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By Gemma Q. Cassas

SAIPAN, CNMI (Marianas Variety, June 14) – Commonwealth of the Northern Mariana Islands Retirement Fund Chairman Joseph Reyes lashed out at the House of Representatives yesterday for passing a bill that allows the government to defer payments to the agency for 18 months, saying the lawmakers are acting like the administration’s "rubber-stamp."

"(Lawmakers) don’t get elected to be a rubber stamp. You get elected to represent the people," said Reyes regarding the passage of House Bill 15-137 on Monday.

H.B. 15-137, which now goes to the Senate for action, authorizes the Commonwealth of the Northern Mariana Islands government to defer its monthly contributions to the local pension system from March to Sept. 2006 and throughout fiscal year 2007, or from Oct. 2006 through Sept. 2007.

Based on his interpretation, Reyes said the bill would also allow autonomous agencies like the Public School System, the Commonwealth Utilities Corp., Northern Marianas College and the Commonwealth Ports Authority to defer paying their employer contributions.

"My understanding is that the word government in the bill covers also the autonomous agencies," Reyes said.

Section 2 (a) of the bill states: "To assist the commonwealth government in addressing the fiscal emergency it faces for the remainder of Fiscal Year 2006 and Fiscal Year 2007, the governor or his designee may suspend the employer contributions due under 1 CMC 8362 for the remainder of Fiscal Year 2006 retroactive to March 1, 2006, and Fiscal Year 2007 from the general fund to the Northern Mariana Islands Retirement Fund. Provided, however, that in the event that a budget surplus is realized, the secretary of finance shall remit the identified surplus to the Fund to cover the employer contributions suspended under this Act with interest based on the current prevailing rate."

Another provision of the bill allows the Retirement Fund to tap into its investment earnings and other assets to come up with "any shortfall in cash flow arising from the suspension."

But even without the suspension of the government’s payments, the Retirement Fund has already been tapping into its investment portfolio to come up with the US$2.3 million in biweekly pension checks of retirees and their dependents.

Reyes said if the government is allowed to defer payments for too long, the Retirement Fund’s investment portfolio will gradually shrink with no assurance that it will be replenished given the worsening economic crisis in the islands.

"The thing that bothers me is where are we going to get our budget? Our operational costs? The Retirement Fund is in effect the employer of the retirees. We subsidize their health insurance, their life insurance," said Reyes.

He described the bill as "treacherous" to the local pension system, which is supposed to be self-sustaining by 2020 with assets of at least US$1 billion.

"The (administration and lawmakers) railroaded the system again. We were willing to assist over and beyond what you call cooperation. But I wonder if they realize the effect that this bill will have on retirees," he said.

The Retirement Fund uses its regular collections from the central government and autonomous agencies to pay the pension of retirees.

[PIR editor’s note: According to PIR files, the current local pension plan entitles retirees to a lifetime annuity of between US$6,000 and US$120,000 a year, depending on their positions and salaries while employed by the government (See story).]

In a separate interview, Press Secretary Charles P. Reyes Jr. denied that the administration "railroaded" the bill’s passage, saying the financial realities that the Commonwealth of the Northern Mariana Islands faces calls for drastic cost-cutting measures.

The Fund chairman also raised concern over the impact of the bill on government employees who will retire between now and 2007.

"How are we going to compute their benefits (without the payments from the government)?" he asked.

Under the current system, the government pays 24 percent of the premium that every employee pays the Retirement Fund.

The payment deferment bill stands to save the cash-strapped government approximately US$41 million.

The Senate is scheduled to hold a session this Thursday.

June 14, 2006

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