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    Tuesday, December 11, 2018-4:56:21P.M.

     

     

     

     

     

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Settlement Fund trustee: No to re-establishment of Retirement Fund

SETTLEMENT Fund trustee Joyce Tang does not support the measure re-establishing the  Retirement Fund, saying it may affect the CNMI government’s ability to pay the retirees’ pension.

In a letter to Rep. Ivan Blanco, chairman of the House Committee on Judiciary and Governmental Operations, which is considering House Bill 20-157, Tang said:

Joyce Tang

“While the Settlement Fund appreciates the government’s desire to provide for the retirement needs of government employees, the major concern is the impact it would have on the government’s financial ability to pay the 75 percent benefits to its members….”

Tang said  the bill may have an impact on the government’s payment obligations that include the annual Minimum Annual Payment or MAP, the Alternative Payment of a Greater Amount, employer contributions and employer contributions for health and life insurance.

She said  the MAP for fiscal year 2014 was $25 million; $27 million for FY 2015; $30 million for FY 2016; and $33 million for FY 2017.

Tang added that for FY 2018, the MAP is  $45 million.

Moreover, “for FY 2018, the government is obligated to pay the Settlement Fund  an amount between $68 million and $79 million. This amount represents between 46.8 percent and 54.4 percent of the government’s FY 2018 budget. It is not an insignificant amount, and is especially risky when the bulk of the government’s income is from casino license fees and taxes,” Tang said.

“In addition to the $68 million to $79 million obligations to the Settlement Fund, the government has committed itself to covering the remaining 25 percent of the benefit payments (including the 25 percent lump sum death benefits). The government’s reliance on casino license and fees to fund many of its new programs, including the new retirement plan, is imprudent and could be disastrous for the government,” she said.

“Because the government’s income source is not diversified, if the casino license and fees are suspended or uncollectable, the government has no other reliable significant source of income to cover these obligations and could default on the Settlement Agreement and its payments to creditors,” she added.

“The Settlement Fund does not support a bill which could create additional long-term liabilities for a government which relies on an income base that is not diversified and is unreliable.”

The House held a public hearing last week on H.B. 20-157 which was introduced by Speaker Ralph Demapan.

Blanco said there was a good turnout for the hearing, and a majority of the people who testified expressed support for the bill.