Override For Veto On NMI Fund Contribution Withdrawal Fails

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Bill would allow retirees access to 50 percent of Fund remittances

By Haidee V. Eugenio

SAIPAN, CNMI (Saipan Tribune, June 1, 2012) – The CNMI House of Representatives failed to override yesterday the governor's veto of a bill allowing non-retired members of the NMI Retirement Fund to withdraw up to 50 percent of their contributions, to the disappointment of some 100 employees that filled the House lobby and chamber on Capital Hill.

The override action on Gov. Benigno R. Fitial's veto of the compromise House Bill 17-226 got only 11 "yes" votes. This was short by three "yes" votes to meet the required 14 votes or two-thirds of the 20-member House.

Six House members voted "no" to the override, while three members were absent.

"We tried very hard but we didn't make it," Speaker Eli Cabrea (R-Saipan), author of HB 17-226, said at the end of the session.

Rep. Teresita Santos (Ind-Rota) was excused from the session owing to the death of her mother, while Rep. Janet Maratita (Ind-Saipan) is off-island. Rep. Ray Yumul (R-Saipan) had an appointment that he said he could not reschedule.

Hours before the House session, acting governor Eloy S. Inos said it's the House's prerogative to override the veto but he is hoping it won't happen "simply because we believe we have a better plan."

"I say better because HB 17-226 will give [active members] only 50 percent. Our plan is to give them 100 percent," Inos said, if and when the buyback into the U.S. Social Security does not push through.

The Fitial administration had urged the House to recall HB 17-226 and work on a modified version that will not impede its plan to get into the U.S. Social Security system, which would require an estimated $60 million in employer-employee contribution for a five-year buyback.

Inos said retirees, meanwhile, will continue to be in the retirement system.

"That's our plan. We are going to make whole of those folks who are in the retirement system already and are now receiving pension. They're not going to be affected by the buyback because they can be contributing to two pension systems," Inos told reporters in an interview after signing three proclamations and swearing in three members of the Public Utilities Commission.

Inos said the administration plans to declare a state of emergency for the Retirement Fund, but is waiting for a final decision from a federal court judge to dismiss the Fund's Chapter 11 bankruptcy filing.

The administration plans to place the Fund under the Department of Finance, which will continue to disburse retirement pension to retirees.


Yesterday's session was marked by numerous applause and cheers from the crowd every time a House member says the veto of House Bill 17-226 should be overridden so that non-retired members will have access to at least half of their own money before the Fund totally collapses.

Other active members of the Fund were also holding small placards that read, "Please help us. Override veto. Thank you."

When the House clerk reported that the override got a vote of 11 "yes" and six "no," the crowd cheered, thinking that the override was successful but this jubilation was cut short when the speaker said it was defeated because it failed to get two-thirds or at least 14 "yes" votes.

One by one, active Fund members left the Chamber expressing disappointment with the outcome of the voting.

"I am very disappointed," said Joe M. Pangelinan, who has been one of the leaders of non-retired Fund members who have been pushing for the passage of Cabrera's HB 17-226.

Pangelinan, in his testimony yesterday before House members, said allowing the Fund's defined benefit program members to withdraw up to 50 percent of their contributions without being penalized and without losing their jobs is the "best option based on the ongoing circumstances."

"The unfunded liabilities, unpaid employer's contributions and the extravagant pensions paid to retirees are just too overwhelming for the pension program to sustain. .As active contributing DB members, we are very uncertain of our future and as such, we cannot continue to invest our money and rely on a pension plan that is very uncertain and likely to fail," he said.

Pangelinan added that they believe it is just a matter of time before the CNMI pension program runs out of funds.

"We feel that the actions being taken now are just too little to late. Therefore, it is only right that we have the option to withdraw before the NMI Retirement Fund goes bankrupt," he said.

'Unfair, unjustified'

Pangelinan said once HB 17-226 becomes law and the federal government allows the CNMI government to join the U.S. Social Security program, then the 50 percent that active member rolled over into the defined contribution plan "should be sufficient to cover the buyback requirement that will be imposed by the U.S. Social Security."

He said to use buyback as the argument for vetoing HB 17-226 and holding 100 percent of active members' contributions is "truly unfair and unjustified."

Lupe Borja Robinson, an employee at Northern Marianas College, told House members that once HB 17-226 is overridden and becomes law, the Fund "can focus only on providing benefits to current retirees."

Active Fund members Manny Pangelinan, Paul Joyce, Lt. Pius Yaroitemal, and Phyllis Ain also addressed House members, all urging them to override the governor's veto.

"We're at a point where we lost faith in the Fund," Joyce said.

Taking turns

House members who were poised to vote "no" to the override action, along with those who supported the veto, took turns explaining their side.

Rep. Frank Dela Cruz said there is nothing in HB 17-226 that references a Social Security buyback of five years.

He said the bill should be amended to roll over the other 50 percent of the contributions to Social Security and not to the DC plan.

The House minority leader, Rep. Joe Deleon Guerrero, echoed this. He added that if HB 17-226 becomes law as it is currently written, elected leaders basically fail the retirees. He said the bill should be worked on to help both retirees and active members.

While Rep. Tony Sablan had his turn to speak and the crowd started talking among themselves, the House minority leader said, "You don't have to agree with what we say but at least listen to what we have to say." At this point, the crowd kept quiet.

Rep. Joe Palacios said there's no guarantee that a bill allowing the CNMI a buyback into the Social Security could even be introduced in Congress this election year.

Tenorio said the House should not wait for a draft bill before acting on HB 17-226. He added that the U.S. Social Security itself is predicted to run out of money in 2022, but the speaker clarified that it will be in 2033.

Rep. Stanley Torres asked whether they could hold off action on the veto of HB 17-266 for at least five days, so that other members could also be present, but Cabrera said he wanted action yesterday.

Rep. Trenton Conner said lawmakers were elected to make tough decisions, and asked the members to stop their political posturing.

"Past decisions led us [to this situation]. Don't play political ping-pong with people's lives," he added.

Rep. Ralph Demapan, for his part, asked Cabrera that if he really cared, why didn't he recall his bill to help everyone, and not only the people in the House gallery.

Rep. Ray Tebuteb said the Republican governor's communication to the Republican House leadership was very clear.

Cabrera said the House leadership is still working with the Fitial administration, and took note of Tebuteb's use of the word "Republican." He said he's not playing politics.

The floor leader, for his part, said he initially said he will vote "no" to an override and this was shortly after hearing the administration's plan, but after further consideration, he decided to support an override.

Under the vetoed bill, active members of the Fund would be allowed to take back up to 50 percent of their employee contributions regardless of years of service and without penalty or the need for them to quit their job. The rest of their employee contributions will be rolled over to the Fund's defined contribution plan.

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