjustments. The Board, before May 1 of each year commencing with the year 2002, shall determine the percentage of the annual increase or decrease in the cost of living as of March 1 of that year from March 1 of the preceding year as shown by the Consumer Price Index for All Urban Consumers as published by the Bureau of Labor Statistics or such other index as the Federal Government may develop to replace the All Urban Consumers Index for the area in which the City is located. If any such index were not to reflect the cost of living as of a particular March 1, then the index for the closest preceding date shall be used.
(b) Annual Cost of Living Adjustments.
(1) Commencing as of July 1 of the year in which the Board shall determine the percentage of increase or decrease in the cost of living, the monthly amounts of all pensions granted pursuant to the provisions of this Tier 5, shall be increased or decreased by reason of such determined percentage of increase or decrease in the cost of living, not to exceed an increase or decrease of 3% in any given year. Pensions which became payable before July 1, but subsequent to the preceding July 1, will be adjusted on a prorated basis whereby one twelfth of the annual adjustment shall be applied for each completed month since such pension commenced. In no event shall pensions adjusted hereunder ever be decreased below the amount received by the Beneficiary when such pension first became payable to the Beneficiary.
(2) If the percentage of increase in the cost of living, as determined by the Board in accordance with subsection (a), were to exceed three percent (3%), the percentage of increase in the cost of living in excess of three percent (3%) shall be accumulated and carried over and added to the retiree’s “COLA bank”. In subsequent years, should the Board determine, based upon the applicable index, that the cost of living increase is below three percent (3%), an additional percentage, if available in such COLA bank, will be withdrawn from the retiree’s COLA bank and applied to that current year’s cost of living increase, up to the maximum of three percent (3%).
(c) Discretionary Cost of Living Adjustments. To the extent that the annual cost of living adjustments provided by subsection (b) hereof are less than the annual change in the cost of living as determined in subsection (a) hereof, the Council may grant discretionary cost of living adjustments, in addition to the annual cost of living adjustments provided by subsection (b) hereof, subject to the following conditions and requirements:
(1) No More Than Every Three Years. Discretionary adjustments may not be provided more frequently than once every three years, counting from the date the last discretionary adjustment became effective.
(2) Limit of Adjustments. Discretionary adjustments shall not exceed one-half of the difference between the percentage of the annual increases in the cost of living, as determined pursuant to the provisions of subsection (a) of this section, and the annual adjustments made pursuant to subsection (b) of this section for each of the preceding three years. Discretionary adjustments shall be allocated to each of the three years for which an adjustment is made. The adjustment may not exceed the percentage available in the retiree’s COLA bank and upon application the additional percentage will be withdrawn from the retiree’s COLA bank.
(3) Pensions Eligible for Adjustment. Discretionary adjustments herein provided shall be applied to pensions granted pursuant to Sections 4.2004, 4.2006, 4.2008 and 4.2008.5 subject to the following limitations: If a pension became payable on or after the July 1 immediately preceding the effective date of such adjustment, it shall not be so adjusted; and any pension which shall have become payable at a time within the three year period (but prior to the immediately preceding July 1) shall be prorated on a monthly basis to the number of completed months for which the pension was received, provided that pensions paid pursuant to Section 4.2008(a)(3), (4) or (5), Section 4.2008(c), (e) or (f), Section 4.2008.5(a) (3), (4) or (5), 4.2008.5(a) (7)(a), (b) or (c) or 4.2008.5(e) or (f) shall be adjusted by basing eligibility on the date upon which the Retired Plan Member’s pension became effective.
(4) Report to Council Prior to Adoption by Ordinance. Discretionary cost of living adjustments may be provided only by ordinance. Ordinances providing discretionary adjustments may not be finally adopted until the Council has first obtained and published a report from the actuary or actuaries of the Fire and Police Pension Plan – Tier 5 indicating the present value of the liabilities that will be created by the proposed discretionary adjustment. This report must identify the annual funding cost of amortizing this liability over a 30 year period utilizing the funding procedure adopted by the Board.
(5) Vote by Council. Ordinances adopted pursuant to this subsection must be by not less than two-thirds of the membership of the Council, subject to the veto of the Mayor and re-adoption by the Council by not less than three-fourths of the membership of Council. No such ordinance may be finally adopted by the Council until the expiration of at least 30 days after its first presentation to the Council, nor until after a public hearing has been held thereon. Ordinances adopted pursuant to this subsection, shall be published no later than November 30 and shall become effective January 1.
