COMMUNICATION FROM THE CITY ADMINISTRATIVE OFFICER relative to amending Chapter 14 – Deferred Compensation Plan, of the Los Angeles Administrative Code (LAAC) to allow for an employer contribution to an employee’s Deferred Compensation Plan 457(b) retirement savings account.

This communication from the City Administrative Officer (CAO) recommends amending Chapter 14 of the Los Angeles Administrative Code (LAAC) to allow for employer contributions to employee Deferred Compensation Plan (DCP) 457(b) retirement savings accounts. This change is prompted by a 2022 Memorandum of Understanding (MOU) between the International Brotherhood of Electrical Workers (IBEW) Local 18 and the Los Angeles Department of Water and Power (LADWP) that included an employer contribution of $150 per month for eligible WPERP Tier 2 members. The Board of Deferred Compensation Administration (Board) has approved augmenting the existing Plan to incorporate this employer contribution feature, recommending the 457(b) Plan enhancement as the preferred option due to its feasibility and timeline. The change also aims to leverage the benefit by creating an opportunity for automatic enrollment into the DCP, which is seen as crucial given evolving retirement benefit landscapes and longer life expectancies. The estimated cost for developing the plan amendment and implementation is $250,000, with LADWP contributing $150,000 and the General Fund covering the remainder for initial setup. Ongoing employer contribution amounts will be borne solely by LADWP.

This change will allow for employer contributions to employee retirement savings accounts, potentially enhancing retirement security for City employees, particularly those in newer, less generous pension tiers. City employees participating in the Deferred Compensation Plan may see increased retirement savings due to these new employer contributions.

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