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(a) Council Authority. The Council may by ordinance adopted in accordance with the provisions of this section establish a program whereby a deferred retirement option plan (DROP) is created and offered to sworn members of the Fire and Police Departments on a voluntary basis as an alternative method of benefit accrual in the Fire and Police Pension Plans. The authority granted in this section shall include the authority to make necessary modifications to requirements of other Charter provisions of the various Fire and Police Pension Plans for the specific and limited purpose of implementing a DROP.
(b) Limitations of DROP. The authority given to the Council to establish a DROP is specifically limited as follows:
(1) DROP Shall Be Cost Neutral to the City. Members who elect to participate in the program will have access to a lump sum benefit in addition to their normal monthly retirement allowance at their actual retirement. With regard to plan funding, DROP shall be cost neutral to the City of Los Angeles as defined by the Plan’s actuary. DROP shall be designed to ensure that the implementation of the program will not adversely affect the tax-qualified status of the Fire and Police Pension Plans.
(2) Five Year Window Period for Enrollment. There shall be a five-year window period for enrollment, after which the City may review and evaluate DROP and at its sole discretion determine to continue DROP by ordinance.
(3) Operability of this Section. This section shall become inoperative in the event that a demand is made by a bargaining unit representing employees affected by this section that an impasse over a proposed ordinance authorized by this section be resolved by binding arbitration if such arbitration is authorized by law. In such event, pension benefits shall again be determined by Charter provisions in effect at the time this section was adopted. Courts of law shall have the exclusive authority to resolve disputes over whether an ordinance authorized by this section meets the cost neutrality requirement established by this section or satisfies any other legal requirement.
(c) Mode of Adoption. Ordinances adopted pursuant to this section shall be adopted in the same manner as provided in section 1618(b), but the City Council shall be advised in writing by an enrolled actuary as to the cost of the proposed program.
SECTION HISTORY
Added by Charter Amendment 2 § 1, approved April 10, 2001, effective May 5, 2001.
Editor’s Note: Refer to Los Angeles Administrative Code Division 4, Chapter 21 (§§ 4.2100 et seq.) for provisions regarding the Deferred Retirement Option Plan.
Notwithstanding any provision of this Part 3 to the contrary, effective July 1, 2001:
(a) The separate Tiers of the Plan shall be merged together and shall thereafter be the single Fire and Police Pension Plan;
(b) The assets of the separate Service Pension Funds, General Pension Funds and other funds described in this Part 3 shall become the assets of the single Plan, but the funds may be accounted for separately by the Board for record keeping, actuarial and other administrative purposes. If the total of the items calculated under Section 1210(b) with respect to a single Tier is a negative number, the assets allocated to that Tier shall be reduced by the amount of such negative number that is applied as an offset to a positive total of items for another Tier. In addition, such offset shall be treated as an increase of assets allocated to such other Tier; and
(c) All of the assets in the Plan, regardless of the fund to which they may be assigned for record keeping, actuarial or other administrative purposes, shall be available to pay any of the benefits provided for under the Plan, except as otherwise provided by Section 401(h) of the Internal Revenue Code.
(d) Notwithstanding the preceding subsections of this section, Member Contributions shall be paid into the applicable Service Pension Fund, and the moneys in the Service Pension Fund(s) shall continue to be applied solely to the payment of service pensions and, if applicable, refunds to Members.
(e) The Council is hereby authorized to provide by ordinance conforming and technical changes to this Part to implement the intention of this Section that the Tiers function as different benefit structures within the single Plan. Ordinances adopted pursuant to this section shall be adopted in the same manner as provided in Section 1618(b) of this Charter.
SECTION HISTORY
Added by Charter Amendment A § 5, approved June 5, 2001, effective July 10, 2001.
(a) Council Authority. The Council shall by ordinance adopted in accordance with the provisions of this section establish a new tier to be known as Tier 5 to the Fire and Police Pension Plan. Such ordinance shall be adopted by the Council no later than December 31, 2001.