(6) Prospective Application. All adjustments provided in this subsection are to be applied prospectively only and shall not be understood to permit retroactive adjustments of pensions.
SECTION HISTORY
Added by Ord. No. 174,367, Eff. 12-19-01.
(a) Purpose of this Section. It is the purpose of this section to enable the Council to provide by ordinance a program or programs whereby persons receiving pensions pursuant to the provisions of this Tier 5 may become eligible to have subsidy payments made on their behalf for health insurance, accident insurance, life insurance or health care plan coverage or coverage for any combination of such programs as determined by the Council and subject to such conditions of entitlement as may be set forth in any ordinance adopted in accordance with the provisions of this section.
(b) Mode of Adoption of Ordinance. Ordinances adopted pursuant to this section must be approved by not less than two-thirds of the membership of the Council, subject to the veto of the Mayor and readoption by the Council by three-fourths of the membership of the Council. No such ordinance may be finally adopted by the Council until the expiration of at least 30 days after its first presentation to the Council, nor until after a public hearing has been held thereon. Any ordinance adopted pursuant to this section shall go into effect upon its publication, but the terms of such ordinance, or portions thereof, may be operative at a later date or dates. Council shall, prior to approval of the ordinance, be advised in writing by an enrolled actuary as to the cost of the proposed benefits.
(c) The Council may establish by ordinance the maximum subsidy payments for beneficiaries under any programs established by the Council pursuant to subsection (a), including appropriate limitations for employees receiving subsidies from other City plans.
(d) Administration of Subsidy Program. Any subsidy program adopted by ordinance pursuant to this section shall be administered by the Board. In furtherance thereof, the Board shall have the authority to contract for suitable programs as defined in subsection (a), to be made available to retired members or other beneficiaries, and shall have the power to adopt such rules as it deems necessary to administer such programs. Notwithstanding the foregoing provisions, the Board may authorize the Personnel Department to administer any program or part thereof established by ordinance pursuant to the provisions of this section, but the Board shall reimburse the General Fund of the City of Los Angeles for all necessary expenses incurred by the Personnel Department in administering these programs.
(e) The Council may by ordinance authorize the Board to increase or decrease subsidy payments pursuant to factors, standards, and limitations prescribed in the ordinance.
SECTION HISTORY
Added by Ord. No. 174,367, Eff. 12-19-01.
Amended by: Subsecs. (c) and (e), Ord. No. 176,731, Eff. 6-21-05.
(a) Notwithstanding any other provisions of this Tier 5, the benefits payable to any person who became a Member of the Fire and Police Pension Plan prior to January 1, 1990, shall be subject to the greater of the following limitations:
(1) The limitations set forth in Section 415 of the Internal Revenue Code; or
(2) The accrued benefit of the Member determined without regard to any amendment to the Plan made after October 14, 1987, as provided in Section 415(b)(10)(A) of the Internal Revenue Code.
(b) The benefits payable to any person who becomes a Member of the Fire and Police Pension Plan on or after January 1, 1990, shall be subject to the limitations set forth in Section 415 of the Internal Revenue Code.
(c) The Council shall, by ordinance, provide such benefits as are necessary to preserve the level of benefits in effect prior to the effective date of this section.
(d) Should it be determined that the provisions of any section of this Tier 5 violate the limitations of Section 415 or the incidental death benefit provisions of the Internal Revenue Code, such section shall be deemed inapplicable to the extent necessary to achieve compliance. The Council shall by ordinance, adopt such measures as are necessary to achieve compliance and to preserve the level of benefits in effect prior to the effective date of this section.
(e) Ordinances adopted pursuant to this section shall be adopted in the same manner as those authorized by Section 4.2018, except however any Ordinances adopted shall be effective upon publication.
(f) If any of the provisions of Section 415 of the Internal Revenue Code should be repealed, the provisions of this section shall be deemed repealed to the same extent.
(g) All benefits provided pursuant to any ordinance adopted under the provisions of subsection (e) shall be administered by the Board. A separate and distinct fund or funds shall be created by the Board as required to administer such benefits. Such fund or funds shall not contain employee contributions. The Board shall also determine the manner of funding any liabilities incurred as a result of ordinances adopted pursuant to this section.
SECTION HISTORY
Added by Ord. No. 174,367, Eff. 12-19-01.
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