DROP Participation
YOUR STATUS IN DROP
Will I receive any service credit for retirement benefit calculation purposes for the time I am in DROP?
No. Service credit is determined as of the time you enter DROP and no additional credit will be given for any time while you are in DROP. Any prior service time such as Lost Service Time (Tier 2), Workers’ Compensation State Rate Time, recruit training time (Tiers 3, 4, 5 and 6) or time under the Public Service Purchase (PSP) Program, must be purchased prior to enrollment in DROP in order for that time to be counted toward your years of service credit. Also, you may want to consider working to the end of the payroll period immediately prior to your date of retirement/DROP entry date if you wish to receive credit toward your years of service for that pay period.
Will I pay contributions into the retirement system while I’m in DROP?
Yes. To maintain the requirement in the LAAC that DROP be cost neutral, both your contributions and the City’s contributions will continue while you are in DROP. Your contributions will continue at the rate and for the length of time specified for your tier, as shown in the chart below. Additionally, members of Tiers 2 – 5 who elected to pay the 2% “opt-in” contributions will continue to make these contributions until they have done so for 25 years. All member contributions go into the LAFPP Service Pension Fund and are not applied to your DROP account.
While I’m in DROP, will my pension contributions cease when I reach the maximum years of service (YOS) for my tier?
Yes. Although you no longer earn YOS credit as a DROP participant, YOS does count toward the maximum number of years in which you must make pension contributions. For example, a Tier 3 member entering DROP upon completing 28 YOS would cease making contributions after two years of participation in DROP.
What happens to my sick, vacation and overtime accruals when I enter DROP?
While you are in DROP, you are still considered an active employee for purposes of sick, vacation and overtime accrual. Your operating Department will make payouts of unused sick, vacation and overtime when you terminate employment with the City. Sick, vacation and overtime cannot be used beyond the end of your DROP participation period.
Will I receive cost of living adjustments to my pension payments?
Yes. Cost of living adjustments (COLAs) for your tier will be applied to your monthly service pension while you are in DROP; however, the amount of the COLA is capped at +/- 3% for all tiers, as shown below. Note that in the event of a negative COLA, your pension will never be adjusted to less than your original pension amount.
Can I participate in both DROP and the City’s Deferred Compensation program?
Yes. As long as you are an active employee receiving a salary you may contribute to Deferred Compensation, a retirement savings program administered by the City’s Personnel Department. Deferred Compensation is a deduction taken from your active salary while your DROP account is a retirement benefit administered by LAFPP.
What happens if I am promoted while in DROP?
The amount of your retirement benefit, both the amount credited to your DROP account and the amount you will eventually receive as a monthly pension when you terminate employment and retire, are frozen at the time of entry. Therefore, your DROP account and pension will not reflect the additional pay from your promotion. If you think a promotion may be forthcoming, you may want to consider delaying your entry into DROP. You may wish to also consider that your monthly pension entitlement, if in Tiers 3, 4 or 5, is based upon the calculation of a 12-month Final Average Salary, and if in Tier 6, upon a 24-month Final Average Salary.
What happens if I am demoted while in DROP?
The amount of your retirement benefit, both the amount credited to your DROP account and the amount you eventually receive as a monthly retirement allowance, will not be affected by any reduction in your salary that accompanies the demotion.
What happens if I am terminated while in DROP?
Being fired automatically terminates your participation in DROP. At your request, distribution of your DROP account will be withheld while the appeal of your discharge is pending. Should you be reinstated, you may continue to participate in DROP if the account has been withheld, and the original period of DROP participation will continue but cannot exceed the original 5-year/60-month limit (plus any additional months where your DROP participation was suspended, applicable to members who enter DROP on or after February 1, 2019 – up to 30 additional months). If the DROP funds have been distributed, you cannot return to sworn employment or continue in DROP even if your termination is overturned.
What happens if I resign while in DROP?
Resigning from sworn employment with the City will automatically terminate your participation in DROP and you will be deemed to have retired. You will begin receiving your monthly retirement benefit and will have to decide how you wish to have your DROP account distributed. (See Question 29 for more information).
INJURY, DISABILITY OR DEATH
What if I am on injured on duty (IOD) status while in DROP?
