6 CNMI Retirement Fund Members Opt Out Of Settlement

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Whether or not those who opt out can still get relief uncertain

By Alexie Villegas Zotomayor

SAIPAN, CNMI (Marianas Variety, Sept. 19, 2013) – On the heels of the Commonwealth of the Northern Mariana Islands Senate’s announcing its inclination to support retirees who opt out of the settlement, six Fund members filed requests to opt out of the settlement class.

Yesterday, acting Fund Administrator Lilian M. Pangelinan confirmed, "So far, the Fund has received opt-out requests from two active employees, three retirees and one surviving spouse, for a total of six."

When asked if any of the opt-outs were lawmakers, Pangelinan replied, "None of the opt-outs are lawmakers."

On Monday, the Senate indicated it would be filing a resolution in support of those who choose to opt out of the settlement class citing the retirees’ constitutionally protected right.

The draft CNMI Senate resolution maintains that the opt outs can still get relief from the CNMI Department of Finance.

This was not the Administration’s position when, in an earlier interview, Gov. Eloy S. Inos stated that the opt-outs would have to get their own lawyers and file a claim against the government.

Lawmakers were recently riled by what they described as the "exorbitant" fees requested by the class counsels.

To date, the lawyers are seeking a total $40.73 million in attorney’s fees and costs.

Prior to the filing of the fees, the Administration maintained the position that opt-outs would not be getting anything from the central government.

Inos earlier told Variety, "If they don’t want to join the settlement, there is nothing I can do. I cannot guarantee payment even if they decide to go to Finance to demand their checks. They are not going to get a check. They can’t. They won’t."

He said the opt-outs will have to go through the court.

He earlier said that Finance would not be cutting checks for them.

He recognized their constitutionally protected right; however, Governor Inos said they can go to court for their constitutional right.

During the assembly of the members of the Commonwealth Retirement Association Friday night at the MHS Gym, Assistant Attorney General Gil Birnbrich explained the consequences and benefits of staying in the settlement class.

"If you do nothing, you will be protected by the settlement," he said.

Birnbrich said that this would be the best thing for them.

"If you opt out, you will not have the protections of the settlement," he said.

Retiree Rose Igitol asked what will happen to those who opt-outs, especially, the manamko’ among them, who don’t read newspapers or listen to the radio or do not understand English and do not know what is in the agreement.

Attorney General Joey San Nicolas responded in Chamorro and explained that was why they were there, and he didn’t want to point fingers at anybody.

He said they were there so the retirees would be better informed.

"You have a right to opt out if that is what you want. That is your right. We leave it all up to you," he said.

He said that if there are more than 10 percent who opt out, then the settlement would be "matai."

He said, "Then we will move forward again with the litigation."

If the opt-outs are less than 10 percent, "they will not receive benefits from the settlement [fund]."

But San Nicolas said, "Nothing in this whole process or in the settlement agreement prevents the legislature or the administration from paying those who opt out."

For his part, trustee ad litem Joseph C. Razzano said, "The answer is if the settlement agreement is approved, the assets of the Retirement Fund are going to be transferred to the Settlement Fund. That means on Oct. 1 the Retirement Fund as you know it will have no assets."

He also said that if the question was if the opt-outs would get paid come Oct. 15, he said, "I can’t guarantee you the answer is ‘No’ because of course the Legislature could appropriate money to get you paid."

He did say, however, that the retirees could rely on the fact that if the settlement agreement is approved, there will be no checks for them from the Retirement Fund.

According to the preliminarily approved agreement, once it becomes final, the assets of the Fund will be transferred to the Settlement Fund.

The agreement stated that as to the real property assets of the Fund, the pension agency would only transfer the leasehold interest in that property for the maximum period allowed by law and for an annual lease payment not to exceed $1 per year.

Moreover, if it is necessary to foreclose on any real property to collect on any loan which is an asset of the Fund, the Fund or the government will hold all real property interests for the benefit of the Settlement Fund.

‘We are confused’

Retiree Ricardo Castro said, "The settlement makes all the retirees confused. I am confused now."

He said if he opts out, come Oct. 15 there will be no pension check for him, "What happens to my children and grandchildren? What happens to my obligations? Luckily I am saving my Social Security."

Ben Santos could not agree more.

He told the panelists composed of Attorney General San Nicolas, Assistant Attorney General Gil Birnbrich, CRA Chairman Larry Cabrera, Trustee Ad Litem Joseph C. Razzano, acting Fund Administrator Lilian Pangelinan, Senate President Ralph Torres and Sen. Ray Yumul: "I am confused."

He also said, "We are not at fault. It is our government. Now we have to be burdened with all of this. It is not fair. The government must find a way."

He questioned the necessity of having the settlement agreement.

"Only the lawyers will benefit, not the retirees," he said.

He told San Nicolas and Torres, "I appreciate what you are doing. But it is not enough."

He said where is the government in all this.

"Maybe the best thing is to close the government," he said.

With the reduced pension, Santo said they would be incurring more financial burdens.

"Put us in jail. All of us. Nobody can pay his loan at the bank. This is another problem in our livelihood."

He also said, "I am sorry. This happened because of the negligence of our government and the legislature."

Former Speaker Oscar Rasa asked what the government will do with those who opt out?

"Why did you allow the people who negotiated the agreement to take away the rights of those who contributed [to the Fund]. It is unconscionable."

He said it puts the retirees under duress.

"They have to comply otherwise they won’t get paid," he said.

He said whoever did the negotiation was not capable.

As to pension cuts, he said, "Under the Constitution, it is a contractual obligation between the retirees and the government. You cannot diminish or impair that pension obligation. Has that issue been raised?"

He asked if the legal fees were brought up in the negotiations.

"It is unfair for a person who opts out to not get paid, in my opinion," he said.

Rasa said laws were passed in order to avoid making the contributions.

"Now you are placing the burden on the retirees. What are you going to do to protect them?" he asked.

Pay the fees over 20 years

The retirees were equally enraged over the fees filed by the lawyers.

Retiree David Sablan said, "The 25 percent is a big sacrifice for the members of the Retirement Fund."

He said they will have to make huge adjustments to accommodate the government which is not able to pay the retirees as agreed in the constitution.

"If I violate the rules, I get penalized. The way it is now. It is reversed. The retirees are being penalized for paying [their contributions]. Who screwed up the payments? The government should be penalized, not us."

Sablan said, "The CNMI government cannot afford anything beyond the amount due to us. Why should we accommodate the attorneys?"

Sablan, among other retirees, had wanted to put a discussion of the legal fees ahead of other items on the agenda for Friday’s meeting.

"If we must pay the $36 million, let us do it this way — pay over 20 years with no interest."

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