Loading...
When a court of competent jurisdiction does not order a separate account as specified in Section 4.1032, but instead awards the former spouse or former domestic partner (the “Ex”) a portion of the retirement benefits payable to the member and to the member’s surviving spouse or domestic partner (survivor), if any, the “Ex,” in lieu of receiving the “Ex’s” portion of the benefits payable based upon the lifetime of the member and/or survivor, may instead make an irrevocable election to convert the “Ex’s” interest in such retirement benefits into an actuarially equivalent life annuity payable for the lifetime of the “Ex.” If the member has not yet retired, the “Ex” must make this irrevocable election to receive a life annuity in writing prior to receiving payment of the “Ex’s” community property portion of the retirement allowance. If the member has already retired, the election must be made at the time the “Ex” requests direct payment of the “Ex’s” community property portion of the retirement allowance. If this irrevocable election is not made prior to the applicable times specified herein, the “Ex” will be deemed to have waived the right to elect to receive a life annuity.
This option is not available in a legal separation where the parties’ relationship has not been legally terminated.
SECTION HISTORY
Added by Ord. No. 182,629, Eff. 7-25-13.
Separate accounts, on the terms and conditions set forth in this section, may be established under a court order dividing community property in connection with a legal separation or a dissolution provided that the order is entered prior to the member’s retirement. Separate accounts cannot be established by a court order entered after the member’s retirement.
(a) Court Order Required for Separate Accounts. When a court of competent jurisdiction orders the division of community property prior to the member’s date of retirement, the court may order that the accumulated contributions, plus regular interest and service credit attributable to periods of service during the marriage be divided into two separate and distinct accounts in the name of the member and the nonmember, respectively. Any service credit or accumulated contributions that are not explicitly awarded by the court order shall be deemed the separate property of the member, in which the nonmember shall have no further interest.
The nonmember who is awarded a separate account under this section shall be required to make an irrevocable written election to either receive a refund of contributions or a separate account allowance, provided the nonmember must be eligible for the option that is elected. If said election is not timely made, the nonmember shall be deemed to have chosen a refund of contributions.
(b) Definitions. For purposes of this section, the following words and phrases are defined as follows:
Nonmember. The spouse, former spouse, domestic partner, or former domestic partner of a member who, as a result of petitioning the court for the division of community property, has been awarded a separate account reflecting specific credited service and accumulated contributions.
Separate Account Allowance. The monthly amount remitted to a nonmember based on the division of community property, by a court of competent jurisdiction, into a separate account reflecting specific credited service and accumulated contributions, actuarially reduced to provide an annuity for life.
Final Monthly Average Compensation. For a nonmember only, is the monthly average of the member’s highest consecutive twelve (12) months of salary at the time of separation.
(c) Benefits Available to Nonmember Awarded a Separate Account.
(1) Refund of Contributions.
(i) A nonmember who is awarded a separate account shall have the right to a refund of the accumulated contributions, plus regular interest in the separate account of the nonmember. A nonmember who elects a refund of contributions is deemed to have permanently waived all rights in this System and all rights to any future retirement benefits pertaining to the service credit, accumulated contributions or both when the refund becomes effective. The nonmember may not cancel a refund once it has become effective, nor may the nonmember redeposit a refund once it has been paid.
(ii) If at the time of separation the member does not have five (5) years of service credit in the System, the nonmember who has been awarded a separate account shall only receive a refund of the accumulated contributions and regular interest placed in the nonmember’s account.
(iii) A nonmember who has elected a refund of contributions or whose only separate account right is to a refund of contributions shall not have interest credited to the contributions in the nonmember’s separate account after the date of the member’s retirement or death, whichever occurs first. The nonmember’s right to receive a refund of all the contributions in the nonmember’s account on such date is a vested property right, provided, however, that should the nonmember fail to request a refund within ten (10) years from the date of the member’s death or retirement, as applicable, said contributions shall be removed from the nonmember’s separate account and shall revert to the Retirement Fund, unless and until the Board of Administration receives a valid belated refund request, determined at the sole discretion of the Board of Administration, which shall be granted. If the nonmember attains age seventy and a half (70 1/2) with contributions still on deposit in the nonmember’s separate account, the nonmember’s contributions shall be subject to mandatory distribution as required by the Internal Revenue Code; provided that, if such person cannot be located and paid such mandatory distribution and the Retirement System has followed Internal Revenue Service procedures to locate the beneficiary, such funds shall revert to the Retirement Fund as provided above, unless and until the Board of Administration receives a valid belated refund request, determined at the sole discretion of the Board of Administration, which shall be granted.
(2) Separate Account Allowance.
(i) Unless the nonmember has elected to receive or has received a refund of contributions, a nonmember who is awarded a separate account shall be entitled to receive a Separate Account Allowance paid monthly for life, provided that a timely written election has been made and that both of the following conditions are met:
(A) On the date of separation the member had five (5) years of service credit in the System; and
(B) The member was eligible to receive a service retirement allowance on the date that the separate account allowance begins.
(ii) The amount of the Separate Account Allowance shall be based on the service retirement formula in effect on the date of separation applicable to the service credited to the nonmember by the employer and the effective date of the nonmember’s Separate Account Allowance, actuarially reduced to provide an annuity for life. The Separate Account Allowance shall be subject to all cost-of-living and discretionary increases.
(iii) The Separate Account Allowance shall consist of a pension and a life annuity, the latter of which shall be derived from the nonmember’s accumulated contributions. The Separate Account Allowance shall terminate upon the death of the nonmember.
