THE NMI Settlement Fund financial statements as of September 30, 2021, and 2020 presented fairly, in all material respects, the Fund’s financial position, according to an independent audit of Ernst & Young.
The Fund’s operations and cash flows were in accordance with the accounting principles generally accepted in the U.S., the audit added.
The primary purpose of the Settlement Agreement is to ensure that retirees, who are part of the Settlement Agreement, will always be paid at least 75% of their benefits and will always get paid as much as any retiree who opted out of the Settlement Agreement.
The District Court for the NMI has appointed a trustee, Joyce C.H. Tang, with the powers of a federal equity receiver, to administer and run the Settlement Fund as a fiduciary to the Settlement Class Members.
The Settlement Fund is an extension of the district court, and as such, is exempt from taxation under Section 1105(a) of the Commonwealth Code.
As stated in the Stipulation Regarding Settlement Fund Assets filed in the District Court in Johnson v. Eloy S. Inos, et al, Civ. No. 09-00023, the Settlement Fund is not a pension plan and it does not operate or manage a pension plan.
The Settlement Fund is a not-for-profit, tax-exempt entity created by the Settlement Agreement dated Aug. 6, 2013, and approved by the District Court of the NMI. Furthermore, because the assets of the NMI Retirement Fund were transferred to the Settlement Fund, these assets are no longer assets of the NMIRF/CNMI government, the audit stated.
“Lastly, because oversight of the Settlement Fund lies exclusively with the CNMI District Court, the NMIRF and the CNMI Government do not own or have any control over the Settlement Fund or its assets. The Trustee believes it would be misleading for the CNMI Government to include the Settlement Fund’s assets in its financial statements, and to include the Settlement Fund as a component unit of the CNMI Government,” the audit added.
The audit also stated that the CNMI government’s projected minimum annual payments necessary to enable the Settlement Fund to pay 75% of Settlement Class Members’ retirement benefits total approximately as follows:
Year ending Sept. 30, 2022 — $41 million
YE Sept. 30, 2023 — $40 million
YE Sept. 30, 2024 — $39 million
Total future minimum payments receivable: $120 million
In her recent report to the district court, Fund Trustee Joyce C. H. Tang said: “In a year of exceptional challenges and disruption, the CNMI continues to recover, and the government continues to timely pay its biweekly Settlement Fund payments.”
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 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.
On Sept. 25, 2013, the federal court appointed Tang as Settlement Fund trustee.
