GUAM RETIREMENT FUND FACES $1 BILLION LIABILITY

HAGATNA, Guam (Pacific Daily News, Jan. 8) - The government of Guam is costing the GovGuam Employees Retirement Fund about $100 million per year, and at the current rate, the Fund will run out of money in about nine years, said outgoing board Chairman Gerald Perez.

Perez said the Retirement Fund has a "horrendous unfunded liability as a result of legislatively mandated programs that have nothing to do with vested benefits."

Lawmakers borrowed as much as $30 million from the Retirement Fund each year during the past several fiscal years to make supplemental payments to government retirees -- payments that are not part of their regular benefits, but which are a gift from local taxpayers.

Other factors that contributed to the $1 billion unfunded liability are programs that allow GovGuam employees to retire ahead of schedule because of military experience and education.

The board of trustees for the Retirement Fund officially resigned yesterday evening because of the change in administration, and Perez said the unfunded liability is one of three major challenges the incoming board will face.

He said the Retirement Fund still faces possible lawsuits related to the supplemental payments to retirees.

And the payment of cost-of-living allowances and supplemental annuities should be restructured, Perez said, so that favorable treatment will be given to employees who retired decades ago before pay increases were implemented.

The Retirement Fund has drafted a response to last month's order by Superior Court of Guam Presiding Judge Alberto Lamorena III, which prohibits the Retirement Fund from making supplemental payments to retirees unless agencies provide the money up front for the checks.

The board declined to show the Pacific Daily News a copy of the Retirement Fund's response, saying it had not yet been filed in court.

January 8, 2003

Pacific Daily News: www.guampdn.com

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