“This is accelerating the bankruptcy of the Fund,” Rep. Heinz S. Hofschneider said in an interview on Friday. “In October alone the Fund lost $80 million in the equity value of its investments. It has been incurring losses throughout the year. The government is not paying its employer’s contributions to the Fund so the agency has to sell some of its stocks at this time when their value has been reduced just to meet pension obligations.”
Hofschneider, R-Saipan, noted that the Fund is supposed to get a 37 percent employee contribution rate from the government, which can only afford to pay 11 percent.
“And we can’t even pay that 11 percent now,” he said. “We’re inching closer and closer to seeing drastic actions imposed on us by the court.”
Hofschneider said the Fund’s members may “force the issue” through the local and federal courts.
The local trial court has already ruled in favor of the Fund in the lawsuit it filed over the government’s failure to remit its employer contributions worth more than $91 million.
An evidentiary hearing on the issue of damages has been scheduled for June 8, 9, 10, and 12, 2009 in Superior Court.
“What if the court impounds government revenues so that we can pay the Retirement Fund? What if the judge orders us to cut personnel, raise taxes or sell public lands so we can pay our obligations to the Fund?” Hofschneider said. “What will happen to the rest of the government’s obligations and to our economy which is already saddled by so many problems?”
He said there is a now a need to “put politics aside and look at the financial reality of this government.”
He noted, however, that despite these worsening problems, “the government continues to hire non-essential employees.”