(3) Election of Nonmember Benefits. The nonmember may make an irrevocable election, in writing, to receive the benefit provided under this section as either a refund of contributions or a Separate Account Allowance at any time after the entry of the court order and before the member’s retirement or death, whichever occurs first. A nonmember who elects a refund of contributions may request a refund of contributions at the time the election is made or any time thereafter. A nonmember who elects a Separate Account Allowance may request the allowance to begin at the time the election is made or at any time thereafter so long as the conditions set forth in Section 4.1032(c)(2)(i) have been met by the date the monthly allowance is to begin.
The nonmember shall be deemed to have elected a refund of contributions if an irrevocable written election is not made either prior to the member’s retirement or death, whichever occurs first, or within such period following the retirement or death as provided by Board rule. The Board of Administration shall adopt rules establishing a limited period following the member’s retirement or death, as applicable, in which a nonmember who has not yet made an election may be allowed to make an irrevocable written election. If within the period established by Board rule the nonmember elects to take a separate account allowance, the allowance shall begin on the day prior to the member’s retirement or death, as applicable, so long as the conditions set forth in Section 4.1032(c)(2)(i) have been met by that date.
(4) Benefits Not Granted to Nonmember. A nonmember whose dissolution is final shall not be entitled to any disability retirement allowance, any basic death benefit, any special death benefit, any monthly allowance for survivors of a member or retired person, any insurance benefit, medical or dental subsidy, or retired member lump-sum death benefit. No survivor continuance allowance shall be payable to a survivor of a nonmember.
(d) Calculation of Member’s Service Retirement Allowance. A member whose retirement is divided under the provisions set forth above shall receive a monthly retirement allowance based on all service credit and the member’s final compensation at the date of retirement as provided under the provisions of this Article, subject to reduction by the value of the separate account determined as follows:
(1) If the separate account was paid as a refund of contributions, the service credit and contributions awarded to the nonmember shall not be included in the calculation of the member’s retirement allowance, except to the extent that the member has re-deposited funds as provided in Section 4.1032(f)(1).
(2) If the nonmember elected to receive a Separate Account Allowance, the service credit and contributions awarded to the nonmember shall not be included in the calculation of the member’s retirement allowance except to the extent that the member has paid to purchase service credit as provided in Section 4.1032(f)(2).
(3) If the nonmember has not elected to receive either a refund of contributions or a Separate Account Allowance prior to the member’s retirement, the service credit and contributions awarded to the nonmember shall not be included in the calculation of the member’s retirement allowance.
(e) Calculation of Member’s Disability Retirement Allowance. Members whose retirement is divided under the provisions set forth above shall receive a monthly disability retirement allowance as provided for in Section 4.1008 except that the portion of accumulated contributions credited to the nonmember will be treated as missed deductions in the member account.
(f) Buy Back of Funds Allocated to Nonmember.
(1) If a nonmember receives a refund of contributions and interest, the member may re-deposit these funds, together with any accumulated interest these funds would have earned if the refund had not occurred, to the System, subject to rules adopted by the Board of Administration, and receive full credit for the period of time represented by these funds.
(2) If a nonmember elects to receive a Separate Account Allowance, the member may purchase service credit not to exceed the years of service credited to the nonmember. The purchase of this service credit shall be the full actuarial cost and subject to rules adopted by the Board of Administration.
(g) Duties and Responsibilities of the Board of Administration. The Board of Administration shall adopt rules to administer separate accounts ordered by a court of competent jurisdiction, and shall formulate benefits applicable to these separate accounts in such a way that no additional actuarial liability is incurred either by the System or by the City.
SECTION HISTORY
Added by Ord. No. 182,629, Eff. 7-25-13.
(a) Wherever “ERIP” is used in this Chapter, it shall refer to the Early Retirement Incentive Program. Subject to the provisions and limitations set forth herein, an active City employee who is a member of the Los Angeles City Employees’ Retirement System (LACERS) may be retired from the service of the City with the ERIP benefits set forth herein, provided that the LACERS member meets all of the requirements set forth herein to be eligible for retiring under the ERIP, and provided that the member’s completed ERIP Election Form is received in the Office of the City Administrative Officer (CAO) within the forty-five (45)-day ERIP window period defined herein (ERIP Eligible Filers). Also subject to the provisions and limitations set forth herein, a City retiree who was an active LACERS member may receive the ERIP benefits set forth herein, provided that the retiree retired on or after June 26, 2009, but prior to the ERIP Beginning Date defined herein, and the retiree meets all of the requirements set forth herein to be eligible to receive the ERIP benefits as contemplated in the June 26, 2009, Council motion (Council File 09-1320) (“Grandfathered Participant,” further defined below in Section 4.1033(a)(4)(i)). The forty-five (45)-day ERIP window period shall begin on this ordinance’s effective date (ERIP Beginning Date) and end on the forty-fifth (45th) day thereafter unless that forty-fifth (45th) day falls on a weekend or a City holiday, in which case it shall end on the next day that is not a weekend or a City holiday (ERIP Ending Date). The ERIP Ending Date shall be included in the ERIP window period, so that the CAO shall continue to receive completed ERIP Election Forms until close of business on the ERIP Ending Date. The CAO shall establish the rules and procedures for receiving a completed ERIP Election Form, including what constitutes a completed ERIP Election Form and what constitutes the date and time the form was received by the CAO. In order for the ERIP to meet its goal of assisting with the City’s financial situation while minimizing the impact on City services, the following provisions and limitations shall apply to the ERIP:
(1) Only LACERS members currently in an employed status with the City on the ERIP Beginning Date shall be eligible to submit an ERIP Election Form. LACERS members in a terminated status shall not be eligible to submit an ERIP Election Form. Former City employees, including, but not limited to, deferred vested former City employees, shall not be eligible to submit an ERIP Election Form. In addition, only persons belonging to at least one of the five ERIP “Groups” listed below in Sections 4.1033(b)(1)-(5) as of the ERIP Beginning Date shall be eligible to submit an ERIP Election Form. A person belonging to one of the ERIP Groups as of the ERIP Beginning Date may possibly change ERIP Groups prior to the person’s effective date of retirement. However, a person who does not belong to any ERIP Group as of the ERIP Beginning Date shall not be eligible to submit an ERIP Election Form. Grandfathered Participants may be eligible to receive the ERIP benefits, but they need not submit an ERIP Election Form, and their retirements are not considered retirements under the ERIP.
