H.L.I. 16-13 will prohibit the Legislature from increasing benefits to members of the Retirement Fund unless the CNMI government satisfies its obligations to the Fund or unless the Retirement System is fully funded.
H.L.I. 17-1 will authorize the government to issue a pension obligation bond so it can pay its debt to the Retirement Fund.
Both initiatives are on the Nov. 2 ballot.
Muna, a former special assistant for management and budget of the governor, said he supports H.L.I. 17-1 “because it provides for certain safeguards which will ensure that when the decision is made to float the bond such a decision is guided by expert advice.”
As of 1 Oct 2008, the difference in the cost of benefits, the accrued liability, and Fund assets was $529,857,827, said Muna.
“We need the pension obligation bond as an available option in paying for this $529,857,827,” he said.
Without this option, limited resources could go to paying retirement benefits, foregoing health, welfare, education, and public safety concerns, he added.
Muna said H.L.I. 17-1 provides “us an option, based on expert advice, to pay what we owe the Fund.”
“For all of us who have experienced borrowing money to consolidate a loan, buy a house, a car etc., having the option to borrow and spread payments over a period of time to make payments affordable was welcome relief.
The same goes with having a pension obligation bond available as a financing option for what we owe the Retirement Fund — it will make the payments more affordable,” he said in an email to Variety.
As of Oct. 1, 2008, he said, based on the Retirement Fund’s own actuarial valuation, it had a total membership of 6,768 — active, inactive, receiving benefits (retirees and beneficiaries).
Muna said these 6,768 were owed $933,062,839 in benefits over their lifetime.
The Retirement Fund, in contrast, only had $403,205,012 in assets.
The difference in the $933,062,839 cost of benefits and the $403,205,012 value of the assets is $529,857,827.
This difference, Muna said, is called the unfunded accrued liability.
“This difference is what the Retirement Fund needs to have to ensure it can pay for all benefits over the lifetime of the 6,768 participants,” he added.
Muna said people should support H.L.I. 16-13 because the cost of current benefits is already a staggering $933,062,839.
He said that to increase benefits at $100 per participant per year would increase the cost of benefits by $676,800.
According to Muna, $50 per month or $600 per year for each participant would mean an increase in cost of benefits of $4,060,080 annually.
“Any increase in benefits would add tens of millions of dollars to the accrued liability,” he said.
Muna said the CNMI is a small territory that must address a liability that is almost $1 billion.
“How much more can we afford?” he asked. “Please vote ‘yes’ to H.L.I. 16-13.”
He added, “We need to control the cost of benefits not only for us but for our children and perhaps our children’s children who will unfortunately inherit and continue to pay for this liability.”