(b) Provisions of Tier 5. The new tier to the Fire and Police Pension Plan shall include the following provisions:
(1) Eligibility for Membership: Each person who shall be appointed as a Department Member on or after January 1, 2002, shall become a Tier 5 member. In addition, any Plan Member currently in Tiers 2, 3, or 4, as of January 1, 2002, hired prior to that date who makes an irrevocable election in writing during a six to twelve month time period to be specified by the Board of Fire and Police Pension Commissioners after adoption of this section shall become a Tier 5 member.
(2) Service Pension Formula. Normal Retirement shall be with a minimum of 20 years of service and a minimum age of 50 years. The minimum service pension payable shall be equal to 50% of Final Average Salary at age 50 with 20 years of service. For each year of service after 20 years, an amount of 3% of Final Average Salary shall be provided per year of service, with the exception of the 30th year, in which 4% shall be provided. The maximum percentage of Final Average Salary payable, regardless of length of service, shall be 90% of Final Average Salary. The definition of Final Average Salary shall be the same definition as contained in Tier 3. Notwithstanding the above, a Tier 5 member may elect a deferred retirement with at least 20 years of service, however, the retirement formula will be identical to that contained in Tier 3.
(3) Member Contributions. Each Tier 5 Member shall contribute by salary deduction at a rate of 9% of the amount of his or her salary, except that further contributions shall not be required from a Tier 5 Member who has served as a Plan Member more than 33 years. The City shall pay 1% of this contribution contingent on the Fire and Police Pension Plan remaining at least 100% actuarially funded for pension benefits. 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.
(4) Refund of Contributions. Tier 5 Members shall upon termination of employment be entitled to a refund of contributions.
(5) Cost-of-Living Adjustments. The annual cost of living adjustment shall be the equivalent to the provisions of Tier 3, except that there shall also be included a provision providing for the banking of amounts above the maximum annual increase and a provision crediting such banked amounts to members’ pensions during years when the applicable Consumer Price Index is less than the maximum permitted.
(6) Recall to Active Duty. The recall to active duty provisions shall be substantially identical to those currently provided for in Tier 2, Charter Section 1410(b).
(7) Compliance with Certain Internal Revenue Code Provisions. Tier 5 shall contain substantially identical provisions regarding compliance with Internal Revenue Code provisions as those set forth in Section 1520 of this Charter.
(8) Other Provisions and Definitions. All other provisions and definitions of Tier 5 not otherwise described herein shall be substantially identical to those of Tier 3. Notwithstanding the above, Tier 2 Members who elect to transfer into Tier 5, shall retain the existing Tier 2 Survivorship pension benefits contained in Section 1414 of this Charter, subject to the cost of living adjustment described in subsection (5), except that the active duty death survivor benefits shall be calculated at the higher rate currently contained in Tier 3.
(c) Technical Corrections. The Council is hereby authorized to provide conforming and technical changes to Tier 5 that do not result in any additional costs to the Fire and Police Pension Plan.
(d) Operability of the Section. This section shall become inoperative in the event that a demand is made by a bargaining unit representing employees affected by this section that an impasse over a proposed ordinance authorized by this section be resolved by binding arbitration if such arbitration is authorized by law. In such event, pension benefits shall again be determined by Charter provisions in effect at the time this section was adopted. Courts of law shall have the exclusive authority to resolve disputes over whether an ordinance authorized by this section satisfies any legal requirement.
(e) Mode of Adoption. Ordinances adopted pursuant to this section shall be adopted in the same manner as provided in Section 1618(b) of this Charter, but the City Council shall be advised in writing by an enrolled actuary as to the cost of the proposed program.
SECTION HISTORY
Added by Charter Amendment A § 6, approved June 5, 2001, effective July 10, 2001.
Editor’s Note: Refer to Los Angeles Administrative Code Division 4, Chapter 20 (§§ 4.2000 et seq.) for provisions regarding Fire and Police Pension Plan Tier 5.
(a) Council Authority. The Council may by ordinance adopted in accordance with the provisions of this section reactivate the survivor benefit of a Qualified Surviving Spouse under any Tier of the Fire and Police Pension Plan who had remarried prior to December 5, 1996, and, as a result thereof, had their survivor benefit discontinued.
