Early last month, I was inquiring through the public print media why the GovGuam Retirement Fund board had not been keeping the thousands of government retires informed of the status and condition of their retirement savings and investments, especially their 401(k) credits.
The major banks on Guam, at the time, had been reporting that their banks had not been affected by the crisis and had assured the depositors and the people of Guam that there was no reason to be concerned.
Without any public nor official announcement, the chairman of the Guam Retirement Fund board reported in one of the local radio stations that the GovGuam retirees and current government employees have no need to be concerned about their funds and savings, since the Retirement Fund program is safe and not affected by the Wall Street financial crisis.
However, about a week or two ago, Retirement Fund treasurer Gerry Cruz appeared on TV and reported just the opposite. The worldwide financial meltdown had indeed had a negative effect on the Retirement Fund program.
Cruz reported that the Retirement Fund had been spreading its risk through investing in several different types of financial products worldwide, not only at Wall Street. As a result of the worldwide money market taking a major hit over the last several months, somehow everything was going on a downward spiral ever since. And, like many other investors worldwide, the Retirement Fund had also taken a major hit and a major loss.
Cruz had projected that, as of September of this year, the Retirement Fund had about $1.1 billion in assets. Compare this to last year, the Retirement Fund was about $1.39 billion in total assets. This means that the Retirement Fund had lost close to $300 million, and counting, this year.
Despite this shocking news, Cruz and the Retirement Fund staff explained that this worldwide financial crisis is all just part of a financial cycle and not to worry too much. They assured the people of Guam and all the retirement pensioners that the markets will rebound as always. In addition, they also assured the people of Guam that they will not do anything foolish at this time, but to continue to hold on to its investments (what’s left of them) and not sell anything. They further explained that Guam’s conservative investment laws have kept the Retirement Fund from taking any further major risks. With over $1 billion in total assets, apparently the opportunity is always there to make more investments.
Lastly, Cruz believed and was quite optimistic that the Retirement Fund has the capital necessary to hold on to their investments and to weather the storm, so to speak. But how long this belief and optimism will last remains to be seen.
It was quite disconcerting that none of the island’s policymakers, especially the Guam Legislature, did take note of this shocking news at the time. The financial loss of $300 million is surely not a laughing matter nor something to sneeze at. That is almost the same amount as GovGuam’s public debt. I know that the general public wants to know more as to what had happened. After all, the GovGuam Retirement Fund Program is a public agency and belongs to the people of Guam.
It is also interesting to note, in hindsight, that back in December 2006, the governor’s office had tried to solicit the Retirement Fund into becoming an investor in a consortium of lenders that would have lend the Government of Guam the $123 million court settlement to pay the retirees their “Lola COLA.” It was felt that the participation of the Retirement Fund would be quite appropriate since the loan will directly benefit their annuitants and which will not be too risky on their part. Considering now the loss of $300 million by the Retirement Fund in FY2008 and maybe more in FY2009, the loan of $123 million to cover the “Lola COLA” court settlement is nothing short of a missed opportunity and a real crying shame.
MANNY Q. CRUZ
Yona, Guam
