Rule would alter public employee pensions

CARSON CITY — A major change proposed by the IRS for public pension plans, including Nevada’s public employee retirement system, could eliminate early retirement pay for government employees in less than two years.

A new regulation the agency is pursuing would prohibit most public pension plans from allowing participants to retire and collect benefits earlier than age 55, with a preferred retirement age of 62. This would cover everyone from teachers to police to city and state workers in Nevada and across the country.

The Nevada Public Employees’ Retirement System, for example, allows most participants to retire and receive benefits at any age after 30 years of service. Police and firefighters can retire even earlier.

The IRS regulation, which public pension systems have been fighting since it was first proposed, would end such a practice. The IRS has the ability to implement the rule because public pensions have tax deferral status given to them by the federal agency.

Labor unions and pension officials across the country, including Nevada, are fighting implementation of the rule. They are taking their case to Congress but are not sounding the alarm to their members just yet.

Others are welcoming the proposal as a modest but necessary reform.

A briefing paper on the proposed regulation prepared by officials with the city of Henderson says the impetus for the regulation is that the IRS believes a normal retirement age younger than 55 is not reasonable.

Workers covered under the Social Security program cannot receive full benefits now until they reach the age of 67.

The IRS regulation is set to take effect June 30, 2010, although a large number of national groups, from the Fraternal Order of Police to the National Education Association, asked in April for a delay in its implementation.

The IRS has not responded to the request, according to the Henderson briefing paper dated Aug. 11.

The state retirement system is questioning the new regulation as well.

Tina Leiss, operations officer for Nevada PERS, said the agency is waiting for more direction from the IRS on how this regulation would affect the Nevada retirement system before it reacts to the proposed regulation.

Employees in the state’s retirement system are believed to have constitutional rights under the contracts clause to the benefits as they currently exist, she said. Any changes to the benefits for current participants could provoke lawsuits from employees or their associations, Leiss said.

“It’s just not clear yet how this would affect any of the public pension plans,” Leiss said.

The IRS regulation would apply to public pension plans such as PERS because they are tax qualified plans under the agency’s regulations, she said. Such a designation provides tax benefits to participants who might otherwise have to pay taxes on their retirement contributions, Leiss said.

Dave Kallas, an official with the Las Vegas Police Protective Association, said he is fielding a number of calls from concerned police officers about the rule but suggested there is no immediate cause for alarm.

Public pension officials and other stakeholders are working with the IRS to come to an agreement on the issue, which was never intended to apply to public pensions in the first place, the union official said.

Kallas said it is his understanding that the legislation that prompted the IRS rule, a pension reform bill sponsored by Rep. Sam Johnson, R-Texas, was aimed at private pensions and not intended to apply to public pension plans.

“I’m not worrying about this issue quite yet,” Kallas said. “We have to wait and see what transpires over the next few months.”

Public awareness of the potential IRS change to the nation’s public pension systems has come at the same time as calls for reforms to the plans.

A study released earlier this month by the Las Vegas Chamber of Commerce concludes that the government support of the public retirement system has become a drain on state and local government resources, leading to the underfunding of important programs such as education and transportation.

Hugh Anderson, vice president of the ABD&F Group at Merrill Lynch in Las Vegas and chairman of the chamber’s government affairs committee, said the proposed IRS change is the right move.

A retirement age should better reflect today’s demographic reality that people are living much longer, he said.

It is conceivable that a public employee could retire at age 55 with 30 years of service under today’s rules and end up receiving retirement benefits for longer than the years worked, Anderson said.

“This whole demographic shift is here,” he said. “It is no longer in the future. The baby boom generation is here and they are living a long time.”

Withdrawals from personal retirement accounts are not permitted before age 59.5, so why should public employees be immediately entitled to retirement benefits at age 50 or 55, Anderson asked.

While there might be legitimate reasons why public pension rules should not be changed for those approaching retirement, ignoring the longevity issue puts the long-term viability of the public pensions at risk, he said.

A decision by the IRS to move forward could take the politically difficult decision out of the hands of elected officials, some of whom may be reluctant to implement such a reform, he said.

The development of the IRS regulation began about three years ago following passage of the pension reform legislation in Congress.

Those opposed to the new regulation are seeking help from Congress, circulating letters in both the House and Senate to get the IRS to hold off on the change.

Letters are also being sent to the Treasury secretary and the head of IRS suggesting the IRS overstepped its bounds and indicating that Congress never intended to give the agency such authority.

The Henderson memo states a public pension plan would completely comply with IRS regulations if the retirement age is set at 62.

But if a plan wants participants to receive benefits before they reach age 62, and no earlier than age 55, the plan administrator must prove to the IRS that such an age range is reasonably representative of the industry in which the covered workforce is employed.

