Here are the new requirements that are in effect for members who enter the DROP Program on or after February 1, 2019:
• Any member who enters DROP on or after February 1, 2019, shall have his or her participation in DROP suspended for any calendar month in which he or she does not spend at least 112 hours on active duty status
• For any participant who sustains a serious injury on duty and is admitted to the hospital for a minimum of three consecutive days as a direct result of that injury, participation shall not be suspended during the first 12 calendar months following the date of injury
• Any member whose participation is suspended shall be eligible to participate in DROP for a maximum of 30 additional months beyond the original participation period. The participation period shall only be extended for as many months as the member’s participation was suspended.
• No interest accrues on the DROP account following the initial 5-year/60-month participation period, including any periods of participation suspension.
Q. What if I am already in DROP, do these changes affect me?
A. No. The changes only affect members who enter DROP on or after February 1, 2019.
Q. Is the 112-hour active duty requirement counted in calendar or work hours?
A. Calendar hours.
Q. What time counts as a working hour?
A. You can use hours worked (HW), vacation (VC), preventative medicine (PM) and time off (TO) as part of the 112 hours. The City and labor unions have agreed on the list of timekeeping codes that will count toward the 112-hour active duty requirement.
Q. What time does not count as a working hour?
A. Sick time (SK), family illness (FI) and Injury on Duty/Workers’ Comp time will not count towards your 112 working hours. There is an exception, however, if you are hospitalized for three or more days as a direct result of an on-duty injury.
Q. Does overtime count toward my working hours?
A. You cannot use overtime toward your working hours, but if you bank your hours and take them as TO, those hours will count.
Q. If I don’t work the 112 hours will I be immediately terminated from the DROP Program?
A. No. A participant can work up to the full five years while in DROP. Within the five years, any month with less than 112 active duty hours is not eligible for DROP pension accrual (i.e., your participation is suspended for that month and nothing is “deposited” to your DROP account that month). The months ineligible for pension accrual can be made up at the end of the 5-year standard DROP period, for up to a maximum of 30 additional months beyond the original 5-year participation period.
Q. Where does my money go if I fail to meet the 112-hour active duty requirement?
A. While it is common to refer to DROP credit being earned in the form of a payment or check, it is not in fact a payment or a check. While in DROP, you get credit in your individual DROP account once you have earned the credit; but the actual money stays in the LAFPP trust fund. If you fail to meet the 112-hour requirement during a calendar month, your DROP account will not receive a pension credit for that month. However, the funds remain in the LAFPP trust fund.
Q. Will the months I make up be subject to the 5% interest?
A. No. The 5% interest is only for the first five years in DROP. Any extension beyond the five-year DROP period would not earn the 5% interest. Extensions beyond the five-year DROP period would only receive cost of living adjustments to your pension.
Q. Will my DROP account from the initial 5-year period continue to accrue interest while I’m making up any months?
A. No. Your DROP balance from the initial 5-year period will be frozen and not collect interest during your extended make-up time.
Q. What if I enter DROP in the middle of the month or exit DROP in the middle of the month?
A. You must be on “active duty status” for a minimum of 112 hours in a calendar month to be credited with a DROP deposit for that month, regardless if it is at the beginning or end of your DROP period.
Q. Will the timing of DROP payouts be impacted by these new provisions?
A. Yes, under the new provisions LAFPP must confirm with the City’s payroll system (PAYSR) that you met the 112-hour active duty threshold in your final pay period. Depending upon your DROP exit date, this may delay the payout of your DROP lump sum for a minimum of one month.
Q. Will I earn interest on my DROP balance while the final pay period is being verified?
A. No. The terms for crediting interest remain unchanged. No interest accrues after a member’s DROP exit effective date.
Q. If I do not agree with the changes to the DROP Program, can I appeal?
A. No. The DROP Program is an optional, voluntary program that provides LAFPP sworn members with an additional way to save for their retirement years. No member is required to participate.
For more information on the DROP Program, please visit the LAFPP “DROP Information” page