(a) Definitions. For the purposes of this section, the following words and phrases shall have the meaning ascribed to them in this subsection unless a different meaning is clearly indicated by the context:
"Board" means the Board of Fire and Police Pension Commissioners.
"DROP" means the Deferred Retirement Option Plan established in Chapter 21 of Division 4 of the Los Angeles Administrative Code.
"Full Actuarial Cost" means the cost to be paid for purchased service in order to achieve cost neutrality to the Plan as determined by the Board's actuary.
"LAAC" means the Los Angeles Administrative Code.
"LACERS" means the Los Angeles City Employees' Retirement System.
"OPS Service Purchase Program" means the voluntary program that allows certain members, who were formerly employed with the Department of General Services' Office of Public Safety (OPS), to purchase service with the Fire and Police Pension Plan on the terms and conditions established in this section.
"Plan" means the Fire and Police Pension Plan established in Article XI, Part 3 of the Los Angeles City Charter.
"Purchased Service" means service purchased under the OPS Service Purchase Program.
(b) Participation in the Program. Only persons who were transferred to the Police Department from the Department of General Services and gained status in Class Code 2214, 2217, 2223, 2227, 2232 or 2244, and who become members of Tier 6 of the Plan may purchase service as provided herein.
A Tier 6 member who satisfies these criteria shall not be eligible to enter into a written purchase agreement until he or she passes the field certification program with the Police Department. This limitation is necessary because of the possibility he or she could revert back to membership in LACERS prior to obtaining field certification.
(c) Service Eligible for Purchase. Only sworn service with the City in Class Codes 3183, 3185, 3188 and 3198 for which the employee paid contributions and earned service credit with LACERS may be purchased as provided herein. Such periods of service shall be referred to as "Eligible Service" for purposes of this section.
(d) Transfer of Funds from LACERS to the Plan. For each member who elects to make a purchase under this section, LACERS shall transfer to the Plan:
(1) Sufficient funds to cover all funded accrued liability related to the benefits provided in Chapter 10 of Division 4 of the LAAC for all periods of the member's Eligible Service to include, but not necessarily be limited to, employee contributions, City contributions, and earnings. The transfer of all member contributions attributable to periods of Eligible Service is mandatory; the member shall have no right to authorize only a partial transfer of such contributions even if the member elects to purchase only a part, rather than all, of the periods of Eligible Service. The portion of the funds that are transferred from the member's contribution account with LACERS, including interest, shall be transferred to the member's individual contribution account with the Plan (where they shall earn interest and be refundable as provided in Charter Section 1714); the balance of the funds transferred from LACERS shall be transferred to the appropriate Plan account and credited toward satisfying the City's liability for the benefits provided in Tier 6 of the Plan (excluding the City's liability for benefits provided in Chapter 11.5 of Division 4 of the LAAC).
(2) Sufficient funds from LACERS' 401(h) account shall be transferred to cover all funded accrued liability related to the benefits provided in Chapter 11 of Division 4 of the LAAC for all periods of the member's Eligible Service to include, but not necessarily be limited to, City contributions and earnings. These funds shall be transferred directly to the Plan's 401(h) account and credited toward satisfying the City's obligation to fund benefits provided in Chapter 11.5 of Division 4 of the LAAC.
The amount of funds due to the Plan from LACERS shall be mutually agreed upon between the Plan and LACERS, upon advice from the plans' actuaries, and is to include, but not necessarily be limited to, employee contributions, City contributions, and earnings to cover all funded accrued liability for the period of the transferred service determined by first using the results in the most recent actuarial valuation as of June 30, 2013, and then adjusting those results for the passage of time, including adjustments for both time value of money and City and employee contributions made from June 30, 2013, to the date of fund transfer to the Plan, using the actuarial assumptions from the June 30, 2013, valuation. All the relevant actuarial assumptions used in the June 30, 2013, LACERS actuarial valuations, with adjustment to a unisex basis, are to be used in the calculations. There shall be a separate calculation for purposes of Subdivision (1) and for purposes of Subdivision (2) above. The total sum transferred shall be credited towards the member's purchase costs, as provided in Subsections (f), (g) and (h) herein, and the member shall forfeit all right to benefits from LACERS for the periods of Eligible Service for which these funds have been transferred.
(e) Right to Purchase Years of Service. A member shall have a one-time right to elect to purchase Years of Service with the Plan for periods of Eligible Service with LACERS by entering into a purchase agreement, subject to the following terms and conditions:
(1) Minimum Purchase. The member may elect to purchase the minimum number of Years of Service with the Plan that can be purchased outright with the funds transferred to the Plan from LACERS pursuant to Subsection (d) above, provided that he or she shall be required to pay any additional amount required to purchase the same number of Years of Service for Tier 6 health benefits and for all other Tier 6 benefits.
(2) Maximum Purchase. The member may elect to purchase the total period of Eligible Service with the Plan.
(3) Purchase Restrictions. The member shall be required to make either a minimum purchase or a maximum purchase, as provided in Subdivision (1) or (2) above. A member shall not be allowed to purchase a different number of Years of Service for Tier 6 health benefit purposes than for purposes of other Tier 6 benefits.