A delay is being sought in the regulations in part because of concerns about the rights of those participating in the pension plans.

The memo states that when the Nevada Legislature made changes to the retirement system in 1989, a lawsuit arose and the state lost. The finding was that once an employee joins the PERS system, a contract is established and benefit levels, such as retirement after 30 years, cannot be taken away.

With the potential effective date of the IRS regulation nearly two years away, those now in public pension plans will have the opportunity to determine whether to pursue retirement to avoid the mandatory retirement age policy.

PERS has a $6.3 billion unfunded liability and $22 billion in assets. Nearly 104,000 state and local government workers and teachers and school staffers are PERS members.

An additional 37,000 retired workers are receiving benefits.

Contact Capital Bureau reporter Sean Whaley at or 775-687-3900.

Protesters Line Streets for President Trump's Arrival in Las Vegas
Hundreds lined the streets in front of Suncoast to protest President Donald Trump's arrival in Las Vegas. (Madelyn Reese/ Las Vegas Review-Journal)
Thunder Mountain monument stands as a tribute to Native American culture
Caretaker Fred Lewis talks about Thunder Mountain monument in central Nevada, made from concrete and found items. The five-acre site is a tribute to Native Peoples of the West. (K.M. Cannon/Las Vegas Review-Journal)
New CCSD superintendent Jesus F. Jara aims for 1st in the nation
On his third day as Clark County School District superintendent, Jesus F. Jara talks about his vision for the future during a visit to Del Sol Academy of the Performing Arts on Thursday, June 21, 2018, in Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Ceremony Recognizes Refugee Students, Graduates
Rosy Mibulano, a graduate of Las Vegas High School who came to America from the Congo in 2015, was recognized in a ceremony for refugee students in Clark County. Like many other students relocated to Las Vegas from countries around the world, Rosy had a challenging high school experience, from learning English to adjusting to American customs and taking care of her family. On top of that, she wants to go to school to become a nurse so she can take care of her mother, who suffers from diabetes. The annual Refugee Recognition Ceremony celebrates the enormous lengths these young adults go through to create a new life for themselves. (Madelyn Reese/Las Vegas Review-Journal)
Paul McCartney is worth over $1 billion
Sir Paul McCartney is one of the most celebrated and accomplished musicians in history. He just turned 76 on June 18. McCartney grew to international fame with the Beatles and went on to become a wildly successful solo musician. Paul McCartney’s net worth is estimated at $1.2 billion, according to Celebrity Net Worth. In 2017, McCartney landed the No. 13 spot on Forbes’ list of the world’s highest-paid musicians, earning $54 million for the year. On Thursday, June 20, McCartney will release a double A-side single featuring two new songs, "I Don't Know" and "Come On to Me." McCartney has yet to announce a title of his new album or when it will be released. Th album is expected to be released before he headlines the Austin City Limits Music fest in October.
Water leak at Mandalay Bay convention center
The convention center area of Mandalay Bay in Las Vegas experienced major flooding Tuesday afternoon. Credit: Melinda Cook
Hollywood Memorabilia Up For Grabs at Las Vegas Auction
Elvis Presley's car, Marilyn Monroe's bras, Han Solo's blaster, and Jerry Lewis's "Nutty Professor" suit are just some of the items that are up for auction at Julien's Auctions at Planet Hollywood June 22 and 23. The auction's viewing room at Planet Hollywood is open to the public 11 a.m. to 6 p.m. daily through Saturday at Planet Hollywood. (Madelyn Reese/Las Vegas Review-Journal)
Indoor farming in Southern Nevada
Experts discuss Nevada's indoor farming industry. (Bailey Schulz/Las Vegas Review-Journal)
Former Fontainebleau could have become a Waldorf Astoria
Months after developer Steve Witkoff bought the Fontainebleau last summer, he unveiled plans to turn the mothballed hotel into a Marriott-managed resort called The Drew. But if Richard “Boz” Bosworth’s plans didn’t fall through, the north Las Vegas Strip tower could have become a Waldorf Astoria with several floors of timeshare units. (Eli Segall/Las Vegas Review-Journal)
New Springs Preserve Exhibit Shows Off "Nature's Ninjas"
"Nature's Ninjas" arrives at the Springs Preserve, in an exhibit and live show featuring critters that come with natural defenses, from armadillos to snakes, poison dart frogs to scorpions and tarantulas (Madelyn Reese/Las Vegas Review-Journal)
CrossRoads of Southern Nevada psychiatric urgent care to open in Las Vegas
Jeff Iverson, who operates the nonprofit sober living facility Freedom House, is opening a private addiction treatment center that will operate a detoxification center and transitional living for substance users trying to recover. (K.M. Cannon/Las Vegas Review-Journal)
