9. In 2007, the Internal Revenue Service (IRS) proposed a new rule requiring pension plans to have a “normal retirement age’ which is an age “not earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed.” For plans in which “substantially all” of the participants are public safety officers, the new “normal retirement age” would be 50. This is at odds with the standard practice of defined benefit plans used by State and local governments, which typically define their normal retirement age or normal retirement date as the date or age when participants qualify for normal or unreduced retirement benefits under the plan. Such qualification is often conditioned, in whole or in part, on the completion of a stated number of years of service. Pension plans are designed for public safety employees, who must maintain physical vigor to accomplish their public safety missions, and, for this reason, often begin these careers at an earlier age than other public employees and retire at an earlier age. Typical public safety plans are tied to years of service, usually ranging from 20 to 25 years, not to the arbitrary 50 years of age described in the regulation. The Federal government has never prohibited the use of years of service practice for governmental pension plans. In fact, the IRS routinely approved service-based normal retirement ages through the determination letter process. The implementation of this rule has been delayed by the IRS several times already had without another delay, a change in the rule, or legislative action, it will go into effect on 1 January 2013. There is little doubt that its implementation would have an immediate and very negative impact on many individuals as well as pension plans, many of which are governed by State statutes or State Constitutions and others which could be part of an existing labor contract. Plans may be forced into a position of choosing to violate a State Constitution, a State law, an existing contract, or an IRS regulation. Congress has introduced legislation, H.R. 3561, the “Small Business Pension Promotion Act,” which would make clear that existing plans which use “years of service” to establish a normal retirement date will be able to continue this practice without penalty and without jeopardizing the retirement plans and benefits of so many of our nation’s law enforcement and other public safety officers. If elected, would you support this legislation or take other steps in your Administration to repeal this regulation?
Obama: After spending their careers in the service of their communities, police and other public safety employees should be able to rely on a secure retirement. In response to the rule in question, under my Administration, the Treasury Department and the IRS have taken steps to ensure that it does not have an adverse impact on public safety employees, reflected in proposed guidance issued in April that would modify the 2007 regulations.
As part of this guidance, Treasury and IRS also extended the effective date for governmental plans to comply with the rule to January 1, 2015 (after earlier extending it in 2009 to 2013), providing additional time to consider and respond to comments on the rule. Moreover, as an illustration of its commitment to ensuring this rule is appropriately applied to public safety employees, Treasury and IRS specifically asked for comments regarding “whether, because qualified public safety employees generally tend to have career spans that commence at a young age and continue over a limited period of years, an additional rule should be provided under which retirement after 20 to 30 years of service may be a normal retirement that is reasonably representative for qualified public safety employees.”
Romney: I have not studied this question carefully enough to offer a full answer at this time. I understand why some pension plans — particularly those for professions like law enforcement where careers begin at a young age and are physically demanding — would prefer a years-of-service standard. But I also understand why the IRS would seek to establish a clear, age-based threshold that ensures pension plans are not being used to provide compensation to people who do not need to retire. I would welcome the opportunity to hear more from organizations like the Fraternal Order of Police about how such a policy would affect their members, and would also want to discuss with tax experts the reason for the proposed rule.
10. The Fraternal Order of Police is the largest labor organization representing this country’s law enforcement professionals and, as such, we have been involved with the Administration on a wide range of labor issues, including serving as a member of the Labor Advisory Council for Trade Negotiations and Trade Policy. We were also involved in an effort to evaluate a law enforcement training program in Iraq. As President, how will you involve and consult with our leadership relating to labor issues?
Obama: Over the past four years, we made tough choices together. In particular, the Fraternal Order of Police’s assistance has made a number of trade and international law enforcement issues a success. FOP and law enforcement will have a seat at any table at which I sit. Whether we agree on a particular issue or not, FOP will always be heard out.
Romney: One of the greatest strengths of a union like the Fraternal Order of Police is its ability to provide strong representation for the interests of its members on law enforcement and public safety issues where those members have unparalleled expertise and face most directly the consequences of public policy. My administration will be one that seeks the input of all relevant stakeholders and perspectives before making important policy decisions, and that will include the active involvement of the Fraternal Order of Police on law enforcement matters. I will also look to the Order to provide leadership within the law enforcement community in promoting best practices and supporting law enforcement officials throughout their careers.