The 2020 Annual Report for Los Angeles Fire and Police Pensions is available online!
LAFPP is pleased to present our 2020 Annual Report. This report provides financial information, such as the department’s budget summary, investment performance, asset allocation data, plan actuarial data, statistical information, and a summary of plan provisions for the fiscal year ending June 30, 2020.
Some of the highlights in this year’s report include:
The System serves approximately 27,352 members, including active, DROP, deferred vested, and retired members and beneficiaries.
Pension benefits were actuarially funded at 93.2% (change of -0.4%) and health subsidy benefits were funded at 59.7% (change of +3.5%). The combined funded status for pension and health benefits is 88.6% (change of 0.1%).
System assets totaled $23.5 billion on a market value basis.
The investment rate of return for Fiscal Year 2019-20 was 3.04%.
LAFPP continues to grow as an organization as we strive to be a leader and innovator in the public pension industry. The Board and staff continue to adhere to prudent and sound investment strategies to grow and protect Plan assets over the long-term to secure the retirement benefits of our members.
In addition to this report, our historical annual reports, actuarial valuations, and financial statements are available on our website under Financial Reports.
Based on the actuarial report for the period ending June 30, 2023, the combined funded ratio for pension and health benefits is 96.8%, up from 95.0% the previous year. This marks the sixth consecutive year that the combined funded ratio has increased for the System. The pension benefit funded ratio is now 99.5%, up from 98.0%, and the retiree health benefit funded ratio increased from 74.3% to 77.7%. The favorable results indicate that the Plan remains strong despite another volatile year marked by the continuing high inflation and financial market volatility.
Every year a valuation of the LAFPP fund is performed by the Board’s actuary. The valuation reviews the System’s assets and liabilities and establishes the City’s (including the Harbor and Airport Departments) contribution to the fund for each fiscal year. The City’s combined contribution rate for July 15, 2024, will decrease by 1.90% of sworn payroll, from 40.41% to 38.51%. The contribution rate decrease is due to a higher than expected return on the valuation value of assets (after smoothing) and changes in assumptions, partially offset by higher than expected COLA increases for retirees and beneficiaries and higher than expected salary increases for active members. The overall unfunded liabilities have decreased from $1.5 billion to $975 million.
The actuarial valuation reports can be found on the Financial Reports page of our website.
The Social Security Administration has designated March 7, 2024, as national “Slam the Scam” day to raise awareness of imposter scams. An imposter scam is when criminals claim to be representatives from well-known government agencies to deceive people into providing personal information or money. There are ways to protect yourself and prevent you from falling victim to these types of predators.
Here are some tips on how to protect yourself from scammers:
Don’t answer your phone if you receive a call from a phone number you do not recognize.
Don’t give out personal or pension related information when you receive a call, email, text message or direct message on social media by someone saying they work for a government agency. If you do receive a call, hang up and call the official number found on the agency’s website. If you get an email or text from a government agency, you know and do business with, contact them using a website you know is real. Look up their real email address or phone number — but don’t call the number they give you or the number from your caller ID.
LAFPP staff will occasionally call our members and beneficiaries. If you receive a call and you are not sure it is LAFPP staff, get their name, hang up and call our toll-free number found on our website to continue the conversation.
A government agency will not threaten or pressure you to take immediate action. Nor will a government agency ask you to pay with gift cards, prepaid debit cards, wire transfers, cryptocurrency or by mailing cash.
Don’t include any personally identifiable information (PII) in your email messages, such as Social Security numbers, dates of birth, driver’s license numbers, or addresses.
Do periodically update your security software and passwords. This will protect your computer and cell phone from security threats, which could expose your personal or financial information to scammers.
Exercise caution when you receive solicitations for financial services from unaffiliated third parties. LAFPP is not affiliated with, nor do we endorse any financial planning services for retirees.
For additional information on LAFPP’s ongoing commitment to keeping member data/information safe and secure please visit lafpp.com/cybersecurity.
Based on the actuarial report for the period ending June 30, 2022, the combined funded ratio for pension and health benefits is 95.0%, up from 92.5% the previous year. This marks the fifth consecutive year that the combined funded ratio has increased for the System. The pension benefit funded ratio is now 98.0%, up from 96.8%, and the retiree health benefit funded ratio increased from 64.7% to 74.3%. The favorable results indicate that the Plan remains strong despite another volatile year marked by the continuing COVID-19 pandemic, high inflation, and financial market volatility.
Every year a valuation of the LAFPP fund is performed by the Board’s actuary. The valuation reviews the System’s assets and liabilities and establishes the City’s (including the Harbor and Airport Departments) contribution to the fund for each fiscal year. The City’s combined contribution rate for July 15, 2023, will decrease by 1.26% of sworn payroll, from 41.67% to 40.41%. The contribution rate decrease is due to a higher than expected return on the valuation value of assets (after smoothing), lower than expected salary increases for active members, higher than expected employer contributions, and lower health plan premiums and subsidies than projected in the prior valuation. The overall unfunded liabilities have decreased from $2.1 billion to $1.5 billion.