Metro Capt. Jaime Prosser gives update of officer-involved shooting
Metro Capt. Jaime Prosser provides an update about an officer-involved shooting at Radwick Drive and Owens Avenue in the northeast Las Vegas on Thursday. A robbery suspect was shot and killed. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Wayne Newton surprises burglars
Wayne Newton and his wife, Kathleen, arrived at their southeast Las Vegas home shortly before midnight on Wednesday to find two burglars inside their house. The burglars fled and were seen heading north through the property. Las Vegas police quickly set up a perimeter and launched an extensive search of the area, but the suspects were able to escape. It was unclear if the burglars got away with anything of value. Several items, under the watchful eyes of the police, were seen on the ground near the home's main driveway. Neither Newton, nor his wife, were injured. The Newtons were not available for comment.
Police Officers Turn Off Body Cameras
In four separate body camera videos from the Route 91 Harvest festival shooting released Wednesday, officers in a strike team are instructed to turn their body cameras off and comply with the request.
Debra Saunders reports from Singapore
Las Vegas Review-Journal White House correspondent talks about the historic summit between President Donald Trump and North Korea's leader Kim Jong Un.
How long will North Korea's denuclearization take?
In Singapore, Las Vegas Review-Journal White House correspondent Debra Saunders asks President Donald Trump how long North Korea's denuclearization will take. White House video.
LVCVA purchase of gift cards hidden
A former LVCVA executive hid the purchase of $90,000 in Southwest Airlines gift cards in records at the agency. Brig Lawson, the senior director of business partnerships, said the money was for promotional events and did not disclose that it was for gift cards. Lawson also instructed Southwest employees to submit invoices without mentioning the purchases were for the cards. More than $50,000 of the cards cannot be accounted for. The convention authority is publicly funded . Lawson recently resigned.
Kim Jong Un visits Marina Bay Sands in Singapore
North Korean leader Kim Jong Un and his entourage visited the Marina Bay Sands in Singapore briefly Monday night, local time. (Video by Philip Chope)
Coca-Cola Bottle Purse Has 9,888 Diamonds
Designer Kathrine Baumann and jeweler Aaron Shum set the Guinness World Record for most diamonds (9,888) set on a handbag. The Coca Cola bottle-shaped purse was on display at the Coca Cola Store on the Strip. (Madelyn Reese/Las Vegas Review-Journal)
Sentosa Island a pleasure resort with a pirate past
The site of Tuesday's U.S.-North Korea summit is known for theme parks and resorts. But before that, it was known as a pirate island. (Debra Saunders/Las Vegas Review-Journal)
Judge Sandra Pomrenze's comment about girl's hair
Nevada Races Full of Women From Both Sides
It's already been a historic election season for women in politics. Record numbers of women are running for political office all over the country - including Nevada. (Madelyn Reese/ Las Vegas Review-Journal) @MadelynGReese
East Las Vegas home damaged by fire
Clark County Fire Department crews responded to a house fire in east Las Vegas Thursday morning. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
911 call: Mom tries to get to son shot at Route 91
A woman stuck on the interstate during the Route 91 Harvest festival shooting on Oct. 1, 2017, in Las Vegas, tries to get to her son. 911 call released by Las Vegas police.
Las Vegas 911 caller reports people shot on Oct. 1
A 911 caller on Oct. 1, 2017, reports several people shot at the Route 91 Harvest festival in Las Vegas.
911 call from woman under stage in Las Vegas shooting
A 911 call from a woman underneath the stage at the Route 91 Harvest festival during the Oct. 1, 2017, Las Vegas shooting.
LVCVA facing scandal over gift cards
LVCVA is facing a growing scandal over airline gift cards. LVCVA bought $90,000 in Southwest Airline gift cards between 2012 and 2017. Now auditors can’t account for more than $50,000 of the cards. CEO Rossi Ralenkotter and his family used $16,207 in gift cards on 56 trips. Brig Lawson, the senior director of business partnerships, was responsible for buying and distributing the cards. He recently resigned.
Siblings separated in the foster care system get a day together
St. Jude's Ranch for Children and Cowabunga Bay Cares program partnered to bring 75 siblings together for the day to play on the water slides and in the pools at the Henderson water park. (K.M. Cannon/Las Vegas Review-Journal)
People flee the Route 91 Harvest festival on Oct. 1, 2017
Las Vegas police released footage from a camera on Mandalay Bay of the Route 91 Harvest festival on Oct. 1, 2017
Aaliyah Inghram awarded medal of courage
Aaliyah Inghram, a 10-year-old girl who was shot while protecting her 18-month-old brother and 4-year-old cousin during a shooting on May 8, awarded medal of courage. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
News Headlines
Local Spotlight
Home Front Page Footer Listing
You May Like

You May Like