They expressed dismay at the same time over the prospect of losing their pensions due to the government’s failure to remit its contributions to Retirement Fund which is now on the brink of collapse.
Retiree Gloria Hunter said, “Don’t ask us to cut our paycheck to pay you so you can live off the fat. No way!”
Hunter said she’s willing to take a 10 percent cut provided the government “which owes us, trim its fats.”
The retirees will not accept cuts just to allow the government to continue spending at current levels, she added.
She said benefits cuts at this time are unacceptable. “I cannot even live on what I am getting right now.”
Another retiree, Sapuro Rayphand, asked House Minority Leader Joseph P. Deleon Guerrero, R-Saipan, when will the Legislature cut its “fat,” referring to the discretionary funds.
“I don’t know what fat are you talking about,” the lawmaker replied.
He said lawmakers have already made “drastic cuts” to their budget. He himself has only two staffers, he said.
Online commentator Ruth Tighe said she doesn’t see the Legislature scaling back its expenditures.
She noted that the Legislature’s budget will even increase in the new fiscal year.
Apart from taxing businesses that are already struggling, Tighe said there has to be cuts in government spending.
But, she added, “I don’t see the Legislature doing anything to cut expenditures on anywhere.”
David Sablan, a retiree, also voiced his discontent with the way the government is handling the pension system.
“We have done our share and the government has not done its share…. They are trying to renege on a contract between employer and employee right from the beginning,” Sablan said.
Another retiree said the government is not broke. “It’s just not doing anything.”
Former Northern Marianas College President Agnes McPhetres expressed her frustration with the Legislature. “Who are they working for — the people or themselves? It is frustrating that we have become the victims of the people we elect.”
Eric Plinske, an active member, said assets of the government have to be given up in some shape or form. “We cannot just take some cut,” he added.
Repealer bill
Tighe asked Deleon Guerrero about the status of the bill that would repeal the derivative lawsuit act.
He said the measure is with the House Judicial and Governmental Operations Committee. “It’s the speaker’s call,” he added.
Tighe said the controversial law has prevented the Fund from investing the retirees’ money and each day that the repeal isn’t acted upon the Fund loses money.
The Fund went to the Superior Court and filed a motion for temporary restraining order two weeks ago, questioning the constitutionality of the law. Judge Kenneth Govendo may decide on the motion this week.
$266 million left
Fund Chairman Sixto K. Igiomar said based on unaudited figures, the pension agency has $266 million left.
“As of today it is approximately $266 million (unaudited). If we are actually 80 percent funded, that’s fine. We are below 40 percent,” meaning the Fund has 40 cents available for every dollar of liability.
He told the retirees that the Fund is paying out $63 million in pension benefits a year. However, it is not collecting as much from the government.
“We are always short.”
He said due to this shortfall, the Fund keeps getting money from its investments.
He reminded the retirees that investing in the market is not the silver bullet to the Fund’s woes. “The market is not the answer nor the solution for your retirement.”
Fund Administrator Richard Villagomez said the contributions that have gone into the portfolio is $147 million while the total cumulative drawdown is over $200 million. “We have actually withdrawn more than we put in the portfolio yet we still have around $266 million left,” he added.
Igisomar said the Fund needs about $900 million to support all retirees and all active members still in the defined benefit plan as well as their beneficiaries.
He said since Judge Govendo awarded judgment to the Fund in 2009, they were only able to collect from the government each time they returned to the court. “Every time we end up in the court, they pay out. When we’re not in court, they stay behind,” Igisomar said, referring to the government.
He compared the Fund to a leaking water tank whose supply has been cut off.
“With $266 million left, based on simple math, the Fund is going to last for less than three years,” he said.
He told the retirees to decide on a position and let their voices be heard on Capital Hill. “You need these numbers up at the Legislature whenever they discuss something that affects you,” he added.
Villagomez agreed. “You guys represent a large group of the population. You have a strong voice. There is strength in numbers.”
He said the Fund doesn’t want to reduce benefits.
Igisomar cited the CNMI constitution provision that disallows reducing benefits.
But the Fund is not getting the employer contributions it should receive, he added.
He told retirees that the pension agency received $400,000 in employer contributions in the last 12 months.
Villagomez said, “There is no way $400,000 can support $63 million in payouts.”
Rayphand, the former assistant attorney general in Chuuk, also told his fellow retirees that he requested the removal of the lawsuit against the government from local to federal court because he doesn’t trust the CNMI government.
He noted that CNMI judges and justice are going to become retirees. “That’s conflict of interest,” he added.
With the lawsuit now in federal court, Plinske said it may assign an executor and liquidate assets.
Rayphand said it’s a possibility, but it is up to the judge.
Tighe said she’s not opposed to moving the case to the federal court but the timing is “atrocious.”
She echoed Igisomar’s statement that the next local court hearing would have identified steps to be taken. But she said this is on hold pending the designation of a federal judge that will take the case.
It may take a year, she said, and the Fund cannot wait too long.
She also mentioned that the attorney involved, Bruce Jorgensen, is not a member of the local bar.
Several retirees suggested for the Retirement Fund building to be sold or leased.
The Fund should look into the assets of the government that can be used to pay what it owes the agency.
“It’s not our job to bail the government out. It’s their own fault that we’re in the situation we’re in,” a retiree said.
Social Security option
Congressman Gregorio Kilili Camacho Sablan said he was told that the Social Security Administration will come in and review contributions of the government and then propose a new funding mechanism.
“Right now… my obligation is to try and convince the Social Security Administration…to provide safety nets for the active members because they are putting money into a program that we know they are not going to get anything out of. That is unfair to them.”
He told the retirees that the administration, the Legislature, and members of the Fund should come up with a concept to present to Social Security.
Deleon Guerrero said besides an income tax hike, lawmakers are looking into the possibility of imposing a commercial property tax.
He said the solvency of the Fund is not only an issue that retirees are concerned with.
“If the Fund goes broke in two years, it will not be a $27 million problem. It will be a $63 million problem for a government that can only generate $100 million.”
Election of new CRA board
The retirees on Thursday night nominated and elected the following to the board of directors of the Commonwealth Retirees Association: Oscar Camacho, Agnes McPhetres, Sapuro Rayphand, Manuel A. Tenorio, Dr. Helen Taro, Jocelyn Deleon Guerrero, Diego T. Benavente and Larry DLG. Cabrera.
Gov’t can’t pay
Gov. Benigno R. Fitial on Friday admitted that the government cannot pay what it owes the Retirement Fund.
“How can we satisfy employee contributions if we don’t have revenues?” the governor asked. “The message I have for the retirees is: they have a problem.”
Each year, Fitial said, $70 million is spent for the pension of the current retirees.
“I have a message for the vested members who are working for the government. Their contributions are being used to pay for the pension of current retirees. And that is not right. That is why I created the defined contribution plan so that whatever you contribute and when you retire, that is what you get.”
The governor at the same time said he does not support Speaker Eli D. Cabrera’s House Bill 17-226 which will allow some government employees to withdraw their contributions from the Fund.
That proposal will only hasten the Fund’s demise, Fitial said.
The Fund’s problems, he added, started even before he became governor in 2006.
“I created the defined contribution plan…because I know that the Retirement [Fund] was going south. And I know that the revenues were decreasing.”
Implemented in 2007, the defined contribution plan “stopped the bleeding of the unfunded liabilities,” he said.
Most retirees, however, are under the more generous defined benefit plan, which also required a higher government employer contribution rate.
