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Your Pension Plan: Tier 5 2 Fine-Tuning

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

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Your Pension Plan: Tier 5 2 Fine-Tuning

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  1. Your Pension Plan: Tier 52 Fine-Tuning Date: September 22, 2006

  2. 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.

  3. Three Kinds of Pensions Service Pensions Disability Pensions Survivor Pensions

  4. Service Pensions

  5. 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.

  6. How Is Your Pension Calculated? Final Average Salary x Pension Percentage = Pension

  7. Your Salary Base - What Counts? Final Average Salary Average pay during the last 12 months of service or any 12 consecutive month period designated by the Member. Includes: • Special pay • Longevity pay • Hazard pay • Assignment pay Overtime pay does not count in this calculation.

  8. 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.

  9. 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time on military leave while a Member • Previous membership in the Pension System, provided contributions were not withdrawn upon termination from that tier

  10. 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

  11. 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%.

  12. 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.

  13. Pension Percentage Chart

  14. 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.

  15. Cost-of-Living Adjustment (COLA) Note: City Council may approve a discretionary COLA to address periods of high inflation.

  16. Cost-of-Living Adjustment (COLA) • COLA is immediate • Prorated by the number of completed months on pension for the first year

  17. 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

  18. 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) 978-3750 Police Department: (213) 485-3243

  19. 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

  20. 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.

  21. Disability Pensions

  22. Disability Pensions Eligibility Service-Connected Disability Immediate upon membership Nonservice-Connected Disability Covered after 5 years of membership Filing After Service Retirement Up to 1 year after retirement or one year from resolution of Workers’ Compensation claim, if later

  23. 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

  24. 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 disability rating is taxable.

  25. Disability Pensions Nonservice-Connected Disability Pension • 30% - 50% of Final Average Salary • 3% cap on COLA, with COLA Bank • Fully taxable

  26. 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.

  27. 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.

  28. 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

  29. Survivor Pensions

  30. Survivor Pensions – Tier 52 Members Who qualifies? • Qualified Surviving Spouse (QSS) • Qualified Domestic Partner (QDP) • Qualified Children • Qualified Parents

  31. 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.

  32. 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

  33. 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

  34. Surviving Spouse/Domestic Partner Benefit - Tier 52 Service-Connected Death 75% of Normal Pension Base 3% cap on COLA, with COLA Bank Member Death While On a Service-Connected Disability Pension 50% of Normal Pension Baseor 55% if Member had 25+ Years of Service 3% cap on COLA, with COLA Bank

  35. Surviving Spouse/Domestic Partner Benefit - Tier 52 Normal Pension Base Regular Gross Monthly Pay Rate the member received at date of death or effective date of retirement. Includes: - Special Pay - Longevity Pay - Hazard Pay - Assignment Pay Overtime Pay does not count in this calculation

  36. Surviving Spouse/Domestic Partner Benefit - Tier 52 Nonservice-Connected Death (With 20 Years of Service or More) 100% of Member’s accrued service retirement not to exceed 55% of Normal Pension Base 3% cap on COLA, with COLA Bank

  37. Surviving Spouse/Domestic Partner Benefit - Tier 52 Member Death On A Service Pension Same percentage as the member’s pension up to 55% of member’s Normal Pension Base 3% cap on COLA, with COLA Bank

  38. Surviving Spouse/Domestic Partner Benefit - Tier 52 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.

  39. 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

  40. Survivor Pensions – Tier 52 Additional Benefits for Minor Children 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

  41. Survivor Pensions – Tier 52 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).

  42. Survivor Pensions – Tier 52 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.

  43. 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 qualified dependents.

  44. Member Age 55 Subsidy Members are eligible to receive a health 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 health plan

  45. Amount of Age 55 Subsidy - Member Current maximum amount: $782.44* per month Formula Years 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.

  46. 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.

  47. 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

  48. 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.

  49. 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 Ad Code and City Charter limits.

  50. Age 55 Subsidy for QSS/QDP QSSs/QDPs are eligible to receive a health subsidy if the following requirements are 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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