By Gemma Q. Casas
Variety News Staff

THE Retirement Fund will be able to keep contributions of government employees up to 15 years before they fully refund them, and the cost of living allowance for retirees will no longer be adjusted annually if Senate Bill 15-76 becomes law.
Right now, government employees can cash in their contributions after to 10 years of service.
By a vote of 15-0 on Wednesday, the House of Representatives passed S.B. 15-76, or the Defined Benefit Plan Reform Act of 2007, authored by Sen. Maria T. Pangelinan, D-Saipan.
Reps. Candido B. Taman, R-Saipan, Manuel A. Tenorio, R-Saipan, and Martin B. Ada, R-Saipan, were not present during the session.
According to the House Committee on Health, Education and Welfare chaired by Rep. Jesus Sn. Lizama, Covenant-Saipan, S.B. 15-76 could improve the fiscal solvency of the financially troubled local pension program.
“Section 4(b) was amended to increase the refund period to 15 years. The committee feels that this will assist the Retirement Fund in meeting current obligations because the time period for refund “cash-outs” is extended,” the committee said in its report.
Since April, the Retirement Fund has split the local pension program into two — the Defined Benefit or DB plan, and the Defined Contribution or DC plan.
All of the government’s 4,927 employees are with the DB plan, which has two classes — I and II – which are determined by the starting date of their employment.
The DC plan started in April this year and automatically enrolls new government hires. This pension plan is similar to the U.S. private sector’s 401-K plan and is designed to be self-sustaining.
The DB plan’s unfunded liability as of Oct. 1, 2004 was about $470 million.
“The Legislature recognizes that the commonwealth lacks the financial resources to pay off a $500,000,000 unfunded government liability to the Retirement Fund, and that a rescue and reform plan is necessary to restore the Fund to a more sound financial footing,” the bill stated.
The bill will change the way COLA is given to retirees: “The cost of living increase percentage will be applied to the first $30,000 of the previous year’s annuity amount paid in semimonthly increments. This figure shall not be adjusted.”
The employees’ contributions to the local system will also increase.