(2) A LACERS member eligible under Section 4.1020 (Government Service Buyback or GSB) to purchase time due to service in another government agency shall be allowed to include the purchased time in the determination of ERIP eligibility. For the purchased time to be included in the determination of ERIP eligibility, the LACERS member must follow the existing GSB purchasing policies, and the member must have completed the GSB purchase by the end of the City pay period that includes the ERIP Beginning Date. For reciprocal service under Section 4.1096 to be included in the determination of ERIP eligibility, the reciprocal time must be certified by the reciprocating system, and the certification must be received by LACERS prior to the ERIP Beginning Date. Once so established, the LACERS member shall be entitled to use this reciprocal service in order to qualify for ERIP even if reciprocity is subsequently broken, such as by the member’s inability to retire concurrently from the reciprocating system. When a person elects to submit an ERIP Election Form and retire under the ERIP, the person shall assume all risks that result from this election, including, but not limited to, the loss of the right to use the person’s final compensation as determined by LACERS for purposes of computing final compensation earnable with the reciprocal system in the event that the person is not able to retire concurrently under both systems. Time purchased under Section 4.1019 (Public Service Buyback or PSB) shall not be included in the determination of ERIP eligibility.
(3) Certain City employee classifications are excluded from the ERIP (Excluded Classifications). Certain other City employee classifications have an ERIP limitation number, meaning that the total number of a classification’s ERIP Eligible Filers actually retiring under the ERIP, plus the number of that classification’s Grandfathered Participants actually receiving the ERIP benefits, shall be limited in number (Limited Classification). The CAO shall make known these Excluded Classifications, Limited Classifications, and the Limited Classifications’ ERIP limitation numbers.
(i) In the event that a Limited Classification’s number of ERIP Eligible Filers and Grandfathered Participants exceeds the limitation number, the earliest initial date of LACERS membership (Initial LACERS Membership Date) shall be used to determine which ERIP Eligible Filers shall be allowed to retire under the ERIP and which Grandfathered Participants shall receive the ERIP benefits. The person with the earliest Initial LACERS Membership Date shall receive priority. If there is a tie in the earliest Initial LACERS Membership Date between two or more persons of the same Limited Classification, then the one with the longer time of employment in the Limited Classification at issue shall prevail. If there is also a tie in the time of employment in the Limited Classification at issue, then the one whose completed ERIP Election Form was first received by the CAO’s office prevails. A Grandfathered Participant shall be deemed to have submitted (and the CAO’s office shall be deemed to have received) a completed ERIP Election Form when the retirement application resulting in the Grandfathered Participant’s retirement was first filed with LACERS.
(ii) If a Limited Classification’s ERIP limitation number is reached, an ERIP waiting list shall be created for that Limited Classification. ERIP Eligible Filers on a Limited Classification’s ERIP waiting list may be allowed to retire under the ERIP, and/or Grandfathered Participants on a Limited Classification’s ERIP waiting list may be allowed to receive the ERIP benefits, if and to the extent that ERIP Eligible Filers with earlier Initial LACERS Membership Dates in the Limited Classification rescind their ERIP Election Forms, and/or the Limited Classification’s ERIP limitation rate is increased. A Limited Classification’s ERIP waiting list shall be ordered pursuant to the same Initial LACERS Membership Date priority and tiebreakers referenced above in Section 4.1033(a)(3)(i). A Grandfathered Participant shall be deemed to have submitted (and the CAO’s office shall be deemed to have received) a completed ERIP Election Form when the retirement application resulting in the Grandfathered Participant’s retirement was first filed with LACERS. After the 45-day ERIP window period has expired, the CAO’s office shall notify any ERIP Eligible Filers on a Limited Classification’s waiting list who will not be allowed to retire under the ERIP. After the forty-five (45)-day ERIP window period has expired, any LACERS member may elect to retire pursuant to standard, non-ERIP LACERS procedures and provisions. After the 45-day ERIP window period has expired, the CAO’s office shall notify any Grandfathered Participants on a Limited Classification’s waiting list who will not be allowed to receive the ERIP benefits.
