The board of trustees believes the withdrawals will continue until the government’s finances improve.
The Fund said it started making withdrawals in June 2005 against the advice of its investment consultants because the government wasn’t able to timely remit its contributions.
These contributions are used to fund pension checks and whatever is left is invested in stocks and other investment opportunities.
The Fund disburses over $5 million in pension checks every month.
In 2007, the Fund’s assets totaled about $500 million. This year, this figure went down to about $300 million mainly due to the global stock market decline and the continued withdrawals.
“The Retirement Fund has already fallen below a level of 45 percent actuarial funding at the conclusion of fiscal year 2008 and has not reached a level of total funded liability of 60 percent since fiscal year 2000,” states Resolution 09-002 that the board of trustees adopted yesterday.
The resolution prohibits retirees from adding on additional beneficiaries arising through adoption for purposes of survivor benefits starting Sept. 1, 2009.
This new directive requires the Fund management and staff to stop processing any amendments or additions to originally filed applications for retirement of public servants.
During their discussion, the trustees said the measure is necessary to address criticisms that the Fund was partially responsible for its financial mess.
A court ruling stated that the Fund “has been too generous in allowing the grandchildren and great grandchildren of the first generation of retirees to obtain benefits long after the original retiree has died. The Fund was designed to provide for retirees and their spouses. It is assumed that when a person retires that his or her children are already grown up. The Fund is not for the children of the retirees’ children. This is unfair to future retirees who could possibly see the original retiree’s family avail themselves of the Fund for over 18 years.”
