“This isn’t about supporting the executive branch or fighting the Retirement Fund. This is about the CNMI government and an issue that is really very serious. It’s a very painful situation for everybody,” Sen. Maria T. Pangelinan, D-Saipan, told her colleagues during their session.
She also informed them that she had submitted an affidavit to the Superior Court in her legislative capacity ahead of the Monday evidentiary hearing on the Fund’s lawsuit against the central government.
Last year, the Fund won its case by default and next week’s hearing will be held to determine damages that will be awarded to the local pension system.
When the lawsuit was brought forth, the Fund claimed unpaid contributions of about $100 million.
As of Dec. 2008, this had reached over $209 million, excluding the unpaid liabilities of more than $400 million accumulated over the years.
“We’re already in a fiscal disaster. I believe this lawsuit judgment opens an avenue for the court, the Retirement Fund, the Legislature to look forward to a solution,” said Pangelinan.
She said the financial problems of the Fund should be the concern of all three branches of the government.
“How do you resolve the issue and how do you find money outside of the current revenue to also address the issue of vested employees who are qualified to retire but cannot retire [due to the government’s unpaid contributions]?” she asked.
Different proposals may come up during the evidentiary hearing.
This includes requiring the cash-strapped CNMI government to pay the actuarial rate of 37.39 percent in annual contributions.
Currently, the government only pays 11 percent.
If the court insists on the payment of the actuarial rate, over 1,000 government employees may lose their jobs.
Senate Vice President Felix T. Mendiola, Covenant-Rota, said there are suggestions to use part of the federal stimulus money that the CNMI stands to receive to address the issue of eligible retirees who cannot retire due to budget constraint.
“It may not be the cure all but it would alleviate the problem,” he said.
Due the government’s failure to remit its employer contributions, the Retirement Fund projects to withdraw as much as $55 million in FY 2010 to pay the pensions of retirees.
This means that its shrinking investment portfolio valued at just over $276 million as of March will further be depleted.
