CNMI PENSION FUND IN NEED OF MORE CONTRIBUTIONS

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More money, deferred payments could save retirement fund

SAIPAN, CNMI (Saipan Tribune, Feb. 7, 2012) – Increasing the amount of employer contributions and deferring payments to members starting this fiscal year could immediately save the NMI Retirement Fund's deteriorating condition, according to the pension agency.

In documents submitted to the Legislature, the Fund said that increasing the employee and employer contributions could result in an infusion of $42.4 million that will help prolong the pension program's lifespan by eight years.

In its analysis provided to lawmakers, the Fund recommends 100 percent deferral of payments above a certain amount to reduce the pension drawdowns starting this fiscal year.

Under its projection, if the Fund withdraws $53 million from its portfolio each fiscal year, the program's lifespan will only be until September 2014. If drawdowns go down to $42.2 million a year, this will extend that to May 2015.

If payments are deferred and contributions are increased as recommended, and by capping drawdowns at only $26.5 million a year, the Fund will live until May 2017. Dropping the annual drawdown to only $10.6 million will further extend the Fund's lifespan to May 2025.

The Fund has an asset portfolio valued at only $256.7 million as of Dec. 31. Because of a court order that requires the agency to set aside $113 million for active government employees, this leaves only $143.7 million that is available to pay for members' benefits.

The lifespan of the pension program is projected to last less than three years, based on its current portfolio and with no new money expected to come into the Fund.

$80.7M expenses In fiscal year 2011, the Fund incurred a $50-million shortfall, with expenditures amounting to $80.7 million against only $30.4 million in revenue. To balance this, some $53 million was withdrawn from the Fund's investments to pay for pensions and benefits.

Documents obtained by the Saipan Tribune show that the bulk of the $80.7 million spent last year went to benefit payments totaling to $76.016 million: $61.6 million for retirement/survivors' pension; $1.4 million for disability payments; $67,361 for death lump sum payments; $8.031 million for health and life insurance; $130,246 for cost of living allowance; and $4.6 million for refunds.

Additionally, the Fund spent $3.1 million on professional fees, $1.1 million on personnel expenses, and $393,876 on other general and administrative costs.

Meantime, based on unaudited figures, revenue last fiscal year amounted to $30.4 million, of which $21.1 million came from employee and employer contributions. Employee contributions totaled $8 million; employer contributions amounted to $13.1 million.

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