1 Your Pension Plan: Tier 5 2 Fine-Tuning Date: September 22, 2006

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Your Pension Plan: Tier 52 Fine-Tuning

Date: September 22, 2006

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More Than One Pension Plan

Fire and Police Pension Plans:

Tier 1: 1925 - January 28, 1967

Tier 2: January 29, 1967-December 7, 1980

Tier 3: December 8, 1980 - June 30, 1997

Tier 4: July 1, 1997 – December 31, 2001

Tier 5: January 1, 2002 – Present

Note: certain exceptions may occur based on personnel actions such as reappointments, reinstatements and elections to transfer tiers.

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Three Kinds of Pensions

Service Pensions

Disability Pensions

Survivor Pensions

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Service Pensions

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When Can You Retire On a Service Pension?

Tier 5

Age 50 with at least 20 Years of Service

Deferred Pension Option: Tier 5 members with 20 or more Years of Service who terminate employment prior to age 50 for any reason other than disability are eligible for the deferred pension option, but at the lower Tier 3 pension percentage.

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How Is Your Pension Calculated?

Final Average Salaryx

Pension Percentage=

Pension

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Your Salary Base - What Counts?

Final Average Salary

Average pay during the last 12 months of service orany 12 consecutive month period designated by theMember. Includes:

• Special pay• Longevity pay• Hazard pay• Assignment pay

Overtime pay does not count in this calculation.

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What Else Counts In a Final Average Salary?

Prior Hazard Pay

Credited at 10% per year that Hazard Pay was earned, up to 100% of Hazard Pay the last time it was received.

Applicable to members retiring at a rank not higher than a Captain in the Fire Department or Lieutenant in the Police Department.

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Your Years of Service

• Years you received a paid salary• Time on IOD• Time on a service-connected disability

pension (special rule applies)

• Certain time on military leave while a Member

• Previous membership in the Pension System, provided contributions were not withdrawn upon termination from that tier

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Your Years of Service: Time You May Purchase

• Prior membership in the Fire and Police Pension System

• Recruit training time (not applicable to former Tier 2 members)

• Prior time as a civilian paramedic or ambulance driver

• Time spent on temporary disability (Workers’ Compensation – State rate)

• Time on a nonservice–connected disability pension after returning to active duty

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Pension Contributions

Contribute 8% of salary to the pension system as long as pension system is 100% actuarially funded; 9% if funding is less than 100%.

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Translating Your Years of Service Into a Percentage

• 50% for first 20 years• 3% per year for each additional year,

except for 4% in the 30th year, up to 33 years

• 90% is the maximum benefit percentage

After 33 years, you stop making pension contributions.

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Pension Percentage Chart

Years of Service

Pension Percentage

Years of Service

Pension Percentage

20 50% 27 71%

21 53% 28 74%

22 56% 29 77%

23 59% 30 81%

24 62% 31 84%

25 65% 32 87%

26 68% 33 90%

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Cost-of-Living Adjustment (COLA)

Tier 5 has a capped COLA at 3% per year, with a COLA bank.

Any CPI increase over the 3% cap is deposited into a retiree’s “COLA bank.”

If, in the following years, the CPI increase is below the 3% cap, the additional percentage is withdrawn from the COLA bank and applied to the current COLA amount, up to the 3% cap.

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Note: City Council may approve a discretionary COLA to address periods of high inflation.

COLA Year CPI Retiree COLA

COLA Bank

July 1, 2006 2.5% 2.5% 0%

July 1, 2007 3.6% 3.0% .6%

July 1, 2008 2.4% 3.0% 0%

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• COLA is immediate

• Prorated by the number of completed months on pension for the first year

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Return to Active Duty After Service Retirement

You can return to active duty only if you:

• Retired at rank no higher than Engineer (Fire) or Sergeant (Police)

• Have been retired less than 3 years• Under age 55• Pass a medical examination• Will contribute to Tier 5 until 33 years of service• Approved by Appointing Authority of your original

employing department• Approved by Fire and Police Pension Board• DROP participants are ineligible for reactivation

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Additional Information

You may be entitled to a pay out of accumulated time when you retire. Please contact the Personnel Section of your employing department for more information.

Fire Department: (213) 978-3750Police Department: (213) 485-3243

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Dissolution of Marriage

Most settlements use the time-rule formula:

marital period*÷ employment period x pension

= community property

If Pensions has already been joined and a property settlement is on file, nothing additional is required.