(4) The ERIP shall have a limit of 2,400 persons, meaning that the total number of ERIP Eligible Filers actually retiring under the ERIP, plus the number of Grandfathered Participants actually receiving the ERIP benefits, shall be limited to 2,400. In the event that the total number of ERIP Eligible Filers and Grandfathered Participants exceeds 2,400, a first-come-first-served basis (ordered pursuant to the date and time the ERIP Election Form was received by the CAO’s office) shall be used to determine which ERIP Eligible Filers shall be allowed to retire under the ERIP and which Grandfathered Participants shall be allowed to receive the ERIP benefits. A Grandfathered Participant shall be deemed to have submitted (and the CAO’s office shall be deemed to have received) a completed ERIP Election Form when the retirement application resulting in the Grandfathered Participant’s retirement was first filed with LACERS. Also in the event that the total number of ERIP Eligible Filers and Grandfathered Participants exceeds 2,400, a general ERIP waiting list shall be created. ERIP Eligible Filers on the general ERIP waiting list may be allowed to retire under the ERIP if and to the extent that earlier ERIP Eligible Filers rescind their ERIP Election Forms, and/or if City Council and the Office of the Mayor approve an increase of the 2,400 ERIP limit. (If there are any Grandfathered Participants on the general ERIP waiting list, it means that the 2,400 ERIP limit was reached within the number of Grandfathered Participants alone. A Grandfathered Participant on the general ERIP waiting list may be allowed to receive the ERIP benefits if and to the extent that City Council and the Office of the Mayor approve an increase of the 2,400 ERIP limit.) This general ERIP waiting list shall be separate from the waiting lists for the various Limited Classifications set forth above in Section 4.1033(a)(3)(ii). The CAO’s office shall establish the rules and procedures for accepting ERIP Eligible Filers and Grandfathered Participants from the general ERIP waiting list and/or a Limited Classification’s waiting list, and how the waiting lists shall operate in conjunction with each other. After the forty-five (45)-day ERIP window period has expired, the CAO’s office shall notify any ERIP Eligible Filers on a general ERIP waiting list who will not be allowed to retire under the ERIP. After the 45-day ERIP window period has expired, any LACERS member may elect to retire pursuant to standard, non-ERIP LACERS procedures and provisions. After the forty five (45)-day ERIP window period has expired, the CAO’s office shall notify any Grandfathered Participants on the general ERIP waiting list who will not be allowed to receive the ERIP benefits.
(i) A “Grandfathered Participant” is an ERIP-eligible City retiree whose effective date of retirement is on or after June 26, 2009, but before the ERIP Beginning Date. As contemplated in the June 26, 2009, Council motion (Council File 09-1320), a Grandfathered Participant determined to be allowed to receive the ERIP benefits shall receive such applicable benefits. A Grandfathered Participant need not submit an ERIP Election Form to the CAO’s office within the forty-five (45)-day ERIP window period. Rather, to the extent a Grandfathered Participant is determined to be allowed to receive the ERIP benefits, the Grandfathered Participant shall automatically receive the applicable ERIP benefits for the Grandfathered Participant’s ERIP “Group” (see Section 4.1033(b) below). The date to be used for the purpose of determining the proper ERIP Group for a Grandfathered Participant shall be the Grandfathered Participant’s last day on the City payroll. (A City retiree who retired on or after June 26, 2009, but before the ERIP Beginning Date, who did not belong to any ERIP Group as of the retiree’s last day on the City payroll is not a Grandfathered Participant, and shall not be eligible to receive the ERIP benefits.) A Grandfathered Participant shall receive priority over ERIP Eligible Filers with regards to being within the general 2,400 ERIP limit, in that a Grandfathered Participant shall be deemed to have submitted (and the CAO’s office shall be deemed to have received) a completed ERIP Election Form when the retirement application resulting in the Grandfathered Participant’s retirement was first filed with LACERS. A Grandfathered Participant receiving the ERIP benefits shall count towards the 2,400 ERIP limit. However, a Grandfathered Participant in a Limited Classification shall not be guaranteed to receive the ERIP benefits. A Grandfathered Participant who, as of the Grandfathered Participant’s last day on the City payroll, was in a classification determined to be a Limited Classification shall not receive priority over ERIP Eligible Filers with regards to being within that Limited Classification’s ERIP limitation number. Rather, the ERIP Eligible Filers and the Grandfathered Participants to be allowed within that Limited Classification’s ERIP limitation shall be determined by the Initial LACERS Membership Date priority, tiebreakers, and waiting lists as set forth above in Section 4.1033(a)(3)(i)-(ii).
(5) An ERIP Eligible Filer may rescind the ERIP Eligible Filer’s ERIP Election Form by delivering, to the CAO’s office, a completed ERIP Rescission Form (as promulgated by the CAO’s office) within seven (7) calendar days of delivery, to the ERIP Eligible Filer’s address on file with LACERS, of notification that the ERIP Eligible Filer’s ERIP Election Form has been approved. The ERIP Election Form may not be rescinded after the seven (7) calendar days have passed.
(6) To minimize the impact on City services, an ERIP Eligible Filer may not select the ERIP Eligible Filer’s effective date of retirement under the ERIP. While Management may take the person’s preferences into account, Management shall determine the effective date of retirement for a person retiring under the ERIP.
(i) The portion of Los Angeles Administrative Code Section 4.1005 stating that a person’s effective date of retirement shall be not less than thirty (30) nor more than sixty (60) days from and after the filing of the person’s LACERS retirement application shall not apply to persons retiring under the ERIP.
(ii) Management’s decision as to a person’s effective date of retirement under the ERIP shall be final and binding, regardless of whether the ERIP Eligible Filer agrees with Management’s decision. The ERIP Eligible Filer may be required to retire as soon as administratively possible, or may be required to continue working for the City for an extended period of time. The CAO may promulgate rules that Management shall follow regarding the effective dates of retirement for ERIP Eligible Filers.
(7) During the forty-five (45)-day ERIP window period, LACERS shall not accept a non-ERIP retirement application from a person eligible for the ERIP, defined as a person who, as of the ERIP Beginning Date, belongs to at least one of the five ERIP Groups listed below in Sections 4.1033(b)(1)-(5). After the forty-five (45)-day ERIP window period has expired, any LACERS member may elect to retire pursuant to standard, non-ERIP LACERS procedures and provisions.
