Category: Newsroom

Medicare Health Subsidy Benefit

Effective January 1, 2017, the maximum Medicare Health Subsidy will increase from $487.71 to $505.93. This is an increase of 3.7% or $18.22 from the current Medicare Health Subsidy. The Medicare Health Subsidy is for eligible retired members and their Qualified Surviving Spouses/Domestic Partners who are enrolled in Medicare Parts A and B. The new subsidy will appear on the December 2016 pension checks for coverage effective January 1, 2017. The maximum monthly subsidy received is based on the member’s whole years of service at retirement, as shown in the chart below.

Member’s Whole Years of Service	Maximum Medicare Health Subsidy*
Less than 10	No subsidy
10 – 14	The lesser of: $379.45 or 75% of the single-party premium of the participant’s health plan.
15 – 19	The lesser of: $455.34 or 90% of the single-party premium of the participant’s health plan.
20 or more	The lesser of: $505.93 or 100% of the single-party premium of the participant’s health plan.

*If the member: (1) entered DROP or retired after July 14, 2011, and (2) did not opt in during the designated period to make the additional 2% pension contribution, the Maximum Medicare Health Subsidy is equal to the July 1, 2011 amount of $480.41.

Member Dental Subsidy

The Dental Subsidy will also increase in January 2017, to a maximum of $44.60 for members who have retired with 25 years of service or more. Eligible retired members with less than 25 years of service receive 4% (up to 100%) of this maximum for each whole year of service, not to exceed their single-party dental plan premium. Members must be at least 55 years of age and have a minimum of 10 whole years of service to qualify for this subsidy. Dependents and Qualified Survivors are ineligible to receive a dental subsidy.

Questions?

For questions concerning the LAFPP Health and Dental Subsidy program eligibility requirements, please contact the Medical and Dental Benefits Section at (213) 279-3115 or (844) 88-LAFPP ext. 93115. Information is also available in the Retired Members section of www.lafpp.com.

The 2016 Annual Member Survey was conducted in April and over 1300 members participated. The survey covered a variety of services to evaluate and also provided the opportunity to enter suggestions for the website, newsletters, MyLAFPP and most importantly, how to provide better service to our members. Click on the link below for survey highlights.

REFERENCED DOCUMENTS: 

2016 Annual Member Survey – Highlights

Good news! Recent changes to the Internal Revenue Code now provide a waiver of the existing 10% penalty tax on early distributions of Deferred Retirement Option Plan (DROP) funds rolled over to your Deferred Compensation Account.

In June 2015, President Obama signed into law HR 2146 – Defending Public Safety Employees’ Retirement Act. This new law applies to distributions after December 31, 2015.

Currently, after a participant rolls over DROP funds to the City’s Deferred Compensation Plan, there is typically a 10% tax penalty on DROP money you withdraw before age 59 ½, unless you exit DROP in the year in which you turn age 55. This recent legislative change, HR 2146, will allow those who exit DROP at age 50 or older to take distributions of DROP money from their Deferred Compensation accounts before age 59 ½ without being subject to the penalty. Although you will avoid penalties, please keep in mind that you may incur taxes upon distribution.

We recommend that you consult with your tax and/or financial advisor if you have any questions regarding your personal situation.

VOTER EMPOWERMENT ACT OF 2016

California pension reform proponents are postponing their efforts to place one of their initiatives on this year’s November ballot.  Instead, former San Jose Mayor Chuck Reed and former Councilman Carl DeMaio aim to place a pension reform initiative on the November 2018 ballot.   Proponents believe that 2018 will provide a more favorable environment for pension reform. Please review the following timeline of events and summary of the initiatives for more information.  The Board of Fire and Police Pension Commissioners, management and staff will continue to monitor this and other legislation that may affect Plan member benefits.

Timeline of Events

June 2015 – Former San Jose Mayor Chuck Reed and a bi-partisan group of current and former local government officials filed a pension reform initiative known as the “Voter Empowerment Act of 2016” that would change how California state and local government employee compensation and retirement benefits are determined.