*Marital period while employed

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Dissolution of Marriage

For information on what Fire and Police Pensions has on file for you, call (213) 978-4522.

If you have questions or concerns, you must seek the advice of your own lawyer.

We cannot give legal advice.

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Disability Pensions

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Disability Pensions Eligibility

Service-Connected DisabilityImmediate upon membership

Nonservice-Connected DisabilityCovered after 5 years of membership

Filing After Service RetirementUp to 1 year after retirement or

one year from resolution of Workers’ Compensation claim, if later

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Allow Enough Time!

• Processing time will depend on the complexity of the claim

• The average processing time is 10 months

• Application can be filed and withdrawn

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Disability Pensions

Service-Connected Disability Pension

• 30% - 90% of Final Average Salary• 3% cap on COLA, with COLA Bank• Generally non-taxable*

Minimum pension is the greater of either:

30% of Final Average Salary - OR -

2% x Years of Service x Final Average Salary

*Any pension amount in excess of Board’s disabilityrating is taxable.

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Disability Pensions

Nonservice-Connected Disability Pension

• 30% - 50% of Final Average Salary• 3% cap on COLA, with COLA Bank• Fully taxable

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Disability Pensions

Effective date is the earlier of your Board hearing date or the day after your IOD (or other pay status) expires.

All time off for the same injury, even if you return to work and then go off again, counts toward your one-year of IOD.

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Disability Pensions

Your Pension and Workers’ Compensation

The Board of Fire and Police Pension Commissioners makes independent decisions regarding disability.

ALL cash awards paid by Workers’ Compensation must be paid back for any type of disability pension. This includes attorney's fees.

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Disability Pensions: Review

• All disability pensions are reviewable• Members can also initiate a review of

their disability status• Pension can be decreased• Pension can be increased• Pension can remain the same• Member can be returned to duty within 5

years• After 5 years, members found to be no

longer disabled have their pensions reduced to 30% of Final Average Salary

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Survivor Pensions

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Survivor Pensions – Tier 52 Members

Who qualifies?

• Qualified Surviving Spouse (QSS)

• Qualified Domestic Partner (QDP)

• Qualified Children

• Qualified Parents

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Survivor Pensions – Tier 52 Members

Domestic Partner

• You must file a Declaration with Fire and Police Pensions.

• Print form from website at www.lacity.org or request a form from Active Member Services at (213) 978-4522.

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Survivor Benefits

To qualify for a survivor’s pension, your surviving spouse must be married to you, or domestic partner registered:

Service Pension• at least one year prior to the effective date of

your service pension and• on the date of your death

Nonservice-Connected Death• at least one year prior to the date of your

non-service connected death and • on the date of your death

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Survivor Benefits

To qualify for a survivor’s pension, your surviving spouse must be married to you,or domestic partner registered:

Service-Connected Disability Pension• on the effective date of your service-

connected disability pension and• on the date of your death

Active Duty Death• on the date of your death

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Surviving Spouse/Domestic Partner Benefit - Tier 52

Service-Connected Death75% of Normal Pension Base

3% cap on COLA, with COLA Bank

Member Death While On a Service-Connected Disability Pension

50% of Normal Pension Base or55% if Member had 25+ Years of Service


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Normal Pension Base

Regular Gross Monthly Pay Rate the memberreceived at date of death or effective date ofretirement.

Includes:

- Special Pay - Longevity Pay - Hazard Pay - Assignment Pay

Overtime Pay does not count in this calculation

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Nonservice-Connected Death(With 20 Years of Service or More)

100% of Member’s accrued service retirement not to exceed

55% of Normal Pension Base3% cap on COLA, with COLA Bank

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Member Death On A Service PensionSame percentage as the member’s pension

up to 55% of member’sNormal Pension Base


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When you retire you can take a reduced pension to provide your qualified surviving spouse, or qualified domestic partner, a higher pension upon your death. Rarely used, but an option some members may consider.

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Survivor Pensions – Tier 52

Who else qualifies?

