THE CNMI government, which has to remit $38 million to the Settlement Fund in fiscal year 2022, must make a total of $135 million in payments from FY 2023 to FY 2026, according to an actuarial valuation prepared by the Fund’s consultant, Milliman Inc.
A copy of the Milliman report was among the documents submitted by Finance Secretary David DLG Atalig to the House Ways and Means Committee in compliance with the subpoena duces tecum issued by the panel.
In its cover letter to Settlement Fund Trustee Joyce C.H. Tang dated Sept. 9, 2021, Milliman said it performed an actuarial valuation of the Fund as of Sept. 30, 2020 “to project the minimum annual payments to be made by the [CNMI government] to pay 75% of the class members’ (retirees) full benefits.
According to the Milliman report, the following are the estimated minimum payments from the CNMI government in the next four fiscal years:
|
Fiscal Year 2023 |
$36 million |
|
Fiscal Year 2024 |
$34 million |
|
Fiscal Year 2025 |
$33 million |
|
Fiscal Year 2026 |
$32 million |
The total of $135 million, however, does not include the 25% benefit amounting to $14 million to $15 million annually that the CNMI government “voluntarily” remits for the retirees.
If the 25% benefit is included, the CNMI government must remit a total of $191 million to $195 million from FY 2023 to FY 2026.
Based on the FY 2023 budget bill now pending in the Senate, the CNMI government’s “identified budgetary resources” amount to $150.4 million. This includes $36 million for the Settlement Fund.
From FYs 2027 to 2031, Milliman said the CNMI government must make the following estimated minimum payments:
|
Fiscal Year 2027 |
$31 million |
|
Fiscal Year 2028 |
$30 million |
|
Fiscal Year 2029 |
$29 million |
|
Fiscal Year 2030 |
$28 million |
|
Fiscal Year 2031 |
$27 million |
Milliman stated that from FYs 2032 to 2040, the estimated annual payment from the CNMI government is $26 million.
After FY 2040, Milliman said the CNMI government payments are expected to be equal to the benefits and expenses paid by the Settlement Fund.
The Milliman report included a table indicating that starting in FY 2042, the CNMI government’s payment, which will be $25.68 million in that fiscal year, will gradually decrease until it reaches over $3.9 million in FY 2060.
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 NMI Retirement 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 “with the powers of a federal equity receiver.”
In her recent report to the District Court for the NMI, 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.”