October 2015 – After the California Attorney General issued the official title and summary which determines the language used to collect signatures, the proponents were not satisfied with the language and proceeded to file a new alternative version of the “Voter Empowerment Act of 2016” and a new initiative entitled, “Government Pension Cap Act of 2016”.  The proponents planned to qualify one of the two measures for the November 2016 ballot.  The Voter Empowerment Act would require voter approval for new government employees hired on or after January 1, 2019 to participate in defined benefit pension plans (like LAFPP), and limit government employers from paying more than half of the total cost of retirement benefits for new employees, unless voters approve a higher proportion. The Government Pension Cap Act would limit how much government employers could pay for new hires’ retirement benefits to a certain percentage of their salary (13% for new public safety employees).

January 2016 – Proponents decide not to pursue their efforts to place a measure on the November 2016 ballot and will instead focus on the November 2018 ballot.

Summary of Initiatives

PROPONENTS:	The initiative’s proponents are as follows:Chuck Reed – former San Jose MayorCarl DeMaio – former San Diego council memberStephanie Gomes – former Vallejo MayorBill Kampe – Pacific Grove MayorPat Morris – former San Bernardino MayorTom Tait – Anaheim Mayor
“Government Pension Cap Act of 2016″ (Initiative #15-0077)	Limits government employers from making retirement benefit contributions of more than 13% of base compensation for new public safety employees, and not more than 11% for new general employees. All other costs, including unfunded liability costs, are the responsibility of the new employee, unless voters establish a new limit. New employees are considered those hired on or after 1/1/2019.Limits government employers from paying more than 1/2 of the total cost of retirement benefits for new employees, unless voters approve a higher proportion.The Act shall not alter any current labor agreement in effect, but shall apply to future labor agreements, renewals or extensions entered into after the effective date of the Act.Government employers may continue to offer defined benefit pension plans, defined contribution plans, or a combination of both plans, but the plans are subject to the limitations of the Act.Disability and death benefits are not subject to the limitations outlined in the Act.
“Voter Empowerment Act of 2016″(Initiative #15-0076)	Limits government employers that sponsor defined benefit pension plans from providing benefit enhancements, unless approved by voters.New government employees (hired on or after 1/1/2019) may be enrolled in defined benefit pension plans only if approved by voters.Limits government employers from paying more than 1/2 of the total cost of retirement benefits for new employees, unless voters approve a higher proportion.Limits placement of financial conditions upon government employers closing defined benefit plans to new employees.The Act shall not alter any current labor agreement in effect, but shall apply to future labor agreements, renewals or extensions entered into after the effective date of the Act.The Act does not modify or limit any disability or death benefits, or require voter approval for these benefits.
“Voter Empowerment Act of 2016″(Initiative #15-0033 – Public Employees. Pension and Retiree Healthcare Benefits.  Initiative Constitutional Amendment”	Eliminates constitutional protections for vested pension and retiree healthcare benefits for current public employees, including those working in K-12 schools, higher education, hospitals, and police and fire protection, for future work performed.Adds initiative/referendum powers to Constitution, for determining public employee compensation and retirement benefits.Bars government employers from enrolling new employees (hired after 1/1/2019) in defined benefit plans, paying more than 1/2 of the cost of new employees’ retirement benefits, or enhancing retirement benefits, unless first approved by voters.This initiative will remain active unless the proponents request that it be withdrawn
KEY MILESTONES:	“PUBLIC EMPLOYEES. PENSION AND RETIREE HEALTHCARE BENEFITS. INITIATIVE CONSTITUTIONAL AMENDMENT.“Filed 6/4/2015 with the California Attorney General8/11/2015 – Above formal title and summary were released by Attorney GeneralThe Proponents must collect 585,407 signatures from registered voters to qualify the initiative for the November 2016 election.The proponents estimate that a signature-gathering campaign will cost $2.5 million to $3.5 million.“PUBLIC EMPLOYEES. PENSION AND RETIREE HEALTHCARE BENEFITS. INITIATIVE CONSTITUTIONAL AMENDMENT.”AKA “GOVERNMENT PENSION CAP ACT OF 2016” and “VOTER EMPOWERMENT ACT OF 2016”October 5, 2015 – Revised Initiative #15-0076, Voter Empowerment Act of 2016, and Initiative #15-0077, Government Pension Cap Act of 2016 filed.A 30-day public comment period is open through 11/4/2015 at the California Attorney General’s website: http://oag/ca.gov/initiatives/active-measures.The State Department of Finance and State Legislative Analyst’s Office have 50 calendar days from the initiative filing date to prepare a fiscal impact analysis before the Attorney General issues an official title and summary.October 16, 2015 – The proponents filed amendments to #15-0076, Voter Empowerment Act of 2016, and Initiative #15-0077, Government Pension Cap Act of 2016, defining a “new employee.” A new employee is one who becomes a member of any state or local public retirement system on or after 1/1/2019, and:Who was not a member of any other state or local public retirement system in California prior to that date.Who was a member of another public retirement system prior to that date, but who was not subject to reciprocity under Calif. Gov. Code Sec. 7522.02© as of 9/1/2015.Who was an active member in a state or local retirement system in California and who, after a break in service of more than six months, returns to active membership in the same system with a new employer.December 9, 2015 – The California Attorney General released a formal title and summaries to the Government Pension Cap Act of 2016 and Voter Empowerment Act of 2016.
RELATED LINKS:	Fiscal Impact Estimate Report by State Legislative Analyst’s Office for Initiative #15-0077Fiscal Impact Estimate Report by State Legislative Analyst’s Office for Initiative #15-0076Fiscal Impact Estimate Report by State Legislative Analyst’s Office for Initiative #15-0033