Minor Children• Child or adopted child of the Member• Unmarried, under age 18 or 22 if in school full-time

Dependent Children• Child or adopted child of the Member• Disabled from earning a livelihood before age 21• Not married or adopted, disability has not ceased

Dependent Parents• Natural parent(s) of the Member and financially

dependent on Member for half of their necessary living expenses at least one year immediately prior to death

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Additional Benefits for MinorChildren and/or Dependent Children

• For 1 child, an additional 25% of amount paid to QSS/QDP

• For 2 children, an additional 40% of amount paid to QSS/QDP

• For 3 or more children, an additional 50% of amount paid to QSS/QDP

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Benefits Paid if No Qualified Spouse/Qualified Domestic Partner

Qualified child(ren) receive pension QSS/QDP would have received.

- OR -

If no Qualified Children, QSS/QDP pension may be paid to Qualified Dependent Parent(s).

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If Member dies while active, leaving no qualified survivor, the Member’s contributions plus interest are refunded to a designated beneficiary.

If Member dies while retired on a pension, leaving no qualified survivor, pension benefits end and there is no refund of contributions.

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Member Health Care Subsidy

Two Health Subsidies

Age 55 Subsidy• This subsidy also applies to members 65 or over

who are eligible for Medicare Part B only.

Medicare Subsidy• When you reach age 65 and if you are eligible

for Medicare Parts A and B.

The member health subsidy may cover qualifieddependents.

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Member Age 55 Subsidy

Members are eligible to receive a healthsubsidy if the following requirements aremet:

• Member must be at least age 55• Member must have at least 10 years of

service• Member must be enrolled in a City-

approved health plan

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Amount of Age 55 Subsidy - Member

Current maximum amount:

$782.44* per month

FormulaYears of Service x 4% x Maximum Subsidy

= Subsidy Amount(not to exceed the premium of the plan)

*As of 07/01/06, amount is subject to change based on Ad Code and City Charter limits.

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Age 55 Member Subsidy: Example

Example: Member retires with 22 years of service. The Member and a spouse are in the Fire Medical two-party plan. The monthly premium for this plan is $926.31. The available subsidy will be:

22 YOS x 4% = 88% x $782.44= $688.55 /month

The available subsidy is therefore $688.55.

$926.31 premium - $688.55 subsidy= $237.76

There is an out-of-pocket expense of $237.76 in this case.

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Member Medicare Subsidy

Members Who Qualify for Medicare Parts A and B at Age 65:• You are required enroll in all parts of Medicare

(Parts A and B or B only) for which you are eligible by your 65th birthday.

• The subsidy is not a flat dollar amount and is plan specific.

• Pay for Part B and are reimbursed that amount by the pension system. The current monthly cost for Medicare Part B is $88.50*.

• Delayed Medicare enrollment may subject member to penalties from Social Security, as well as loss of subsidy.

*Effective 1/1/06

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Member Medicare Subsidy

Members Who Qualify for Medicare Prior to Age 65:• Should notify their health plan administrator

and the Medical and Dental Section immediately.

Members Who Qualify for Medicare Part B Only:• Continue to receive the Age 55 subsidy.• Pay for the Part B premium themselves.• If you need information on the Medicare

subsidy amounts and/or formulas, contact the Medical and Dental Section at (213) 978-4560.

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Health Care Subsidy For QSS/QDP

• May qualify for either Age 55 subsidy or Medicare subsidy

• Current maximum Age 55 subsidy amount is $439.45*

• Must enroll in Medicare to the extent eligible in order to continue to receive a subsidy

• This subsidy is for the Qualified Surviving Spouse/Qualified Domestic Partner only; dependents are not eligible for this benefit

*As of 1/1/06, amount is subject to change based on AdCode and City Charter limits.

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Age 55 Subsidy for QSS/QDP

QSSs/QDPs are eligible to receive ahealth subsidy if the following requirementsare met:

• The deceased member would have been at least age 55

• The deceased member must have had at least 10 years of service

• The QSS/QDP must be enrolled in a City approved health plan

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Age 55 QSS/QDP Subsidy

Example: Surviving Spouse is receiving a pension. The deceased Member had 22 years of service. The Surviving Spouse is in the Police California Care (HMO) single-party plan. The monthly premium for this plan is $301.89. The available subsidy will be:

22 YOS X 4% = 88% x $439.45 = $386.72 / month

The resulting amount, $386.72, cannot exceed the single party cost of the survivor’s health plan (which is $301.89).

The available subsidy is therefore $301.89.

There is no out-of-pocket expense in this case.