The actuarial valuation reports can be found on the Financial Reports page of our website.
All eligible DROP participants, retired members, and beneficiaries are subject to an annual cost of living adjustment (“COLA”). The COLA takes effect on July 1 of every year and the adjustment is received accordingly in the July 31st pension payment/DROP account deposit.
Pursuant to the City of Los Angeles Charter and Administrative Code, the LAFPP COLA is based on the annual change in the Consumer Price Index (CPI) as published by the U.S. Bureau of Labor Statistics. Specifically, we look at the change in the CPI for the Los Angeles-Long Beach-Anaheim area for the 12-month period beginning in March through February of the following year.
The LAFPP COLA is calculated differently from the COLA calculated by the Social Security Administration (SSA). Both COLAs are based on changes in the CPI determined by the Bureau of Labor Statistics; however, both the period measured and the population indexes used by SSA are different.
LAFPP determines eligibility requirements and how the COLA is applied based on the member’s tier.
COLA Maximum
COLA Bank
Tiers 1 and 2
Uncapped
No
Tiers 3 and 4
+/- 3%
No
Tiers 5 and 6
+/- 3%
Yes
Tiers 1 and 2 have an uncapped COLA and are subject to a full COLA increase/decrease.
Tiers 3 and 4 have a 3% COLA cap and cannot incur an increase/decrease beyond the cap.
Tiers 5 and 6 have a 3% COLA cap and cannot incur an increase/decrease beyond the cap. In addition, they also have a COLA Bank to store any increases in the CPI greater than 3%, which can be applied in future years when the CPI is below 3%.
First-year retirees and DROP participants in Tiers 3-6 receive a COLA that is prorated by the number of complete months between their retirement effective date (or DROP entry date) and the following July 1.
What is a negative COLA?
In the event that the CPI is negative for the 12-month period used to measure the COLA (i.e., deflation), the LAFPP COLA would also be negative and the monthly pension benefit would be decreased by the negative COLA percentage. Any decrease is subject to the same provisions as an increase. It cannot exceed the 3% cap for Tiers 3-6, and Tiers 5 and 6 may use their COLA banks to offset the decrease, if a balance is available. Tiers 1 and 2 do not have a COLA cap and would incur the full decrease.
For all members, it is important to note that in the event of a negative COLA, the pension amount will not be reduced to less than the member’s or qualified survivor’s original pension amount.
To date, LAFPP members have never been affected by a negative COLA, however, in 2009 there was a 0.00% COLA and in 2015 it was 0.10%. The Bureau of Labor Statistics has made several changes to the CPI over the years and the most significant changes were last made in 2018. For more information, you may visit the Bureau of Labor Statistics website at www.bls.gov/cpi and look for Regional Resources under CPI Data to find the Los Angeles area. Step-by-step instructions on How to Access CPI Data is available. A summary of Historical COLA Percentages is also available for viewing.
For any other inquiries, please contact the Retirement Services Section at (213) 279-3125 or rs@lafpp.com.
Longstanding Chief Investment Officer (CIO), Tom Lopez of Los Angeles Fire and Police Pensions (LAFPP), is set to retire after more than 40 years of service to the fund. Mr. Lopez has been a stalwart in the CIO role since 1993 and has led the Investment Team in building a strong portfolio, successfully achieving returns above the benchmark for over 25 years.
“The LAFPP Commissioners wholeheartedly thank Tom Lopez for his years of service. His steady hand and wise advice are a pillar to the success of this fund,” said Board President Brian Pendleton.
Mr. Lopez began his career with LAFPP in 1980 and has worked with multiple boards over the years, guiding them in building the portfolio to where it stands today. His calm demeanor and methodical approach have helped navigate the fund through several market downturns and various financial crises, while maintaining an average pension funding status of over 90% since the late 1990’s.
During Mr. Lopez’s tenure, the Fund expanded from utilizing four money managers invested in a few stocks and bonds to approximately forty money managers invested in over a dozen different asset classes. Pension fund assets under management grew from approximately $400 million in 1980 to approximately $27 billion today.
LAFPP recognizes the dedication and wisdom of Mr. Lopez and wishes him the best in retirement.
LAFPP has engaged Korn Ferry to assist in finding a new CIO for the Plan. Selection of a new CIO is anticipated to occur in late March or early April 2021. Inquiries can be directed to Michael Kennedy of Korn Ferry.
About LAFPP
LAFPP oversees the pension fund for sworn members of City of Los Angeles Fire, Police, Airport and Port departments. The fund is currently valued at over $27 billion in assets and serves over 26,500 members and beneficiaries.
About Korn Ferry
Korn Ferry is a global organizational consulting firm that specializes in executive management searches, bringing people and organizations together to exceed their potential.
