Fund Chairman Juan T. Guerrero said the agency will no longer process refunds of employee contributions pursuant to Public Law 15-98 amid findings that it will further destabilize the local pension system’s financial situation.
Based on its records, the Fund released over $40.279 million as of end-May this year to comply with P.L. 15-98, which allows public servants vested in the pension system to withdraw their contributions if they have reached 15 years of service.
Guerrero said the Employee Retirement Income Security Act provides that any pension plan may not make lump sum or other accelerated payments and provides for the cessation of benefit accruals under a plan that is less than 60 percent funded as well as the cessation of certain contingent benefit payments under the plan.
The Fund said only 39 percent of its actuarial liability is funded.
On June 29, the Superior Court ruled that the CNMI government owed the Fund $231.647 million and must pay a 16 percent employer contribution rate.
This ruling is expected to further worsen the cash-strapped government’s financial condition.
The CNMI government is the main employer of local residents.
