Fund Administrator Richard S. Villagomez in his Nov. 3 memorandum to all departments and autonomous agencies and government instrumentalities, clarified this.
Citing 1 CMC 8356 (c ), Villagomez said, “Regardless of class membership, a member shall be restricted from government reemployment for a period of six months after receiving a refund of his or her contributions, unless the member returns the full amount to the Fund within six months of receiving the refund.
Villagomez also said that the repayment option is no longer applicable following the creation of the defined contribution plan.
“Accordingly, it is improper for any government branch, department or agency to re-employ any former DB Plan member for six months after complete separation,” Villagomez added.
He also said in the absence of property interest in future employment in the government, there is no basis to apply this provision only on a prospective basis following passage of PL 13-60 and the refund will apply the restriction across the board to all members.
Adopting and implementing a new administrator’s policy on termination refund and reemployment, Villagomez said that the former administrator’s policy on refunds was based on a flawed interpretation and understanding of the right to continued employment and the interaction between this flawed interpretation and certain property rights that attach to pension benefits.
Villagomez also stated in his memo that according to 1 CMC §8356, members may receive a refund of contributions upon completion of separation from service before he or she has completed 15 or 20 years of contributing member service.
According to the Fund’s actuarial valuation report for 2009, refunds are made on termination with less than 10 years of service.
The report further clarified that Class I and Class II refunds are subject to an early withdrawal penalty of 10 percent of the total contributions excluding interest. Class II members, the report also said, who terminate with three but less than 20 years of service may request a refund of their accumulated contributions with interest in lieu of their termination benefits.
In his latest memo, Villagomez said that refunds may or may not include interest and may or may not be subject to a withdrawal penalty.
Villagomez invoked the regulations’ definition of separation from service as separation from government service by any employee of the government whose employment has terminated effective on the last day of employment and who has been refunded his or her contributions.
He also said a person who completely separates from service and refunds his or her contributions shall be deemed a new member of the Fund upon subsequent employment with the CNMI government.
He explained that full separation is achieved upon full refund of employee contributions.
“A person who quits and submits an application for refund is still considered a member until all their contribution has been refunded,” he said.
He also said that upon termination of employment of an active member, the law allows Class I members to refund if years of service is below 15 years, and for Class II members if years of service is less than 20 years.
On reemployment, Villagomez added that if a member is reemployed prior to “complete separation” the refund application will be denied in accordance with the law and member will remain in the same class.
The creation of the Defined Contribution Plan closed out the membership to the Defined Benefit Plan.
Created by PL 15-13, the DC Plan is the single retirement program for all new employees whose employment commences on or after Jan. 1, 2007.
As of 2010, there were 2,852 Class I members and 226 Class II members of the DB Plan while there were 2,236 active members of the DC Plan.
