Los Angeles cops and firefighters are embracing a new pension spiking plan that lets participants in their last years receive up to a 50 percent spike in pension payments.
The Los Angeles Times published an exposé on Sunday that reveals that participation is booming in a program called the Deferred Retirement Option Plan (DROP). By paying police and firefighters nearly twice their income in the last five years of employment, DROP entitles so-called emergency workers to spike their lifetime pension payments substantially.
The wildly controversial DROP programs proliferated for government emergency workers following the September 11, 2001 terrorist attack on the New York’s World Trade Center, where 403 of the 2,753 killed were police officers, firefighters and paramedics.
In 2002, when voters approved the City of Los Angeles’ DROP plan, advocates claimed there was a need to keep experienced emergency workers that were participating in government-sponsored defined benefit pension plans.
But the Times found that the City of Los Angeles’s DROP program could also be gamed by cops and firefighters who file workers’ compensation claims and then go out on extended leaves. Because the workers’ compensation payments are almost the double base worker compensation, the emergency workers’ final years of pay, used as a base to calculate emergency workers’ monthly retirement payments, can spiked.
The Times analysis found that the popularity of the DROP plans is booming, with a record of 129 emergency workers joining in the month of February. That compares to an average enrollment of 25 emergency workers per month over the prior 10.5 years.
The Times calculated that about half of the emergency workers that entered the DROP program in the last decade through 2017 eventually filed a workers’ compensation claims and took an extended leave of absence. The average police and fire emergency workers’ comp absence was 10 months. But hundreds of emergency workers were out over a year, mostly due to the type of “bad backs, sore knees and other ailments that afflict aging bodies.”
L.A. Mayor Eric Garcetti was confronted with the Times analysis in February and called for an investigation by the Los Angeles City Council compensation committee.