According to the report, the CNMI government owed the Retirement Fund about $231.6 million in unpaid employer contributions, based on a court ruling. In this regard, a lawsuit had been filed by some retirees against the Fund over a denial of their retirement benefits. Similarly, another lawsuit was filed in federal court, urging the U.S. government to appoint a federal receiver to run the Fund.
To those of us here on Guam, this may seem like shocking news. How can such a misfortune ever happened to our neighbors in the CNMI? But, let us not be too shocked, because the same bad situation may be happening right under our nose here on Guam.
It was just this time a year ago, when the chairman and vice chairman of the board of trustees of the GovGuam Retirement Fund appeard on TV to explain the status of the Retirement Fund amid rumors that the Retirement Fund was running out of money due to the on-going financial meltdown on Wall Street and in major U.S. banks. It was reported that close to $600 million of the total investment assets of $1.6 billion in the Retirement Fund was lost in 2008. Such financial losses continued into 2009.
The board chairman was very reassuring that the funds in the Guam Retirement Fund were safe and were not in danger of being completely lost. He insisted that some of the invested funds in the Fund’s investment portfolio were still earning interests and dividends, even though the interest rates were very low.
It is still not very clear why there hadn’t been any reports from the Guam Retirement Fund regarding the status of the funds, despite the fact that the Retirement Fund was distributing thousands of retirement checks every two weeks at a cost of $14 million a pop. It made you wonder whether the Retirement Fund had miraculously recovered in 2009 by gaining back some of the losses of its investments. After all, with the so-called financial recovery of Wall Street and some of the large banks in 2009 under President Obama’s economic stimulus program, this might very well be the answer.
But wait, there might still be another explanation. Remember the $123 million bond money that was granted in 2009 to GovGuam to cover the COLA court settlement? The funds were directly paid to the Guam Retirement Fund for distribution to over 4,000 eligible retirees. In turn, the Retirement Fund was allowed to withhold 10 percent of the funds for tax purposes. That was about $12.3 million that was supposed to go to the Department of Revenue and Taxation. Additionally, the Retirement Fund was allowed to hold back millions of dollars that were due to those retires who had since passed away, pending probate settlements.
With the GovGuam Retirement Fund board meeting that is scheduled for Friday, Jan. 29, noontime, in the agency’s conference room, it will be interesting to know what the board will report to the stakeholders regarding the status of the Retirement Fund for 2009. How about the public? Don’t they also want to know?
MANNY Q. CRUZ
Yona, Guam
