Guam Legislators Want To Offer Public Employees Social Security

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GovGuam retirement plan insufficient for most retirees

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, June 5, 2014) – The government of Guam faces urgency to enroll almost 8,000 government of Guam employees into the U.S. Social Security program, some of the island's elected officials said at a legislative hearing yesterday.

Without Social Security, the retirees, who were hired on or after Oct. 1, 1995, under GovGuam's Defined Contribution plan, won't have a monthly pension. The only money they'd get at retirement, if GovGuam was their only employment, is what they've saved, plus GovGuam's contribution of 5 percent of their base pay.

With $40,000 as the average amount saved by Defined Contribution members, future retirees in the plan could run out of money in less than three years, the officials acknowledged.

Public Auditor Doris Flores Brooks, who was the only one who testified at the hearing on the issue yesterday, said it's important for GovGuam to give the retirees the "dignity of retirement." Without a better safety net, they'd end up on the public welfare rolls, officials said.

At issue at the hearing was legislative resolution 379, which calls on Guam's lone voice in Congress, Delegate Madeleine Bordallo, to seek congressional authority to allow GovGuam into the Social Security system.

Encouraged by CNMI

GovGuam employees are specifically barred from opting into Social Security membership, said Sen. Michael San Nicolas, but he wasn't clear on why that's the case. He's the resolution's chief author.

The Guam officials are encouraged by the Commonwealth of the Northern Mariana Islands government's experience with Social Security.

When the CNMI's retirement fund went bankrupt a few years ago, after the local government stopped making contributions to the fund, Social Security allowed the CNMI government to opt in.

GovGuam's retirement fund isn't near bankruptcy, as the local government continues to make payments into the fund, but it faces a possible $1.4 billion shortfall on the amount it will owe future retirees, previous audit reports have shown.

"The situation in the CNMI was dire, but when you think of the Defined Contribution members, they're in very dire straits also," the public auditor said.

Sen. Ben Pangelinan, chairman of the legislative committee with oversight over the GovGuam budget, said he agrees that Defined Contribution members face a dire retirement future.

The older GovGuam retirement plan, called Defined Benefit, which had an October 1995 membership cutoff, guarantees retirees a monthly pension and a cost of living allowance for as long as they live. Their surviving spouse also will receive some economic benefits.

San Nicolas said he hopes Bordallo will pursue the Social Security option "with the same tenacity" she has shown for her support of the military buildup.

Clock is ticking

The urgency to provide a solution for the Defined Contribution members, specifically to provide them with Social Security coverage, gets more pronounced as months pass.

It takes at least 10 years of contributions into Social Security, and next year is the must-enroll year for Defined Contribution members who face retirement in 2025, the officials said.

The Government of Guam Retirement Fund also is proposing to provide the Defined Contribution members enhanced benefits by giving them the option to raise their contribution from 5 percent of pay to 8 or 9 percent of pay, the fund's board chairman, Joe T. San Agustin has said.

The fund wants GovGuam to match employees' higher contribution. Pangelinan said he doesn't support expanding the GovGuam share of contributions for the Defined Contribution members, so the two sides will try to iron out their differences.

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