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QSS/QDP Medicare Subsidy

QSSs/QDPs Who Qualify for Medicare Parts A and B at Age 65:

• Are required to enroll in all parts of Medicare (Parts A and B or B only) to the fullest extent eligible by 65th birthday.

• The subsidy is not a flat dollar amount and is plan specific.

• Pay for Part B and are reimbursed that amount by the pension system. The current monthly cost for Medicare Part B is $88.50*.

• Delayed Medicare enrollment may subject member to penalties from Social Security, as well as loss of subsidy.

Effective 1/1/06

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QSS/QDP Medicare Subsidy

QSSs/QDPs Who Qualify for MedicarePrior to Age 65:• Should notify their health plan

administrator and the Medical and Dental Section immediately.

QSSs/QDPs Who Qualify for MedicarePart B Only:• Continue to receive the Age 55 subsidy.• Pay for the Part B premium themselves.

If you need information on the Medicare subsidy amounts and/or formulas, contact the Medicaland Dental Section at (213) 978-4560.

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ATTENTION – Contact the appropriate health plan sponsor before you retire!

Some City-approved retiree health insurance plans have special enrollment requirements! For instance, you may have to be enrolled in an association health plan as an active member and be enrolled at the time of retirement to be eligible to enroll as a retiree.

City-approved health plans for retired police officers are administered by the Los Angeles Police Relief Association (LAPRA).

City-approved health plans for retired firefighters are administered by the Los Angeles Firemen’s Relief Association (LAFRA) and the United Firefighters of Los Angeles City (UFLAC).

City-approved health plans for retired Port Police transferees into Tier 5 are administered by Fire and Police Pensions.

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Los Angeles Firemen’s Relief Association

(213) 380-2900 or (800) 244-3439www.lafra.org

• Fire Medical• Relief Kaiser (CA only)

Los Angeles Police Relief Association

(888) 252-7721www.lapra.org

• Blue Cross (PPO)• Blue Cross CaliforniaCare (HMO)• Kaiser (CA only)

UFLAC(213) 977-9014www.uflac.org

• Blue Cross Prudent Buyer (PPO)

• Blue Cross CaliforniaCare (HMO)

Health Care PlansFor retired members of the Police and Fire Departments, LAFPP administers the Retiree Health Insurance Subsidies only. Specific questions about retiree health insurance plan provisions for retired police officers and firefighters should be directed to:

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Health Insurance Premium Reimbursement Program

Available to sworn pensioners and QSSs/QDPs who:

Live outside a City-approved HMO health plan zip code service area;

Have at least 10 years of service as a sworn member or the deceased pensioner had at least 10 years of service;

Meet the minimum age requirement, or if the member died prior to age 55, the QSS/QDP would be eligible when the member would have been age 55; and

Are not enrolled in a City-approved health plan. City approved health insurance must be cancelled prior to a member participating in the Reimbursement Program.

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Health Insurance Premium Reimbursement Program

Reimbursement Amount:

Reimbursement will be provided only for the health insurance premium paid, not to exceed the pensioner’s or qualified survivor’s maximum allowed monthly medical subsidy. (See prior slides.)

For more information on the specific guidelines of the Health Insurance Premium Reimbursement Program, contact the Medical and Dental Section at (213) 978-4560 or visit our website at www.lacity.org/pen.

At age 65, the program participant must enroll in Medicare to the extent eligible in order to continue participation. If you delay enrollment, you may be subject to penalties from Social Security, as well as denial of your reimbursement claim.

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Member Dental Subsidy

This subsidy is a member-only subsidy. Qualifiedsurvivors and dependents are not eligible for thisbenefit.

Members are eligible to receive a dental subsidy if the following requirements are met:

• Member must be at least age 55• Member must have at least 10 years of service• Member must be enrolled in a City-approved

dental plan

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Amount of Dental Subsidy

Current maximum amount: $34.84* per month

Formula

Years of Service x 4% x Maximum Subsidy= Subsidy Amount

(not to exceed the single party premium of the plan)

Example:20 YOS x 4% = 80% x $34.84 = $27.87 per month

The available subsidy is therefore $27.87

*As of 1/1/05, amount is subject to change based on Ad Code and City Charter limits.

