‘Sufficient’ Monies Available For NMI Retirement Refunds

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‘Sufficient’ Monies Available For NMI Retirement Refunds Fund head says withdrawals ‘extremely disadvantageous’

By Moneth Deposa

SAIPAN, CNMI (Saipan Tribune, Sept. 20, 2012) – Northern Mariana Islands (NMI) Retirement Fund acting administrator Lillian Pangelinan yesterday assured the public that the agency has sufficient money to pay all members who want to refund their contributions, but admitted that the exodus of the program's members is disadvantageous to the pension system.

As of Sept. 14, Fund assets were estimated at $223 million including the $113 million reserved by the court for active members. Pangelinan disclosed to Saipan Tribune yesterday that all refunds will be paid out from this court-reserved account.

The Fund has an estimated 3,000 active members on the program, or those government employees remitting under the defined contribution plan. For non-active members and retirees, there are also about 3,000 in the defined benefit plan.

As the agency closed office 5pm yesterday, Pangelinan said a total of 1,096 refund applications have been submitted.

"There is sufficient money in the Retirement Fund assets to pay all active and inactive employees their employee contributions. The balance of the Fund's investments as of 9/14/12 is $223 million. The refund of employee of contributions will come from the $113 million reserved by Judge [Kenneth] Govendo's Order," said Pangelinan, adding that there is no deadline for applying for refund. She cautioned members that there is no need to rush to apply to terminate membership and obtain a refund. Members, she said, should carefully consider their options.

According to Pangelinan, termination of membership by DB members will be extremely disadvantageous to the Fund because it will "reduce a steady inflow of funds" coming from both employee and employer contributions that will result in less investment earnings from these inflows.

Fund's assets are invested in international markets to earn and thus, pay for the pension and benefits of members.

"If all active members refund, the Fund will eventually be 100-percent reliant on the liquidation of investments to cover semi-monthly pension payouts. There is concern about how the liabilities to those currently retired, disabled or receiving a survivor benefit will be satisfied," admitted Pangelinan yesterday.

Since the agency started receiving refund applications on Monday, the acting administrator said they noted a dramatic increase in the applications. The agency, on its third day of receiving applications yesterday, has already posted over a thousand refund applications.

"The influx of applications being submitted and the foot traffic at the Fund has increased dramatically. Over the last couple of days, about a dozen people were already waiting in line before 7:30am. Secondly, a portion of the Fund's investments will be required to be liquidated in order to pay out the contributions aside from those amounts already being liquidated to pay semi-monthly pensions," she said, reminding the public that office hours is from 8am to 5pm each day.

Gov. Benigno R. Fitial recently signed into law Public Law 17-82, which addresses the many concerns of active members.

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