(i) All applications for non-ERIP LACERS retirements submitted by persons eligible for the ERIP, and still pending as of the beginning of the forty-five (45)-day ERIP window period, shall be held in abeyance for the duration of the forty-five (45)-day ERIP window period. Such ERIP-eligible persons may elect to submit an ERIP Election Form, or, alternatively, they may wait until after the forty-five (45)-day ERIP window period has expired, at which point their non-ERIP retirement applications shall continue to be processed. Such ERIP-eligible persons who elect to submit an ERIP Election Form shall not receive priority with respect to being within the 2,400 person ERIP limit, and shall not receive priority with respect to being within a Limited Classification’s ERIP limitation number.
(8) Accumulated Sick and Vacation Time is not payable to persons retiring under the ERIP, and such persons shall not be entitled to a payment of Accumulated Sick and Vacation Time upon retirement. In addition to the ERIP benefits set forth below in Section 4.1033(b), which include the Separation Payments in Sections 4.1033(b)(4)(i) and 4.1033(b)(6), persons retiring under the ERIP shall receive a severance payment in the amount of what would be the person’s Accumulated Sick and Vacation Time payment if the person were retiring pursuant to standard, non-ERIP retirement policies and procedures (Severance Payment). This Severance Payment and the applicable Separation Payment, as set forth below in Sections 4.1033(b)(4)(i) and 4.1033(b)(6), shall be paid over two separate calendar years, with the City selecting the payment dates. This Severance Payment and the applicable Separation Payment, as set forth below in Sections 4.1033(b)(4)(i) and 4.1033(b)(6), shall constitute, and be administered as, a Bona Fide Separation Pay Plan under Internal Revenue Code Section 457(e)(11) because (A) these payments are payable only to a person who has submitted an ERIP Election Form during the forty-five (45)-day ERIP window period and who actually has a severance from employment pursuant to the ERIP; (B) the amount payable does not exceed two times the person’s annual rate of pay (taking into account only pay that does not exceed the maximum amount that may be taken into account under a qualified plan pursuant to Internal Revenue Code Section 401(a)(17) for the year in which the person has the person’s severance from employment); and (C) the payments shall be completed by the end of the second calendar year following the calendar year in which the employee separates from City service. Any tax liabilities arising from any Severance Payments and/or Separation Payments shall be the sole responsibility of the person(s) receiving the payments.
(i) A Grandfathered Participant’s retirement is not considered a retirement under the ERIP, even if the Grandfathered Participant receives the ERIP benefits. Therefore, the above provisions pertaining to Accumulated Sick and Vacation Time and the Severance Payment do not apply to Grandfathered Participants who receive the ERIP benefits. Instead, a Grandfathered Participant who receives the ERIP benefits either has already received, or shall receive, the Grandfathered Participant’s Accumulated Sick and Vacation Time payment, if any, pursuant to standard, non-ERIP retirement policies and procedures. Payment of Accumulated Sick and Vacation Time to such a Grandfathered Participant is not a retirement benefit. A Grandfathered Participant who receives the ERIP benefits shall not receive the Severance Payment, but shall receive the applicable Separation Payment as set forth below in Sections 4.1033(b)(4)(i) and 4.1033(b)(6). The applicable Separation Payment shall be paid over two separate calendar years (with the City selecting the payment dates), and shall constitute, and be administered as, a Bona Fide Separation Pay Plan under Internal Revenue Code Section 457(e)(11). Any tax liabilities arising from any Accumulated Sick and Vacation Time payments and/or Separation Payments shall be the sole responsibility of the person(s) receiving the payments.
(ii) The Severance Payment shall be paid by the City, and the cost of the Severance Payment shall remain a cost of the City. The Separation Payment shall also be paid by the City. However, the cost of the Separation Payment shall be an obligation of the LACERS members, and shall be recouped by the City through the provisions set forth below in Section 4.1033(a)(9)(i)-(iii).
(iii) Neither the Severance Payment nor the Separation Payment shall be considered a retirement benefit.
(9) The ERIP actuarial cost, as determined by the LACERS actuary, and the total cost of the Separation Payments shall, together, be known as the “ERIP Cost Obligation.” The ERIP Cost Obligation shall be an obligation of the LACERS members. The LACERS actuary has determined the preliminary ERIP Cost Obligation to be $271 million, as presented in the actuarial report dated September 25, 2009, based on a projection of 2,229 ERIP Eligible Filers actually retiring and Grandfathered Participants actually receiving the ERIP benefits.
(i) LACERS members’ payment of the ERIP Cost Obligation shall commence on July 1, 2011, and end on June 30, 2026, or when the ERIP Cost Obligation is fully paid, whichever comes first. The payment shall consist of a one percent (1%) increase in the LACERS active employee retirement contribution rate of six percent (6%) (of which one-half percent (0.5%) is the survivor contribution portion), so that the total LACERS active employee retirement contribution rate shall be seven percent (7%) for all LACERS members. After all ERIP Eligible Filers actually retiring under the ERIP have retired, the LACERS actuary shall re-calculate the ERIP Cost Obligation based on the number of ERIP Eligible Filers actually retiring and Grandfathered Participants actually receiving the ERIP benefits, using the same methodology used to determine the preliminary ERIP Cost Obligation. However, the City reserves the right to increase the LACERS active employee contribution rate for new City hires, in accordance with all applicable laws and practices.
(ii) The LACERS active employee retirement contribution rate for LACERS members hired prior to 1983 (Defrayal Group) shall be adjusted to six percent (6%) (of which one-half percent (0.5%) is the survivor contribution portion) upon the effective date of this ordinance. Commensurate with Section 4.1033(a)(9)(i), above, employees in the Defrayal Group shall have their retirement contribution increased from six percent (6%) to seven (7%) on July 1, 2011. All savings from the elimination of defrayal shall be credited towards the payment of the ERIP Cost Obligation.