Be assured that the Board of Fire and Police Pension Commissioners, management and staff are monitoring this legislation closely and will keep you updated through our website as more information becomes available.

Each year, the Board of Fire and Police Pension Commissioners elect its Officers of the Board during the last meeting in July.  On July 16, 2015, the Board elected Commissioners Robert von Voigt and Pedram Salimpour as the new President and Vice President, respectively. 

Commissioner von Voigt was originally elected to the Board by active Police members on December 1, 2008 and succeeds Belinda Vega, who served as Board President since July 2014.  As President, he will preside over the Board’s primary responsibility to oversee the administration of the pension system; its assets, investments, actuarial services, rules and regulations.  Additionally, the Board President provides leadership in furthering the mission of LAFPP “to advance the health and retirement security of those who dedicate their careers and risk their lives to protect the people of Los Angeles,” and the delivery of professional and prompt service to over 25,000 active and retired members.  The Board President also exercises the following duties:

• Appoints Board members to committees;
• Approves the Board agenda; presides at all Board meetings, ensuring that such meetings are conducted in an efficient manner and in accordance with the City Charter and Administrative Code, applicable public meeting laws, and relevant Board policies;
• Determines who shall act as spokesperson for the System should the need arise; and,
• Approves the travel expenses incurred by the General Manager and the Board, as appropriate.

As Vice President, Commissioner Pedram Salimpour will assume the duties of the Board President when the President is absent or if the President should delegate the Vice President to act.  He will also assume the duties of the President if the President becomes unable to carry out his or her duties.  Commissioner Salimpour was appointed to the Board in May 2013 by Mayor Villaraigosa and re-appointed in November 2013 by Mayor Garcetti.  Commissioner Salimpour succeeds Commissioner von Voigt, who served as the Board’s Vice President since July 2014.

The Board consists of nine commissioners.  Commissioner von Voigt is one of the four Board members elected by plan members and Commissioner Salimpour is one of the five commissioners appointed by the Mayor.