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Dental PlansThe Department of Fire and Police Pensions administersthe Retiree Dental Insurance Subsidy only. Specific questions about Retiree dental insurance plan provisionsshould be directed to:

Los Angeles Police Protective League(213) 251-4554www.lapd.net Delta Dental

Los Angeles Police Relief Association(888) 252-7721www.lapra.org Cigna Dental

UFLAC(213) 977-9014www.uflac.org Concordia Dental Golden West Dental

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DROP Program

Major Provisions:

• Available for a 5-year period• Program started May 1, 2002• Tier 5 members are eligible if they

meet the following requirements:– At least 25 years of service and – Minimum age 50

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DROP Program

May stay in DROP a maximum of 5 years regardless of when you enter.

Agreement to enter DROP and terminate employment at the end of the DROP period is irrevocable.

Service retirement formula is frozen at the time you enter DROP.

For all other purposes, you are considered an active member of your department.

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DROP Program

How does it work?

An amount equal to 100% of your service pension will be placed in DROP account.

COLA adjustments will be applied per the Charter, not to exceed 3%, with a COLA Bank.

Interest will be credited at 5% annually.

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DROP Program

You will continue to make pension contributions until you would have had 33 Years of Service.

However, contributions are not deposited into your DROP account.

At the end of the DROP period, you will receive the proceeds from your DROP account as a lump sum, or you may roll the proceeds into another tax qualified account.

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DROP Program

At the end of the DROP period, you will begin to receive a monthly pension based on service and pay at time of entry into DROP plus COLAs subject to 3% cap, with a COLA Bank.

Disability retirement: If you are granted a disability pension after entering DROP, you will forfeit your DROP account and receive the disability pension as if you never entered DROP.

Note: You waive any right to apply for or be granted a disability pension once you have taken distribution of your DROP account.

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DROP Program

Future of the DROP Program

The City and some of your labor organizations have reached a tentative agreement to extend DROP and open another 5-year enrollment window that will close 4/30/2012.

An actuary will evaluate DROP at the end of the first DROP period (April 30, 2007). If it is determined that DROP is not cost neutral, the City and the unions will negotiate adjustments to the program.

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DROP Program

Future of the DROP Program

The adjustments would be effective by May 1, 2008. If the City and the unions cannot agree on necessary plan adjustments by March 1, 2008, the City will suspend new entrants into DROP until an agreement is reached.

Until any new changes are approved, the provisions of DROP are carried over to the new DROP enrollment window period.

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DROP Program

More information about DROP, including a DROP calculator, can be found on our website at www.lacity.org/pen

Semi-Annual statements will be provided to DROP members.

If you have any questions, please call the DROP Section at (213) 978-4568.

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Preparing to Apply for Retirement or DROP

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Applying for DROP – Where do I start?

Schedule your appointment at least 30 to 45 days prior to your intended date of effective participation in DROP!

FIRE: Call the Fire and Police Pensions’ DROP Section directly at (213) 978-4568

POLICE: Make an appointment with your retirement counselor by calling (213) 485-4054

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Records You Will Need

When applying for DROP, provide the followingnecessary documents (if applicable):

• Letter of Intent• California driver’s license or department picture

ID card• Social Security numbers for your spouse and any

minor children• Marriage certificate• Dissolution of marriage decree (court certified

copy)• Birth certificates of minor children

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Applying for Service Pension–

Where do I start?

An application for service retirement should be submitted at least four weeks before your desired effective date to avoid delays in receiving your first pension check.

Make an appointment with your retirement counselor:

Fire (213) 978-3750Police (213) 485-4054

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Records You Will Need

When applying for a Service Pension, provide the following necessary documents (if applicable):

• Letter of Intent• Marriage certificate• Dissolution of marriage decree (court certified

copy)• Birth certificates of minor children• Adoption/legitimization documentation• Medical documentation for dependent children• Documentation for dependent parents

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Numbers You Can Use

Fire Relief Association(800) 244-3439www.lafra.org

Los Angeles Police Relief Association(888) 252-7721www.lapra.org

L.A. Retired Fire and Police Association(888) 288-5073 www.larfpa.org

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Your Source For Information

Call us if you have any questions!

Communications(213) 978-4530

Active Member Services(213) 978-4522

Web Sitewww.lacity.org/pen

[email protected]

LAFP2 SOCSEC2006 2006 0818.ppt

Documents

1 Your Pension Plan: Tier 5 2 Fine-Tuning Date: September 22, 2006