(iii) Once the City has recouped the ERIP Cost Obligation, the LACERS active employee retirement contribution rate shall be adjusted to six percent (6%) (of which one-half percent (0.5%) is the survivor contribution portion) for all City employees who were LACERS members as of the ERIP Beginning Date (including those in the Defrayal Group). However, the City reserves the right to increase the LACERS active employee retirement contribution rate for new City hires, in accordance with all applicable laws and practices.
(10) In order for the ERIP to meet its goal of assisting with the City’s financial situation, the City intends to limit the backfilling of positions vacated due to retirements under the ERIP. Therefore, to the extent allowed under the City Charter, the Los Angeles Administrative Code, and any other applicable law: From July 1, 2009, to June 30, 2024, approval of both City Council and the Office of the Mayor shall be necessary prior to backfilling a position vacated due to retirements under the ERIP. The total number of City positions vacated due to retirements under the ERIP shall not be backfilled by more than seven (7%) in the City fiscal year 2010, nor by more than six percent (6%) in each of the City fiscal years 2011 through 2024. These backfill rates may be exceeded only if the cumulative prior years’ actual backfill rate was less than the maximum cumulative rate allowed, pursuant to the Maximum Backfill Rates table below. For example, if the City backfills only five percent (5%) in fiscal year 2010, then the City’s allowed backfill rate in a future year may be increased.
MAXIMUM BACKFILL RATES | ||
Fiscal Year | Backfill | |
In One Year | Cumulative | |
MAXIMUM BACKFILL RATES | ||
Fiscal Year | Backfill | |
In One Year | Cumulative | |
2010 | 7% | 7% |
2011 | 6% | 13% |
2012 | 6% | 19% |
2013 | 6% | 25% |
2014 | 6% | 31% |
2015 | 6% | 37% |
2016 | 6% | 43% |
2017 | 6% | 49% |
2018 | 6% | 55% |
2019 | 6% | 61% |
2020 | 6% | 67% |
2021 | 6% | 73% |
2022 | 6% | 79% |
2023 | 6% | 85% |
2024 | 6% | 91% |
(11) The ERIP shall not affect the existing LACERS requirement that, in order for a LACERS member to leave a continuance to a spouse or domestic partner, the marriage must have occurred, or the proper domestic partnership document(s) must have been filed with LACERS or with the State of California, at least one (1) year prior to the LACERS member’s effective date of retirement.
(12) Persons retiring under the ERIP shall be eligible to be employed by the City under the conditions set forth in City Charter Section 1164. However, persons retiring under the ERIP shall not be allowed to enter into a personal services contract with the City prior to July 1, 2011, unless the personal services contract is approved by City Council and the Office of the Mayor.
(b) Persons retiring pursuant to the ERIP shall receive benefits pursuant to the following terms. (For purposes of the ERIP, “Service” and “Service Credit” shall have the same meanings as those terms are defined in Los Angeles Administrative Code Section 4.1001.):
(1) “Group 1” LACERS members: This group consists of all full-time and part-time LACERS members who, as of the ERIP Beginning Date, would be eligible for an unreduced or standard retirement with less than thirty-three (33) years of Service.
(i) Each Group 1 member retiring under the ERIP shall receive three (3) additional full-time years of Service and three (3) additional full-time years of Service Credit.
(2) “Group 2” LACERS members: This group consists of all full-time and part-time LACERS members who, as of the ERIP Beginning Date, have a minimum of thirty-three (33) years of Service, but have not reached fifty-five (55) years of age.
(i) Each Group 2 member retiring under the ERIP shall receive the additional amount of age credit necessary to be eligible for an unreduced or standard retirement. In addition, each Group 2 member retiring under the ERIP shall receive three (3) additional full-time years of Service and three (3) additional full-time years of Service Credit.
(3) “Group 3” LACERS members: This group consists of all full-time and part-time LACERS members who, as of the ERIP Beginning Date, have less than thirty-three (33) years of Service and who are within five (5) years of the age credit and/or Service necessary to be eligible for an unreduced or standard retirement. To be a member of Group 3, the amount of time that a LACERS member is lacking in age credit to be eligible for an unreduced or standard retirement, plus the amount of time that the member is lacking in Service to be eligible for an unreduced or standard retirement, must, in sum, not exceed five (5) full-time years.
(i) Each Group 3 member retiring under the ERIP shall receive between a minimum of three (3) full-time years and a maximum of five (5) full-time years of additional age credit and/or both Service and Service Credit in order to be eligible for an unreduced or standard retirement. Between three (3) full-time years and five (5) full-time years, fractional years shall be calculated and prorated in determining the amount of additional age credit and/or both Service and Service Credit to be received.
(ii) Each Group 3 member retiring and receiving credit under the ERIP shall be provided with a written breakdown of the amount of age credit, and both Service and Service Credit.
(4) “Group 4” LACERS members: This group consists of all full-time and part-time LACERS members who, as of the ERIP Beginning Date, have a minimum of thirty-three (33) years of Service and have reached a minimum of fifty-five (55) years of age.
(i) Each Group 4 member retiring under the ERIP shall receive a Separation Payment of $1,000.00 for each year of Service. The Separation Payment for a fractional year shall be prorated. This Separation Payment shall not be considered a retirement benefit. This Separation Payment shall be paid by the City, which shall recoup the cost of the Separation Payment from the LACERS members as set forth above in Sections 4.1033(a)(9)(i)-(iii).