LAFPP recently selected seven new emerging managers in the fixed income, large cap, small cap and micro cap asset classes, based on multiple searches initiated over the past year. Approximately $225 million in total is being allocated to the seven new managers. The selected firms include: GIA Partners and Semper Capital Management for fixed income; Channing Capital Management and PHOCAS Financial for small cap equities; Granite Investment Partners for micro cap equities; and Oakbrook Investments and Redwood Investments for large cap domestic equities. Each of the firms was allocated $25 million with the exception of Channing Capital Management and PHOCAS Financial who were allocated $50 million each. Approximately $100 million of the allocation was shifted from an existing fund of funds manager to fund the new managers.

This recent $225 million allocation reinforces LAFPP’s commitment to its long-standing Emerging Manager Program. Currently, LAFPP has over $1.9 billion invested with emerging and diverse investment firms across all asset classes. As a percent of assets under management (AUM), the Fund has one of the highest percentages of any pension fund across the nation.

Although not widely known, Los Angeles Fire and Police Pensions (LAFPP) has been a leader in this area since the late 1980s. LAFPP began hiring and engaging emerging and diverse managers in 1987 and over the many years, various managers have been hired to manage equities, fixed income, real estate and private equity. LAFPP has also employed diverse consultants who have provided different services to the Fund over these many years.  

LAFPP’s Emerging Manager Program consists of hiring direct managers and fund of funds managers in the stock and bond portfolio. Altogether, the Fund has over $1.5 billion invested with diverse stock and bond managers. Many of the emerging managers in the Program started with smaller accounts (AUM), but their AUMs for the Fund have grown larger as they have been successful in growing the Fund’s investments.

The Fund has committed or funded over $390 million to diverse private equity and real estate managers. The Fund created a Specialized Manager Program to  invest in newer private equity funds.  

ELECTION RESULTS

The term of the Board’s Police Department Active Employee Member, Commissioner Robert von Voigt, ends on June 30, 2015.  An election was held on April 28, 2015 for this position. A candidate needs a majority of all votes cast in order to win the election. Commissioner von Voigt received 96.67% of the vote and will serve the term of office from July 1, 2015 until June 30, 2020.

Congratulations Commissioner von Voigt!

The Board normally meets on the first and third Thursdays of the month at 8:30 a.m. at the Los Angeles City Employees’ Retirement System (LACERS) facility located at the Los Angeles Times Building, 202 W. First Street, Suite 500, Los Angeles, CA 90012.  Most meetings, including special and committee meetings, are from one to four hours in duration.

For a current list of Commissioners, please view the Board Directory.  If you have questions concerning the election results, please call Wendy Kamayatsu, Administrative Services Section, at (213) 978-4434, or (800) 787-2489, ext. 84434#.

The term of the Board’s Fire Department Retired Employee Member, Commissioner Sam Diannitto, ends on June 30, 2015.  An election was held on March 31, 2015 for this position. A candidate needs the majority of all votes cast (i.e. at least 50% plus one of the votes returned) in order to win the election. Commissioner Diannitto received 91.38% of the vote and will serve the term of office from July 1, 2015 until June 30, 2020.

Congratulations Commissioner Diannitto!

The Board normally meets on the first and third Thursdays of the month at 8:30 a.m. at the Los Angeles City Employees’ Retirement System (LACERS) facility located at the Los Angeles Times Building, 202 W. First Street, Suite 500, Los Angeles, CA  90012. Most meetings, including special and committee meetings, are from one to four hours in duration.

For a current list of Commissioners, please view the Board Directory.  If you have questions concerning the election results, please call Wendy Kamayatsu, Administrative Services Section, at (213) 978-4434 or (800) 787-2489, ext. 84434#.

Now available to Tier 6 Members! Active members in Tiers 2 – 6 can now log in to MyLAFPP to view and/or print their 2014 Annual Active Member Statement. 

Once logged in, simply click on the link in the Online Paper Statement box and then select the year of your choice. This statement summarizes a member’s individual pension-related information by providing employee information, pension estimates (if eligible to retire), contributions and interest, domestic partner information and beneficiary designation as of December 31, 2014.

For questions concerning your statement, contact the Active Member Services Section at (213) 978-4522.