TRUSTEE Joyce C.H. Tang has informed the federal court that the Settlement Fund’s portfolio value was $166.3 million as of Nov. 30, 2024.
In her status report, Tang said, “The Settlement Fund’s investments have benefitted from the strong stock market performance. The investment portfolio increased by 16% from 2023 to 2024.”
Tang said there have been major policy shifts taking place among the central banks around the world.
“Under this market backdrop, the Settlement Fund had a Fiscal Year Return (10/1/2023 – 9/30/2024) of 15.58%, outperforming the policy benchmark by 0.52% net of fees and expenses. The strong performance was aided by the recent diversification efforts away from core fixed income into diversified real assets and high yield bonds. Both categories outperformed core bonds and are expected to continue to do so,” Tang said.
Looking forward, she added, “we expect that the policy adjustments post-U.S. election may lead to market rotations and cause higher volatilities. We continue to support managing these potential risks through prudent diversification.”
Tang’s latest report, dated Jan. 2, 2025, pertains to the operations of the Settlement Fund for the period of FY 2024 through Dec. 15, 2024.
District Court for the NMI Designated Judge Frances Tydingco-Gatewood scheduled a status hearing for Jan. 9 at 10:30 a.m.
Background
In 2009, retiree Betty Johnson sued the CNMI government for its failure to pay the amounts that it was required by law to remit to the NMI Retirement Fund since 2005.
Johnson said the Fund would run out of money by June 2014 and would no longer be able to pay retirement benefits.
In September 2013, the parties agreed to settle the lawsuit, and the federal court approved a $779 million consent judgment in case the CNMI government did not meet its obligations to the Settlement Fund.
The Settlement Fund was created by the federal court as part of the settlement between the CNMI government and retirees.
The federal court appointed Tang as Settlement Fund trustee on Sept. 25, 2013.
Settlement agreement
The Settlement Fund receives income from three main sources: (1) the Minimum Annual Payments and Alternative Payment of a Greater Amount from the CNMI government, (2) contributions, and (3) investments.
According to Tang, since FY 2020, the Settlement Fund has paid the benefit payments from the bi-weekly Minimum Annual Payments or MAP and avoided having to liquidate its investments.
The MAP represents the 75% of annual benefit payments the CNMI government is required to pay under the settlement agreement.
The agreement also requires the CNMI government to make an Alternative Payment of a Greater Amount equal to the difference of 17% of the government’s total annual revenue after deducting the amount of MAP paid.
Wilshire Investments is the Settlement Fund’s investment consultant; Milliman Inc. is the actuarial consultant; and Ernst & Young serves as its auditor.
All consultant reports are regularly updated and available at the Settlement Fund’s website at https://www.nmisf.com/audit-reports/.
Information regarding the Settlement Fund, including but not limited to the government’s Minimum Annual Payments and investment reports, is posted regularly on the Settlement Fund website: https://www.nmisf.com/.
The Settlement Fund also publishes newsletters to update its membership on the status of their fund. The fifth issue of the Settlement Fund newsletter was published in December 2024 and will be sent to members by mail. The Settlement Fund newsletters are also available on the Settlement Fund website at https://www.nmisf.com/news-events/newsletter/.
