LACERA IS A DEFINED BENEFIT PLAN

All LACERA retirement plans are defined benefit plans that pay you a specified monthly benefit for the rest of your life. Aspects of your plan continue after you are gone, through benefits paid to your survivors and beneficiaries.

Features of your LACERA retirement plan are outlined below and contrasted with those of defined contribution plans.

LACERA DEFINED BENEFIT PLAN DEFINED CONTRIBUTION PLAN
  • Your retirement allowance is a lifetime allowance; it will be paid to you every month for the rest of your life.
  • Benefit payments run out when money is exhausted.
  • Employer promises to pay you a specified benefit when you retire.
  • Employer promises to periodically contribute specified amount to member account.
  • LACERA invests the funds; your employer bears the risk of adverse investment performance.
  • Employee decides how to invest the funds and bears the risk of adverse investment performance.
  • Benefit amount is determined by:
    • Final compensation
    • Years of service
    • Age at retirement
  • You are not affected by investment performance
  • Benefit amount is determined by:
    • Investment performance
    • Amount of contributions
  • Inflation protection provided through cost-of-living (COLA) programs
  • When the Consumer Price Index increases over the prior year, the Board of Retirement approves an annual COLA benefit for retirees and survivors.
  • No COLA program
  • Allows for reciprocal pension benefits with specified public employers
  • Possible transfer of member funds to tax-qualified plans as permitted by law
  • Offers selection of retirement benefit options
  • Not applicable
  • Includes $5,000 lump-sum death benefit for retirees
  • Not included
  • Funds not available during active service
  • Permits hardship withdrawals, sometimes permits loans during active service

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3/25/16