(ii) Any time purchased under Los Angeles Administrative Code Section 4.1020 (GSB) shall not be included in the calculation of the Separation Payment for Group 4 members. Any reciprocal time under Los Angeles Administrative Code Section 4.1096 shall not be included in the calculation of the Separation Payment for Group 4 members. Any time purchased under Los Angeles Administrative Code Section 4.1019 (PSB) shall not be included in the calculation of the Separation Payment for Group 4 members.
(5) “Group 5” LACERS members: This group consists of all full-time and part-time LACERS members whose first day of City employment was on or before December 31, 1982; whose retirement contribution rate is less than six percent (6%); and who, as of the ERIP Beginning Date, are not within five (5) years of the age and/or Service necessary to be eligible for an unreduced or standard retirement.
(i) Each Group 5 member retiring under the ERIP shall receive five (5) additional full-time years of Service and five (5) additional full-time years of Service Credit towards an early or reduced retirement.
(ii) The ERIP does not affect the retirement benefit reduction factors that apply to early or reduced retirements.
(6) Members of Groups 1, 2, 3, and 5 retiring under the ERIP shall each receive a Separation Payment of $15,000.00. This Separation Payment shall not be considered a retirement benefit. This Separation Payment shall be paid by the City, which shall recoup the cost of the Separation Payment from the LACERS members as set forth above in Sections 4.1033(a)(9)(i)-(iii).
(c) The following provisions and limitations shall apply to the ERIP benefits set forth above in Section 4.1033(b):
(1) Any additional age credit provided under the ERIP shall be applied towards the fifty-five (55)-year minimum age requirement for LACERS retiree health subsidies. Any applicable additional Service and/or Service Credit provided under the ERIP shall count toward the retiree health subsidy formula. ERIP Group 5 members are not guaranteed eligibility for any LACERS retiree health subsidies.
(2) A person retiring under the ERIP whose applicable ERIP Group changes between the ERIP Beginning Date and the person’s effective date of retirement shall select the Group to which the person wishes to belong (that is, either the person’s applicable Group as of the ERIP Beginning Date, or the person’s applicable Group as of the person’s effective date of retirement).
(3) A person retiring under the ERIP who belongs to a certain ERIP Group due to the purchase of GSB time may attempt to change the person’s Group by requesting a refund of the GSB time purchased, provided that the request for refund is consistent with existing GSB program policies. To change Groups in this manner, the request for refund must be approved by LACERS prior to the person’s effective date of retirement.
(5) A person eligible under the GSB program to purchase time due to service in another government agency shall be allowed to apply the purchased time towards additional Service Credit under an ERIP retirement. For the purchased GSB time to be applied towards additional Service Credit, the person must follow the existing GSB purchasing policies, and must have completed the GSB purchase prior to the person’s effective date of retirement. This section is not meant to supersede or otherwise affect Section 4.1033(b)(4)(ii), above, which provides that any time purchased under the GSB program shall not be included in the calculation of the Separation Payment for Group 4 members.
(6) The ERIP does not extend any deadlines for purchasing Service Credit under any Service Credit purchase programs, including GSB, PSB, Back Contributions, and Re-deposits. All such purchases must be paid off prior to the LACERS member’s effective date of retirement.
(7) If a person is approved by the CAO’s office for retirement under the ERIP, but the person dies prior to the person’s effective date of retirement, the person’s eligible spouse, as defined in former Section 4.1044(a), or qualified domestic partner, as defined in former Section 4.1044.4, if any, shall be entitled to survivorship benefits as if the person retired under the ERIP with one hundred percent (100%) continuance to the person’s survivor.
(8) Any benefit payable pursuant to the ERIP is subject to the requirements and limitations applicable to benefits payable from a qualified governmental pension plan under Internal Revenue Code (Code) Sections 401(a) and 414(d), and the regulations and guidance issued under those Code sections. Therefore, any ERIP benefits may be adjusted, as necessary, to maintain the tax qualified status of LACERS.
(9) To work toward the ERIP being cost-neutral to the City, an “ERIP 1% Reduction” shall apply to all ERIP Eligible Filers actually retiring under the ERIP and all Grandfathered Participants actually receiving the ERIP benefits (with the exception of ERIP Group 4 members, as noted below). The ERIP 1% Reduction means that, for each ERIP Eligible Filer actually retiring under the ERIP and each Grandfathered Participant actually receiving the ERIP benefits, such person’s entire retirement allowance, including the ERIP benefits, shall be reduced by 1%. The formula for calculating such a person’s actual retirement allowance shall be: The person’s full retirement allowance, including ERIP benefits (that is, the person’s full retirement allowance, including the ERIP benefits, before the ERIP 1% Reduction) multiplied by 0.99. For example, for Groups 1, 2 and 3, the person’s actual retirement allowance shall be:
[Final Compensation x Service Credit x Retirement Factor of 0.0216] x 0.99
For Group 5, the person’s actual retirement allowance shall be:
[Final Compensation x Service Credit x Retirement Factor of 0.0216] x [Reduction Factor] x 0.99. The Reduction Factor is the standard LACERS Early Retirement Reduction Factor.
The ERIP 1% Reduction shall not apply to members of ERIP Group 4.
(d) Unless otherwise specified, the provisions in the City Charter and the Los Angeles Administrative Code pertaining to LACERS shall not be affected by the ERIP.
(e) It is the intent of the City and the LACERS Unions that the ERIP be envisioned as cost-neutral to the City. The increase in the employee retirement contribution rate and the elimination of defrayal (Sections 4.1033(a)(9)(i)-(ii) above), along with the ERIP 1% Reduction (Section 4.1033(c)(9) above), are mechanisms designed for working toward cost-neutrality.
(f) If the government of the United States or a final court of competent jurisdiction determines that one or more provisions of this Chapter pertaining to the ERIP are unlawful or invalid, the remaining provisions shall remain in full force and effect.
