Additional FAQs For members entering DROP on or after February 1, 2019

Additional FAQs For members entering DROP on or after February 1, 2019

Is the 112-hours of active duty status counted in calendar or work hours?

Work hours.

What time counts as “active duty status”?

You can use actual hours worked (HW), vacation (VC), preventive medicine (PM) and overtime taken of (TO) as part of the 112 hours. A complete list of payroll codes that qualify for “active duty status” is shown on page 8 of DROP handbook.

What time does not count as “active duty status”?

Sick time (SK), family illness (FI) and Injury on Duty/Workers’ Comp time will not count toward your 112 hours on active duty status. There is an exception, however, if you are hospitalized for 3 or more days as a direct result of an on-duty injury.

Does overtime count toward my “active duty status” hours?

You cannot use overtime toward your active duty status hours, but if you bank your hours and take them as TO, those hours will count.

If I don’t meet the monthly 112-hour active duty status requirement, will I be immediately terminated from the DROP Program?

No. A participant can work up to the full 5 years of DROP. Within the 5 years, any month with less than 112 active duty status hours is not eligible for DROP pension accrual (i.e., your participation is suspended for that month). The months ineligible for pension accrual can be made up at the end of the 5-year original DROP period, for up to a maximum of 30 additional months beyond the original participation period.

Where does my money go if I fail to meet the 112-hour active duty requirement?

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 pension credit for that month. However, the funds remain in the LAFPP trust fund.

Will the months I make up be subject to the 5% interest?

No. The 5% interest is only for the first five years in DROP. Any extension beyond the original five-year DROP period would not earn the 5% interest. Extensions beyond the five-year DROP period would receive cost of living adjustments to your pension.

Will my DROP account from the initial 5-year period continue to accrue interest while I’m making up any months?

No. Your DROP balance from the initial 5-year period will be frozen and not collect interest during your extended make-up time.

What if I enter DROP in the middle of the month or exit DROP in the middle of the month?

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 participation period.

Will the timing of DROP payouts be impacted by these new provisions?

Yes, under the new DROP provisions LAFPP must confirm with the City’s payroll system that you met the 112-hour active duty status 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 1 month beyond your exit date.

Will I earn interest on my DROP balance while the final pay period is being verified?

No. The terms for crediting interest remain unchanged. No interest accrues after a member’s DROP exit effective date.