(4) Purchase Deadline. The right to purchase service granted in this section shall terminate on June 30, 2015, except that written purchase agreements entered into on or before that date may be completed thereafter.
(f) Cost of Purchased Service. The member shall be required to pay the full actuarial cost of the purchased service as determined by the Plan's actuary without taking into consideration incidental administrative expenses incurred by the Plan, reduced by the amount of any funds transferred from LACERS to the Plan as provided in Subsection (d) above, except as may be otherwise provided in Subsection (g) below. The total purchase cost for each member, including funds transferred pursuant to Subsection (d) above, shall be allocated between the portion necessary to fund the Tier 6 health benefits provided in Chapter 11.5 of Division 4 of the LAAC and to fund all the other benefits provided in Tier 6.
In determining the purchase cost, the actuary shall determine the full actuarial cost utilizing the actuarial assumptions in the most recent actuarial valuation as of June 30, 2013, and then adjusting those results for the passage of time from June 30, 2013, to the date of the actual payment for the purchase contracted using the actuarial assumptions from the June 30, 2013, valuation, and taking into consideration the benefits that may be provided by the Plan as a result of the purchased service. Factors to be considered by the actuary shall include: (a) projected salary increases; (b) probabilities of service retirement, disability retirement, DROP participation, termination, death; (c) probability of leaving a spouse or domestic partner eligible for a continuance benefit; and (d) medical inflation and other assumptions included in the actuarial valuations. All the relevant actuarial assumptions used in the June 30, 2013, Plan actuarial valuations, with adjustment to a unisex basis, will be used in the calculations. There shall be a separate calculation for each of the benefits referenced in Subsections (g) and (h) below.
(g) Purchase Costs Attributable to Tier 6 Health Benefits. The member shall pay the full actuarial cost for the Years of Service purchase attributable to the Tier 6 health benefits provided in Chapter 11.5 of Division 4 of the LAAC, as determined in Subsection (f).
Due to federal rules that apply to the Plan's 401(h) account, in the event that the funds transferred from LACERS' 401(h) account to the Plan's 401(h) account (as provided in Subsection (d)(2)) are not sufficient to fund the full actuarial cost of the purchased service attributable to the benefit provided in Chapter 11.5 of Division 4 of the LAAC to a given member (as determined in Subsection (f)), the member shall make additional contributions to fund the member's other Tier 6 benefits in an amount equal to the amount by which the 401(h) account has been underfunded. The purpose of such additional contributions (which reduce the City's obligation to fund other Tier 6 benefits) is to offset the additional liability incurred by the City for the benefits payable to the member from the Plan's 401(h) account, pursuant to the provisions in Chapter 11.5 of Division 4 of the LAAC, so as to render the member's purchase of this service cost neutral to both the City and the Plan. These additional contributions shall be placed in the member's individual contribution account and shall be credited with interest and be refunded on the terms set forth in Charter Section 1714. Such additional contributions shall be paid as provided in Subsection (i) below.
(h) Purchase Costs Attributable to Other Tier 6 Benefits. The member shall pay the full actuarial cost for the Years of Service purchase attributable to other Tier 6 benefits (excluding the cost for the health benefits provided in Chapter 11.5 of Division 4 of the LAAC) as determined in Subsection (f).
To the extent that the purchase cost required to fund other Tier 6 benefits exceeds the funds transferred under Subsection (d)(1), the member shall make additional contributions, which shall be placed in the member's individual contribution account and shall be credited with interest and be refunded on the terms set forth in Charter Section 1714. Such additional contributions shall be paid as provided in Subsection (i) below.
(i) Written Purchase Agreement Required. A member shall not be considered to have made an election under this section until he or she enters into a written purchase agreement with the Plan as provided herein.
The member shall, on or before June 30, 2015, enter into a written purchase agreement with the Plan for the purchase of Eligible Service. If this purchase requires the member to make additional contributions as provided in Subsection (g) and/or (h) above, the written purchase agreement shall specify whether these payments shall be paid by lump sum payment(s) or on an installment basis through payroll deductions or by both.
A member's election to purchase service under this provision shall become irrevocable once the member's funds have been transferred from LACERS to the Plan pursuant to Subsection (d) above. A member who has entered into a written purchase agreement may unilaterally revoke the purchase agreement by notifying LACERS, in writing, not to transfer his or her funds to the Plan, provided that this written notice must be received by LACERS before the member's funds have been transferred from LACERS to the Plan. After the member has timely notified LACERS not to transfer funds, LACERS shall notify the Plan and provide the Plan with a copy of the written notice received from the member. Once a member has revoked his or her purchase agreement by providing the requisite written notice to LACERS, the member shall no longer have any right to purchase service under this section.
At the time a member is provided with a cost estimate for the purchase of service, the member shall be advised of the interest rate that will accrue on any unpaid balance if not paid in full by a specified date. The interest rate that a member shall be charged on the unpaid balance of any purchase agreement shall be the same rate as the assumed investment earnings rate used in the Plan's June 30, 2013, actuarial valuations.
