In its latest attempt at finding service providers that will agree to contract with the Fund despite PL 17-51, the pension agency announced that it is soliciting proposals from qualified vendors for the period beginning Oct. 31 to Nov. 14.
Since the enactment of the beneficiary derivative measure, the Fund’s investment strategy and operations have been put in a precarious situation as the law chased away its money managers, investment consultant, actuary, and auditor. Majority of these service providers had expressed intent to sever relationship with the Fund as soon as the controversial law had been enacted.
Since Oct. 12, the Fund has been operating without an investment consultant and has resolved to transition to an ultra-conservative investment strategy called Glide Path 2013 as recommended by its former investment consultant Wilshire Associates Inc.
In this strategy, the Fund liquidated its assets held by money managers and shifted to placing the money in CDARS — Certificate of Deposit Account Registry Service — affiliated financial institutions.
According to its enabling law PL 6-17 §8353 (a), the Fund may engage one or more investment agents to secure expert advice and counsel on investments with all costs incurred paid from the Fund.
Under §8353 (c) (6), the Fund should engage with an investment counsel who certifies in writing to the Fund board that the assets under its direct investment supervision are in excess of $200 million.
The law also requires the Fund, under §8353 (e), to not invest unless in the opinion of the investment agent that it is an appropriate investment for the Fund.
The Fund is supposed to restructure benefits on Jan. 1, 2012 and losing its actuary Buck Consultants last September makes it impossible for the pension agency to do so.
The PEW Center on States study “The Trillion Dollar Gap,” found states have had laws in place that require any legislation affecting the pension system undergo an actuarial analysis. Such is the case in Georgia where the constitution called for “funding standards that would ensure the actuarial soundness of any pension or retirement system supported wholly or partially from public funds.”
In North Carolina, every retirement fund-related bill must contain actuarial notes from the actuaries of both the General Assembly and the pension agency.
On Saipan, this is not the case.
The Fund also continues to look for an auditor.
It lost the ability to contract with the only firm to respond to its previous RFP, J. Scott Magliari, when it withdrew its proposal.
The auditor told the Fund that even if they were to be indemnified, the firm could not accept an indemnification from the Fund because it would violate their requirement to maintain independence as an auditor. The standard of independence applies to all audit firms.
The said auditing firm also told the Fund that it exhausted all possible means to look for an insurance that would cover liabilities brought on by the PL 17-51, but to no avail.
The Fund issued an emergency RFP with Oct. 11 as opening date and Nov. 9 as its closing date.
The RFP called for proposals to perform financial audit of the Fund, Workers’ Compensation Commission, and Group Health and Life Insurance Trust Fund for FY 2011 to FY 2012.
The request calls for audits that must be completed within three months from receipt of notice to proceed for FY’11 and on or before Dec. 31, 2012 for FY’12.
Proposals must be received no later than 4:30 p.m. on Nov. 9 at the Northern Mariana Islands Retirement Fund office on Capital Hill, Saipan.
All interested investment consultants, actuaries, or auditors must contact Fund Administrator Richard Villagomez at administrator01@nmiretirement.com or request the RFP packet via fax at 670-664-8080.
Alternatively, interested parties may email nmirf.rfp@nmiretirement.com for the RFP packet for investment consultant and actuarial services.