Total fund assets have once again reached an all new high! As of December 8, 2020, your Fund reached an unaudited market value in excess of $27.5 billion dollars. This greatly exceeds the $25 billion total as of January 2020, just before the stock market declined due to the COVID-19 pandemic. The rebound in the Plan’s market value is due to the strong recovery in the equity markets and the City’s annual contribution payment received in July 2020.
On another positive note, for the actuarial valuation period ending June 30, 2020, the combined funded ratio for pension and health benefits is 88.6%, up slightly from 88.5% the previous year. This marks the third consecutive year that the combined funded ratio has increased. Even though the pension benefit funded ratio is now 93.2%, down from 93.6%, the health benefit funded ratio increased from 56.2% to 59.7%. The favorable results indicate that the Plan remains strong despite a volatile year marked by the COVID-19 pandemic.
We want to remind you that any proposals to modify LAPD’s budget would not impact the substance of your LAFPP pension benefits, or the general obligation under the City Charter to contribute annually to the LAFPP Fund in the amount determined by an independent actuary hired by this Board. Your vested pension benefits, the City’s obligation to fund those benefits, and the independent authority of this Board to protect and invest the trust funds that will be used to pay those benefits, are protected by the California Constitution and the City Charter.
The LAFPP Board and staff continue our commitment to administer your pension benefits during these challenging times. We have implemented changes to our operations, which have enabled us to continue serving you without interruption during the COVID-19 crisis.
Thank you for your dedication and service as first responders to the residents of Los Angeles. For any questions or concerns, please contact us at (213) 279-3000, (844) 88-LAFPP, or at Pensions@lafpp.com.
LAFPP continues to be one of the largest public safety pension funds in the U.S. The Plan administers retirement and health subsidy benefits for over 26,000 current and retired public safety employees and their beneficiaries for the City of Los Angeles.
Fairview Capital and Los Angeles Fire & Police Pensions (LAFPP) held a successful inaugural “Investing in Inclusion” event that occurred on November 17, 2020. The webinar was hosted by Fairview and highlighted LAFPP’s successful Private Equity Specialized Manager Program. This event was attended by over 250 diverse general partners, limited partners, and others interested in learning more about LAFPP’s Specialized Manager Program and potential opportunities for fundraising and institutional investing.
The webinar provided a unique opportunity to access key decision makers including LAFPP commissioners and staff alongside the Fairview Capital team. Additionally, general partners currently investing on behalf of LAFPP’s program profiled their strategies and insights to navigate the fundraising process. The interactive experience focused on nurturing the dialogue between institutional investors, asset managers and diverse GPs in the mission to increase diverse manager investments.
LAFPP’s Specialized Program focuses on attracting private equity funds that are first, second or third-time funds and with a fund size of approximately $500 million or less. Additionally, the focus is on funds that include minority, woman, Lesbian, Gay, Bisexual, Transgender and Queer (LGBTQ) or disabled veteran ownership, investments in underserved areas, or investments in California or Los Angeles. You can learn more about LAFPP’s Specialized Manager Program at www.lafpp.com/private-equity-specialized-manager-program.
LAFPP oversees the pension fund for sworn members of City of Los Angeles Fire, Police, Airport and Port departments. The fund is currently valued at over $26 billion in assets and serves over 26,500 members and beneficiaries.
About Fairview Capital
Fairview Capital Partners, Inc., is a leading private equity and venture capital investment management firm with significant expertise developing innovative and intelligent private market investment solutions for institutional investors. Fairview has provided investment solutions to a wide range of institutional investors, including some of the most sophisticated public and corporate pension plans, endowments, foundations, and family offices in the country.
ATTENTION: MyLAFPP will be temporarily unavailable for system maintenance 10/29/2022 12:00a.m. through 10/30/2022 5:00p.m. PST.
Please access any information you may need, in advance. Leave a message at pensions@lafpp.com or (213) 279-3155 with any questions. We will respond the following business day.
The new and improved MyLAFPP member portal is designed to enhance the security of your member web portal. It incorporates advanced measures to ensure the confidentiality and protection of your pension-related information.
The updated MyLAFPP includes the ability to send a secure message to LAFPP, along with the ability to securely upload documents and completed forms.
Existing MyLAFPP Users: If you have an existing MyLAFPP account, ensure that you know your username prior to logging in. All passwords have been reset and members are required to update their passwords.
To begin the process of updating your password, click on “Forgot Password” on the login page and follow the prompts.
If you do not know your username, retrieve it using the “Forgot Username” link.
New MyLAFPP Users: A one-time registration PIN is required for first-time users. During the registration process you will be asked to verify your credentials in order to request a pin. For security purposes, PINs will be mailed to the address on file and should be received within 3-5 business days. Register for your account here.
NOTE: MyLAFPP registration is not required to receive pension benefits.
To view step-by-step instructions for the most common MyLAFPP questions, visit our helpdesk.