Lump sum payments for amounts due in excess of the funds transferred pursuant to Subsection (d) above may be paid by a cash payment (including a post-tax payroll deduction), by a trustee-to-trustee transfer from the City's Deferred Compensation Plan pursuant to Internal Revenue Code Section 457(e)(17) or by a rollover from an eligible retirement plan (as defined in Internal Revenue Code Section 402(c)(8)), or by a combination of these methods.
In addition to the methods set forth in the preceding paragraph, a member may make a lump sum payment by waiving his or her right to all benefits (based on all his or her service other than Eligible Service) with LACERS and authorizing a transfer of all his or her remaining LACERS member contributions and accrued interest (attributable to all service other than Eligible Service) from LACERS to the Plan, provided that the total amount of the member's remaining LACERS contributions and interest does not exceed the remaining amount that the member owes to the Plan for the purchase. LACERS shall not accept a waiver nor transfer any funds as provided in this paragraph unless and until LACERS has verified with the Plan that the amount of funds to be transferred will not exceed the amount then owed by the member to the Plan. The member shall not have a right to authorize a partial transfer of funds from LACERS to the Plan under this provision.
Installment payments shall be made in a fixed amount by payroll deduction on a post-tax basis pursuant to the terms of the member's written agreement with the Plan. An installment payment agreement may be initiated or ended by a lump sum payment. While a member may terminate a payroll deduction agreement at any time and cease to make further payments, a member shall not be allowed to complete this purchase at a later date nor may the member enter into another written agreement to purchase any service covered by the terminated agreement. If a payroll deduction agreement is terminated, the member shall receive pro-rated Years of Service based on the payments already made.
All payments, whether by lump sum or on an installment basis, must be completed prior to the member's retirement or, if applicable, DROP entry date, whichever occurs first. If payment in full has not been timely made, the member shall receive pro-rated Years of Service based on the payments already made.
In the event a member receives pro-rated Years of Service, the same number of Years of Service shall be allocated for purposes of Tier 6 health benefits as for all other Tier 6 benefits, since a member may not purchase a different number of Years of Service for Tier 6 health benefit purposes than for purposes of other Tier 6 benefits.
Notwithstanding the above, a member who elects to make a Minimum Purchase, as provided in Subsection (e)(1), shall be required to make all additional payments that are necessary to purchase the same number of Years of Service for Tier 6 health benefit purposes as for purposes of other Tier 6 benefits. Failure to complete such payments shall render such service purchase null and void: all contributions paid by the member to purchase Eligible Service (including the LACERS' employee contributions and interest that were transferred to the Plan, but not including any City funding transferred from LACERS to the Plan) shall be refunded to the member, with interest, upon the member's retirement, and the member shall not be entitled to receive Years of Service with the Plan for his or her Eligible Service with LACERS.
In the event a member who has not completed payment for an Eligible Service Purchase dies prior to entering DROP or prior to retirement, if not a DROP participant, and leaves a Qualified Survivor, as defined in Charter Section 1702(g), the Qualified Survivor shall have the right to make a lump sum payment to complete the member's purchase, rather than to have the member's Years of Service pro-rated based upon the payments made prior to the member's death. The Qualified Survivor shall have ninety (90) days following the member's death to make his or her election, unless the Board by rule shall establish a different election period. No benefits shall be paid from the Plan on account of the member's death until the Qualified Survivor has either elected to complete the purchase and made timely payment or elected not to complete the purchase, unless the election period expires without any election having been made by the Qualified Survivor. The Board, by rule, shall establish a deadline for the receipt of payment from a Qualified Survivor who has elected to complete the purchase; failure to make timely payment shall constitute an election by the Qualified Survivor not to complete the purchase.
(j) Reversion of Funds to LACERS. In the event a former Plan member who purchased service under this section should become employed by the City in a position in which he or she becomes a member of LACERS, the Board, upon receipt of a written request from such former member, shall authorize a transfer of all the former member's contributions, including interest, from the Plan to LACERS, provided that the former member shall be required to waive all rights to benefits from the Plan. The member contributions to be transferred shall include all member contributions made to the Plan during periods of Plan membership plus any member contributions made to LACERS that were previously transferred from LACERS to the Plan pursuant to a purchase under this section. In addition to transferring all member contributions, the Plan shall transfer to LACERS all other funds transferred to the Plan from LACERS on account of such former Plan member, together with any interest and/or earnings attributable thereto. These funds shall be transferred from the appropriate Plan account (member contributions, City regular contributions and investment income, and 401(h) account) and shall be returned to the appropriate LACERS fund (member contributions, City regular contributions and investment income, and 401(h) account).
(k) Board Administration of the Program. The Board shall administer the OPS Service Purchase Program and adopt all rules necessary to implement the program. The Board shall determine any factual questions arising in connection with the program's operation after investigation or hearing, as the Board deems appropriate. The Board's decision shall be conclusive and binding on all parties concerned.
SECTION HISTORY
Added by Ord. No. 183,163, Eff. 8-8-14.