The Retirement Fund won by default its lawsuit against the central government over unpaid employer contributions.
The governor said the court should be mindful that only lawyers win if its decision strongly favors the Fund without considering the government’s steadily declining revenues and the fate of more than 4,000 government employees.
“Whatever the decision may be, it has to be reasonable,” the governor said. “I don’t think any judge or judicial system is unreasonable.”
A hearing was held on Monday regarding the Fund’s claim that it is owed $156 million in unpaid contributions as of last month, excluding the 25 percent late penalty charge.
In addition, the government also owes the Fund more than $500 million in unfunded liabilities or benefits mandated by law but were not funded.
An actuarial study recommends that the government pays the Fund over 37 percent in employer contribution.
However, under the current fiscal year 2009 budget, or Public Law 16-32, the government is mandated to pay only 11 percent.
In June, the court will hold another hearing aimed at determining the losses that the pension agency incurred as a direct result of its failure to timely receive payments from the government.
The court may require the government to pay the actuarial rate of over 37 percent. If this happens, more than 1,000 public servants will lose their jobs, officials said.
The Fund had only $276 million in its investment portfolio as of March this year. The monthly pension of retirees is close to $6 million or roughly $72 million in one year.
The government’s contributions are supposed to cover the pension checks and the Fund’s investment portfolio should never be touched and should be at least $1 billion by 2020.
This target date, however, was adjusted to 2045, following the government’s failure to timely remit its payments.
