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Government’s past failure to pay jeopardize fund

By Anthony Pellegrino

Special to the Saipan Tribune

SAIPAN, CNMI (Saipan Tribune, April 16, 2009) - The chairman of the NMI Retirement Fund Working Group has introduced a bill imposing a criminal penalty against any government official for his failure to remit employer contribution to the pension system.

Under Representative Ray N. Yumul’s House Bill 16-236, any person who fails to pay or remit contributions to the Fund is guilty of misdemeanor, and upon conviction may be fined not more than US$2,000 and imprisoned for not more than a year.

"Any government employee shall have a cause of action against the secretary of Finance or head of each autonomous agency or public corporation for the failure to remit the employer’s contribution and recovery of any unpaid employer contribution.," the bill states.

Yumul, who is also chair of the House Ways and Means Committee, said the government’s failure to remit its employer contributions to the Fund created a financial dilemma that resulted in the Fund liquidating its assets to pay retirees their pensions.

The Fund’s investment portfolio has since decreased due to the liquidation of assets and investment market decline.

Introduced on March 30, H.B. 16-236 states that the Fund’s total assets are only at US$267 million, which is much less than its all-time high of US$540 million a few years ago.

The government has repeatedly failed to remit its employer contributions as required by law.

"The purpose of this legislation is to establish a criminal penalty and cause of action against a person charged with the responsibility of remitting employer contributions to the Fund but fails to make such remittance, and to require the secretary of Finance and heads of autonomous agencies and public corporations to notify government employees in writing of any unpaid employer contribution each quarter," Yumul said in his bill.

As of March 31, the CNMI government owes the Fund over US$196 million in employer contributions.

Under Yumul’s bill, the Finance secretary and heads of autonomous agencies and public corporations shall remit their employer’s contribution concurrently with the employee’s contribution within five working days following the end of each payroll date.

They are also required to notify employees in writing of the balance of their unpaid employer contribution, if any, each quarter.

Retirees demand the government to pay its estimated US$6 million monthly employer contribution to the Fund, fearing the pension system would go broke in just a few years if it doesn’t get payments due it.

The Commonwealth Association of Retired Persons and the NMI Retirement Fund administration and board of trustees share the same concern about the pension system’s financial health.

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