(b) Limitations of Ordinance. The authority given to the Council to reactivate the survivor benefit is specifically limited as follows:
(1) No benefits shall be paid for any period prior to the effective date of this Charter amendment.
(2) Operability of this Section. This section shall become inoperative in the event that a demand is made by a bargaining unit representing employees affected by this section that an impasse over a proposed ordinance authorized by this section be resolved by binding arbitration if such arbitration is authorized by law. In such event, pension benefits shall again be determined by Charter provisions in effect at the time this section was adopted.
(c) Mode of Adoption. Ordinances adopted pursuant to this section shall be adopted in the same manner as provided in section 1618(b), but the City Council shall be advised in writing by an enrolled actuary as to the cost of the proposed program.
SECTION HISTORY
Added by Charter Amendment B, approved June 5, 2001, effective July 10, 2001.
(a) Council Authority. The Council may, by ordinance adopted in accordance with the provisions of this section, authorize the return to active duty of Retired Plan Members from any Tier.
(b) Limitations on Council Authority. The authority given to the Council herein is specifically limited as follows:
(1) A retiree's pension shall be terminated when he or she returns to active duty.
(2) The return to active duty provisions shall be substantially similar to those contained in Charter Section 1410 for Tier 2.
(3) The Retired Plan Member shall return to active duty as a member of the tier from which he or she retired.
(4) Members who participate in the Deferred Retirement Option Program (DROP) shall not be eligible to return to active duty.
(5) Rehired Members are ineligible to participate in DROP until three years following return to active duty.
(c) Mode of Adoption. Ordinances adopted pursuant to this section shall be adopted in the same manner as provided in Section 1618(b), but the City Council shall be advised in writing by an enrolled actuary as to the cost of the proposed change.
SECTION HISTORY
Added by Charter Amendment 2, approved March 8, 2005, effective April 6, 2005.
Amended by: Title and Section, Charter Amendment G § 3, approved March 8, 2011, Effective April 8, 2011.
The Council may by ordinance amend Tier 5 to establish maximum subsidy payments for beneficiaries and to authorize the Board to increase or decrease subsidy payments on the same terms and conditions that apply to subsidy payments for members of Tier 4 in Section 1618 of this Charter. Ordinances adopted pursuant to this section shall be adopted in the same manner as provided in Section 1618(b) of this Charter, but the City Council shall be advised in writing by an enrolled actuary as to the cost of the proposed program.
SECTION HISTORY
Added by Charter Amendment 2, approved March 8, 2005, effective April 6, 2005.
(a) Council Authority. The Council may, by ordinance adopted in accordance with the provisions of this section, authorize payment of a portion of employee contributions to Tiers 3, 4, and 5 of the Fire and Police Pension Plan, not to exceed a portion of the required contributions under Charter Sections 1514 and 1614 and Los Angeles Administrative Code Section 4.2014 equal to 2% of salary, pursuant to labor-management Memoranda of Understanding (MOU) for members of the Fire and Police Pension Plan. Provided that a defrayal of an amount equal to no more than 1% of salary may be negotiated as part of each MOU and that such defrayal shall not be considered salary for purposes of computing Final Average Salary or for any other purpose. Funds paid by the City as a defrayal of member contributions pursuant to this section shall be paid into the appropriate Fund of the Fire and Police Pension Plan, but shall not be credited to members' individual contribution accounts, nor shall such funds be refundable to any member, former member or beneficiary. The defrayal of employee contributions authorized in this section shall be in addition to the contribution payment authorized under Charter Section 1222 in an amount equal to 1% of salary; should that payment cease by operation of the terms of Charter Section 1222, this shall not affect the authority granted to the Council under this section.
(b) Mode of Adoption. Ordinances adopted pursuant to this section shall be adopted in the same manner as provided in section 1618(b), but the City Council shall be advised in writing by an enrolled actuary as to the cost of the proposed defrayal.
SECTION HISTORY
Added by Charter Amendment 2, approved March 8, 2005, effective April 6, 2005.
