“What will be left for them?” Cabrera said referring to those who have been contributing to the Fund for 15 years but cannot quit and get their money without penalty or severance of their employment.
The speaker said government employees who want to withdraw their retirement contributions will have to resign and are not allowed to re-join government service for at least six months.
His measure, the speaker said, will allow Fund members to continue working in the government even if they withdrew their retirement contributions.
If there is $270 million remaining with the pension agency, Cabrera estimated that about $90 million if active members of the defined benefit plan for 15 years are allowed to get their contributions.
Those who have not yet completed 15 years of government service can avail of other options for their money, the speaker said.
“They can join the defined contribution plan, join a 401K plan or invest their money on their own,” Cabrera said.
H.B. 17-226 will also remove the mandatory provision that requires new members to be in the defined contribution plan.
“Given the present state of the Fund, we will not presume to dictate to members what they should do with their money by mandating that they reinvest a DB refund into the DC plan even if we may believe that this is a wise course of action,” Cabrera said.
He said his measure likewise removes the “severance of employment provisions” of the current CNMI retirement law.
It aims to allow members to “manage their money as they see fit without suffering the penalty of eliminating their present source of income,” H.B. 17-226 stated.
If the bill becomes law, an active member, regardless of class I or II membership, can withdraw his or her money without severance of employment and may decide to join the defined contribution plan. This request will be granted within 45 days or as soon as possible.
In a separate interview on Friday, Lt. Gov. Eloy S. Inos said the administration had already started talking to the Fund board “to see what can be done to save the active members.”
The Fund’s active members, Inos said, has the “ability to migrate” to the defined contribution plan.
Inos also said he and Congressman Gregorio Kilili Camacho Sablan have “specific plans” on how to help the Fund’s active members to “migrate” to the federal Social Security program.
Inos said he hopes the Social Security administration will allow the CNMI’s defined benefit plan members to “come in.”
A government employee who requested anonymity said there are hundreds of them who are planning to get their Fund contributions “before it’s too late.”