SECTION HISTORY
Added by Ord. No. 182,629, Eff. 7-25-13.
(a) Wherever “SIP” is used in this Chapter, it shall refer to the Separation Incentive Program. The intent of the City in promulgating the SIP is to address the City’s significant financial challenges while minimizing the impact on City services, by incentivizing eligible employees to retire. The SIP is not a retirement benefit. Under no circumstances shall the SIP payments made by the City be considered in any calculation of a retirement benefit or division of a LACERS member’s retirement benefit. Rather, the SIP is a program whereby the City, as employer, has agreed with certain bargaining units to provide two lump-sum, non-pensionable incentive payments to those LACERS members who are eligible for a Full LACERS retirement and who the Office of the City Administrative Officer (CAO), in its sole discretion, has determined to have met all requirements of the SIP program (SIP Eligible Filers). The following provisions and limitations shall apply to the processing of retirement applications by LACERS under the SIP:
(b) To minimize the impact on City services, a SIP Eligible Filer who elects to retire under the SIP may not select their effective date of retirement. Instead, in order to effectuate the City’s intent to assist the City’s financial situation while minimizing the impact on City services, the LACERS General Manager or their designee (LACERS Management) shall determine the effective date of retirement for a person retiring under the SIP.
(1) The portion of Los Angeles Administrative Code Section 4.1005 stating that a person’s effective date of retirement shall be not less than thirty (30) nor more than sixty (60) days from and after the filing of the person’s LACERS retirement application shall not apply to persons retiring under the SIP.
(2) LACERS Management's decision as to a person’s effective date of retirement under the SIP shall be final and binding, regardless of whether the SIP Eligible Filer agrees with LACERS Management’s decision. The SIP Eligible Filer may be required to retire as soon as administratively possible, or may be required to continue working for the City for a longer period of time. The CAO may promulgate rules that LACERS Management shall follow regarding the effective dates of retirement for SIP Eligible Filers. Such rules shall be determined solely by the CAO, based on the City’s intent to minimize the impact on City services and maximize the ability of the SIP to address the City’s financial challenges.
(c) The three-month period from November 1, 2020, through and including January 31, 2021, shall be referred to herein as the “SIP Period”. During the SIP Period, LACERS shall not accept a non-SIP retirement application from a person eligible for Full Retirement or Early Retirement After the SIP Period has expired, any LACERS member who is otherwise eligible to retire may apply to retire, and LACERS shall accept and process new non-SIP retirement applications pursuant to standard, non-SIP LACERS procedures and provisions.
(1) All applications for non-SIP LACERS retirements previously submitted to LACERS by persons eligible for Full Retirement or Early Retirement, and still pending as of the beginning of the SIP Period, shall be held in abeyance for the duration of the SIP Period. After the SIP Period has expired, LACERS shall continue to process previously submitted non-SIP retirement applications pursuant to standard, non-SIP LACERS procedures and provisions.
(d) Notwithstanding any other provision of the City Charter or Los Angeles Administrative Code, a SIP Eligible Filer who elects to participate in the SIP may not withdraw from LACERS their application to retire under the SIP after the time when their SIP agreement with the CAO becomes final. A SIP Eligible Filer’s SIP agreement is final if it is not rescinded before 3:00 p.m. on the seventh business day after the SIP Eligible Filer submitted it to the CAO, and, for SIP applicants submitting their applications on or before August 3, 2020, if it is not rescinded before the additional rescission period ending at 3:00 p.m. on September 10, 2020.
SECTION HISTORY
Added by Ord. No. 186,765, Eff. 9-23-20.
Section
4.1050 Statement of Purpose.
4.1051 Definition of Terms.
4.1052 Membership in Tier 2.
4.1053 Member Contributions.
4.1054 Rights of Former Members.
4.1055 Service Retirement for Employees.
4.1056 Service Retirement for Former Members (Deferred Retirement).
4.1057 Service Retirement Allowances.
4.1058 Disability Retirement.
4.1059 LACERS Domestic Partnerships.
4.1060 Payments Upon Death.
4.1061 Election to Provide an Allowance to a Designated Beneficiary Upon the Retiree's Death.
4.1062 Election to Provide an Optional Allowance to Specified Survivors Upon a Retiree's Death.
4.1063 Right to Elect Life Annuity with No Refund of Contributions.
4.1064 Back Contributions.
4.1065 Redeposit of Formerly Withdrawn Contributions.
4.1066 Buy Back of Periods of Uncompensated Leave from City Service.
4.1067 Government Service Buy Back Program.
4.1067.1 Purchase of Service with WPERP.
4.1068 Larger Annuity Program.
4.1069 Cost of Living Adjustment.
4.1070 Discretionary Cost of Living Adjustments.
4.1071 Waiver of Benefits.
4.1072 Unclaimed Benefits Revert to the Retirement Fund.
4.1073 Board Determinations.
4.1074 Rule Making Power of the Board.
4.1075 Provision Required to Comply with the Pension Protection Act of 2006 § 822(a) Regarding Rollover Distributions.
4.1076 Provision Required to Comply with Internal Revenue Code Section 401(a)(37) and the Heroes Earnings Assistance and Relief Tax Act of 2008 § 104(a).
4.1077 Provision Required to Comply With Internal Revenue Code Section 401(a)(9).
4.1077.1 Additional Provisions Required for Retirement System Compliance with the Internal Revenue Code.
4.1078 Former Spouse or Domestic Partner's Option to Elect a Life Annuity.
4.1079 Separate Account Option in Legal Separations or Dissolutions.
Loading...