(a) Council Authority. The Council may, by ordinance adopted in accordance with the provisions of this section, provide for mandatory Tier 5 membership in the Fire and Police Pension Plan (Plan) for sworn Port Police employees with Peace Officer status under Penal Code Section 830.1 (Sworn Port Police Officers) appointed on or after the operative date of the ordinance, and provide Sworn Port Police Officers who were appointed prior to the operative date of the ordinance the right to irrevocably elect Tier 5 Plan membership. The authority granted in this section shall include the authority to make necessary modifications by ordinance to Tier 5 of the Plan, to the Deferred Retirement Option Plan (DROP), to the Pension Savings Plan for Part-Time, Seasonal and Temporary Employees, and to the Los Angeles City Employees' Retirement System (LACERS) in order to implement this membership change. Such ordinance shall be adopted by the Council no later than December 31, 2005 and shall specify an operative date that is the first day of a payroll period.
(b) Limitations on Council Authority. The authority given to the Council to implement this membership change is specifically limited as follows:
(1) Sworn Port Police Officers includes only employees serving in Port Police civil service classifications with the Harbor Department requiring Peace Officer status under Penal Code Section 830.1.
(2) Each person regularly appointed as a Sworn Port Police Officer on or after the operative date of the ordinance shall become a member of Tier 5 upon appointment, provided that person has previously completed academy training required by the Harbor Department. The Council retains the authority to determine if, and on what terms and conditions, such persons may be allowed to transfer prior sworn service in the Harbor Department from LACERS to Tier 5.
(3) Each Sworn Port Police Officer who was regularly appointed and completed the required academy training prior to the operative date of the ordinance and who was employed in that capacity on such date may elect to become a member of Tier 5. The election to transfer to Tier 5 membership must be made no later than one year after the operative date of the ordinance and shall be conditioned upon the person agreeing to pay an amount as determined by a labor-management Memorandum of Understanding as the employee contributions for all periods of service transferred to Tier 5 from LACERS. Employees who elect to change retirement plans shall have all sworn service with the Harbor Department in classifications included in subsection (1) above transferred to Tier 5 from LACERS. Only actual service with the Harbor Department shall be transferred; prior service with other City departments transferred for purposes of Charter Section 1014 to the Harbor Department shall not be transferred. Further, all funds on deposit in LACERS attributable to service transferred to Tier 5 on behalf of these employees shall be transferred to the Plan. The amount of funds due to the Plan from LACERS shall be mutually agreed upon between the Plan and LACERS and is to include, but not necessarily be limited to: employee contributions, City contributions, and earnings to cover all funded accrued liability. All transferring employees shall pay the full amount of contributions required under Tier 5 retroactive to the operative date of the ordinance, provided that the City shall pay 1% as provided in Charter Section 1222, if applicable. An employee who is eligible to become a Tier 5 member, but chooses to remain in LACERS, will continue as a LACERS member even if subsequently appointed to a different Sworn Port Police Officer civil service classification.
(4) Sworn Port Police Officers who become members of Tier 5 of the Plan shall not be eligible to retire from LACERS while remaining employed as Sworn Port Police Officers. Charter section 1164 prohibits retired members of LACERS from thereafter being paid for any services rendered as an officer or employee of the City, except as expressly provided therein.
(5) The Harbor Department shall pay the Plan for all costs and expenses incurred by the Plan as a result of amending Tier 5 of the Plan to include Sworn Port Police Officers, including any unfunded liability incurred by the Plan. The Harbor Department shall also pay LACERS for all costs and expenses incurred by LACERS in connection with transfers between LACERS and Tier 5 related to these Sworn Port Police Officers.
(6) Inclusion of Sworn Port Police Officers in Tier 5 of the Plan shall not trigger the elimination of the 1% payment by the City of Tier 5 employee contributions as provided in Charter Section 1222 and Los Angeles Administrative Code Section 4.2014. The determination of 100% funded status required by Charter Section 1222 and Los Angeles Administrative Code section 4.2014 shall be made without regard to any impact resulting from the inclusion of this group of employees in Tier 5 of the Plan and any other group of employees from other Outside Agencies included in Tier 5 in the future.
(c) Technical Corrections. The Council is hereby authorized to make conforming and technical changes to Tier 5 that do not result in any additional costs to the Plan.