In the event you are injured on duty any time during your DROP participation period and you happen to remain on IOD status on your mandatory DROP exit date, you must still exit the program, unless you entered DROP on or after February 1, 2019. You are allowed to continue on IOD status with your Department. If you continue on IOD status after exiting DROP, you will not become eligible to receive distribution of your DROP account until your retirement status is determined. Once you have exited the program, interest will stop accruing to your DROP account.
If you entered DROP on or after February 1, 2019, and your DROP participation was suspended due to an on-duty injury (or you otherwise did not meet the 112-hour minimum for active duty status in one or more calendar months), you will be eligible to participate in DROP for as many months as your participation is suspended for a maximum of thirty (30) additional months beyond your original 60-month participation period.
If you subsequently decide to take a disability retirement, you are required to forfeit your DROP account. However, if you elect to take a service retirement and distribution of your DROP account, you will be required to repay any IOD pay earned after the last day of your participation in DROP.
What happens if I join DROP and then become disabled?
If you apply for and receive a disability pension, your years of service credit and active pay adjustments, etc., are restored as if you never entered DROP. However, you must forfeit your entire DROP account should you receive the disability pension. Once you have received your DROP account funds, you are no longer eligible to apply for or receive a disability pension.
What happens if I die while in the DROP Program?
Nonservice-Connected Death: Should you die of nonservice-connected causes, the normal post-retirement survivor pension benefits provided by your tier will be paid to your qualified survivor(s), in addition to the proceeds of your DROP account.
Service-Connected Death: If your death is service-connected, in lieu of the survivor benefits described for a nonservice-connected death, your Qualified Surviving Spouse/ Domestic Partner may choose to forfeit your DROP account and collect a “Service Connected” survivor pension based on your salary and years of service as if you never entered DROP.
Please note: If you were not married or did not file a Declaration of Domestic Partnership with LAFPP one year prior to entering DROP, your surviving spouse/domestic partner would not be considered a “qualified survivor”. However, if your death is deemed service-connected by the LAFPP Board, your surviving spouse/domestic partner could become “qualified” by electing to forfeit your DROP account and collect a “Service Connected” survivor pension based on your salary and years of service. (In order to qualify for a survivor pension in the event you die in the line-of-duty, your spouse must be married to you or your domestic partner must be declared with the Plan as of the date of your service-connected death).
MARRIAGE AND DOMESTIC PARTNERSHIPS
What happens if I marry while I’m in DROP?
Your marriage will be deemed to be a marriage occurring post-retirement, and your spouse will not be eligible for survivor benefits. To qualify your surviving spouse for pension benefits, you must be married to him/her at least one year prior to entering DROP.
If you have a domestic partner and would like for him/her to qualify for pension benefits, you must file a confidential affidavit with LAFPP or register your partnership with the State of California at least one year prior to entering DROP. Please note that there are special requirements to register a domestic partnership with the State of California. Further information may be obtained from any county clerk or at the Office of the Secretary of State.
Will my post retirement spouse/domestic partner be entitled to any survivor benefits?
Under the Survivor Benefit Purchase Program, a Retired Plan Member may elect to provide a survivor benefit to a spouse or domestic partner by reducing his/her monthly pension benefit. The continuance percentage choices range from 30% to 100% in 5% increments. The benefits do not vest until one year from the date of the member’s election, and the election is irrevocable. Since DROP members are Active employees, you cannot elect this program until you are retired and have exited DROP. For more information regarding this program, please call the Retirement Services Section at (213) 279-3125 or visit our website, www.LAFPP.com.
What happens if my marriage is dissolved prior to or while I’m in DROP?
Some or all of your DROP account may be community property depending on your dissolution judgment or order. Your former spouse may have a claim to a portion of the DROP account and may be entitled to a share when you exit DROP and the DROP account is distributed. Whether this applies in your case depends on the court orders and judgment. You may wish to check with your own lawyer regarding this issue.
Note: Until you actually terminate sworn employment with the City of Los Angeles and become eligible to receive a monthly pension benefit, no monies shall be paid from your DROP account. There are no provisions within the Fire and Police Pension Plan to permit payment of any retirement benefit until you terminate sworn City employment.