Arnold I. Palacios
THE CNMI government’s voluntary remittance of 25% of the retirees’ pension to the NMI Settlement Fund will be suspended beginning April 15, 2024, Gov. Arnold I. Palacios said in a letter to Trustee Joyce C.H, Tang on Thursday.
He said the House of Representatives recently passed House Bill 23-104, identifying $5.2 million to fund the 25% payment, but it is still pending in the Senate.
Palacios said the direct appropriation will allow the 25% payment to last until Aug. 31, 2024.
On Friday, Senate President Edith Deleon Guerrero informed members that they will hold a special session on Monday, April 8, at 1 p.m.
She said H.B. 23-104 is with the Senate Fiscal Affairs Committee. “We certainly do not want the retirees’ pension to be diminished hence our ongoing efforts on legal and financial due diligence,” she added.
She said the Senate committee is also reviewing Public Law 5-37 and a memorandum of agreement that governs Commonwealth Economic Development Authority dividends. CEDA is the funding source of H.B. 23-104.
P.L. 5-37, for its part, aims to “authorize an irrevocable trust fund into which Covenant Capital Development Funds will be deposited so as to provide security for the payment of principal, premium and interest on revenue and non-revenue producing project to Bondholders of the Commonwealth Development Authority [CEDA’s predecessor] Adjustable Rate Revenue Bonds (Capital Improvement Projects) Series 1986A Bonds and Series 19868 Bonds.”
Deleon Guerrero said they are waiting for a legal opinion and a funding liquidity certification, “which is just as important.”
Limited
Palacios said his reprogramming authority is limited to the executive branch and any further reprogramming for the retirees’ 25% “will place other critical obligations in jeopardy.”
“In light of these limitations and pending appropriations, the 25% pension payments to retirees will be suspended beginning April 15, 2024, until further notice,” the governor said.
“It is without question that our retirees are vulnerable and important stakeholder in the prosperity and well-being of our community,” Palacios said. “I will continue to work with the Legislature to swiftly enact pending legislation that will both promote the livelihood of retirees as well as protect the critical services upon which our entire community depends.”
Former Rep. Mario Taitano, a retiree, said he hopes the Seante would act swiftly on H.B. 23-104 “so nobody would suffer come April 15.”
Taitano also said that the Legislature should look into the investment portfolio of the Settlement Fund.
In her Oct. 2023 report to the federal court, Trustee Joyce C.H. Tang said the Fund “has approximately $118 million in investments and cash, 98% of which is invested, albeit in a much stronger position.” (https://www.nmisf.com)
The Fund was created by the federal court as part of a settlement agreement with the CNMI government, which was sued by a retiree for its failure to make the required payments to the NMI Retirement Fund.
Under the settlement agreement, the CNMI government must pay the retirees 75% of their benefits.
According to an actuarial valuation prepared in 2022 by the Settlement Fund’s consultant, Milliman Inc., the CNMI government must pay $34 million in fiscal year 2024, $33 million in FY 2025 and $32 million in FY 2026.
These figures do not include the retirees’ 25% benefit, which amounts to $14 million to $15 million annually.