(d) Operability of the Section. This section shall become inoperative in the event that a demand is made by a bargaining unit representing employees affected by this section that an impasse over a proposed ordinance authorized by this section be resolved by binding arbitration if such arbitration is authorized by law. In such event, pension benefits shall again be determined by Charter provisions in effect at the time this section was adopted. Courts of law shall have the exclusive authority to resolve disputes over whether an ordinance authorized by this section satisfies any legal requirement.
(e) Mode of Adoption. Ordinances adopted pursuant to this section shall be adopted in the same manner as provided in Section 1618(b) of this Charter, but the City Council shall be advised in writing by an enrolled actuary as to the cost of the proposed changes.
SECTION HISTORY
Added by Charter Amendment 1, approved March 8, 2005, effective April 6, 2005.
(a) Council Authority. The Council may by ordinance adopted in accordance with the provisions of this section establish a voluntary Public Service Purchase (PSP) program to allow members to purchase service credit with the Fire and Police Pension Plan (the Plan) for prior full-time service with other public agencies that may include military service. The authority granted in this section shall include the authority to determine which members may participate in the program and specify what public service is eligible for purchase, to establish eligibility requirements and benefit limitations, to conduct periodic review of the costs and usefulness of the program for recruitment and retention purposes, and to terminate or make changes to the program. The authority granted in this section shall include the authority to make necessary modifications to requirements of other Charter and Los Angeles Administrative Code provisions of the Plan for the specific and limited purpose of implementing a PSP program.
(b) Limitations of the PSP Program. The authority given to the Council to establish a PSP program is specifically limited as follows:
(1) The PSP Program Shall Be Cost Neutral. The member shall be required to pay the full actuarial cost of the service credit to be purchased as determined by the Plan's actuary based upon the additional benefits available from the Plan as a result of the purchase. The City shall conduct periodic reviews of the PSP program to ensure the program is cost neutral to the City insofar as the additional benefits provided by the Plan are concerned, without regard to incidental administrative expenses incurred by the Plan.
(2) Limitations on Service Purchases. A member may only purchase full-time service with eligible public agencies. A member may purchase full-time service with a branch of the United States military service only if the member was honorably discharged. Full-time service with any bona fide police agency or fire suppression agency may be purchased only if the member was not terminated for cause. A member may not purchase service for which the member is eligible, or may become eligible, to receive a retirement benefit from another entity unless federal law requires otherwise.
(3) Restrictions Applicable to Purchased Service. Purchased service shall be included in a member's years of service for purposes of calculating the amount of the member's service pension, but shall not be included in years of service for purposes of establishing eligibility for service retirement. Purchased service may be used to qualify for other retirement benefits that are dependent on years of service, such as the Deferred Retirement Option Plan (DROP) or health premium subsidies or reimbursements payable after retirement, if authorized by ordinance and the member has paid the full actuarial costs to cover these additional benefits.
(4) Refund of PSP Program Payments. In the event a member terminates employment, all payments made by the member under the PSP program, including interest accruing on the payments, shall be refunded to the member upon request. If a member dies and contributions become payable from the Plan upon his or her death, all payments made by the member under the PSP program, including interest accruing on the payments, shall be considered contributions of the member and shall be paid accordingly.
(5) PSP Program May Be Modified or Terminated. If the Council determines that the PSP program is not cost neutral and/or that the program is not useful for recruitment or retention, the PSP program may be modified or terminated by the Council by ordinance provided that the appropriate employee representatives have received a minimum of sixty days notice prior to Council action. Agreements entered into prior to the PSP program's termination shall be honored based upon the benefits available from the Plan at the time the agreement was executed. If the PSP program is modified by ordinance, existing agreements to purchase service will continue to be honored based upon the benefits available from the Plan at the time the agreement was executed, unless the agreement is modified to encompass different benefits with actuarial costs adjusted accordingly.
(c) Mode of Adoption. Ordinances adopted pursuant to this section shall be adopted in the same manner as provided in Charter Section 1618(b), but the Council shall be advised in writing by an enrolled actuary as to the cost of the proposed program.
SECTION HISTORY
Added by Charter Amendment M, approved March 6, 2007, effective April 4, 2007.
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