Each year, Fitial said, $70 million is spent for the pension of the current retirees.
“I have a message for the vested members who are working for the government. Their contributions are being used to pay for the pension of current retirees. And that is not right. That is why I created the defined contribution plan so that whatever you contribute and when you retire, that is what you get.”
The governor at the same time said he does not support Speaker Eli D. Cabrera’s House Bill 17-226 which will allow some government employees to withdraw their contributions from the Fund.
That proposal will only hasten the Fund’s demise, Fitial said.
The Fund’s problems, he added, started even before he became governor in 2006.
“I created the defined contribution plan…because I know that the Retirement [Fund] was going south. And I know that the revenues were decreasing.”
Implemented in 2007, the defined contribution plan “stopped the bleeding of the unfunded liabilities,” he said.
Most retirees, however, are under the more generous defined benefit plan, which also required a higher government employer contribution rate.
Fitial said the government uses money from the general fund to pay for its contributions to the defined benefit plan.
So when the revenues are going down, of course, there will not be enough money to pay for it, he added.
The government owes the Retirement Fund some $300 million.
