Commonwealth Retirement Association Chairman Lorenzo LG. Cabrera, in his letter to Speaker Eli D. Cabrera and Senate President Paul A. Manglona, said, “Active employees will undoubtedly terminate their membership with the Fund resulting in the withdrawal of their contributions. With no active members of the Fund, the government is free from making its contribution.”
For Chairman Cabrera, this begs the question if the government could find a replacement program for its employees.
He also shared that any replacement to the existing pension program requires money. He asked, “Will the government make a commitment to be faithful in remitting its contribution?”
Such a withdrawal of contributions also warrant an inquiry whether the government could provide workers compensation insurance at no cost to the employees and if the plan sponsor – the government – could arrange for provisioning of health and life insurance coverage “such as the type and amount of coverage that employees have come to enjoy.”
In the aftermath of a law intended to protect the program from harm appears to be harming the Fund, the CRA said, “The recent turn of events we have witnessed was the unfortunate enactment of Public Law No. 17-51.”
The CRA chairman wrote to Manglona and Speaker Cabrera, “The capability of the Fund to invest in the money market has been impaired. Whether this is only temporary and that the money managers will regain trust and confidence in working for the Fund, we don’t know.”
The enactment of the P.L. 17-51, CRA said, occurred at the most inopportune time.
Faced with the uncertainty whether the government will comply with the court order or not and with the Fund’s investment capability severely impaired, the Fund needs help and fast, said Chairman Cabrera.
As in all government retirement programs, funding mechanism is put in place requiring employer and employees to contribute based on rates and amounts determined by an actuarial study and analysis and for the CRA, the Fund will continue to operate as long as the government and the employees continue to remit their share of the cost of the program.
For Chairman Cabrera and the CRA, the Fund has been for over three decades subjected to operate under all kinds of changing legislation some of which were detrimental to the financial well-being of the Fund.
In the face of this barrage of legislation affecting the Fund, the CRA board on Oct. 26 resolved to adopt a resolution asking the Legislature to refrain from entertaining any legislation other than appropriation that would affect in any way the management and operation of the Retirement Fund.
In the resolution, the retirees recognize that the continued extension of the pension program and benefits to the growing number of recipients must depend on a steady flow of income from both the employees and the government.
It also cited the government’s failure to consistently make its contribution resulting in the Fund tapping money it has made through investments abroad so it can continue to provide pension payouts and benefits that retirees and active employees have come to depend on for their livelihood.
The CRA through the same resolution acknowledged that the Fund could only do so to buy a limited time; however, it was left with no choice but to force the government to meet its lawful obligation.
It also cited the court’s recognition of the government’s obligation and its setting aside of $100 million for active employees for the purpose of reimbursing them of their contributions in the event of the Fund’s collapse.
