Inos appeared in Superior Court yesterday along with other administration officials in connection with the hearing on the Retirement Fund’s lawsuit against the central government over its nonpayment of employer contributions.
The pension agency has won its case against the CNMI by default and the court is now determining how much money is owed by the government to the Retirement Fund.
Inos said even if the court rules that the CNMI government pays the Fund the actuarial rate, it won’t happen because there’s barely enough left in the budget to even cover personnel expenses.
Under Public Law 16-32 or the $148 million Fiscal Year 2009 budget, the central government is mandated to pay just 11 percent in employer contributions.
Inos said 11 percent is the rate that the government can pay at this time.
“The government cannot afford to pay 36 percent right now even if we’ve taken a drastic move such as reducing significantly our personnel,” he told the Variety.
“We’re paying the 11 percent right now and that’s what we’re budgeted for. We realize that that would not generate the amount of money that they are asking for but the key is to ensure that retirees get their pensions [on time],” he added.
In a separate interview, Retirement Fund Administrator Mark Aguon said his office wants the government to pay whatever is owed in terms of unpaid contributions.
Based on its record, the Fund is owed about $156 million in unpaid contributions, excluding the 25 percent late penalty charge.
If the penalty charge is added, the arrears will reach close to $200 million, excluding the unfunded liabilities for the defined benefit program estimated at over $500 million.
“They owe us about $156 million excluding the 25 percent penalty. That does not include the unfunded liability,” said Aguon.
He said he looks forward to the next hearing in June to enlighten the court about the negative impact of the government’s failure to timely remit its contributions.
Close to 3,000 retirees and their families rely on their monthly pension.
The Fund estimates its retirement expenses this year to reach more than $71 million, over $56 million of which are solely for pensions.
The central government hasn’t been regularly paying its contributions since Gov. Pedro P. Tenorio’s third administration.
During the Babauta administration, the Fund signed a memorandum of understanding with the central government agreeing to get only $500,000 in pension contributions every pay period.
However, the agreement wasn’t fulfilled and in FY 2006, the Fitial administration and the Legislature enacted a law suspending its payments for 12 months.
The Fund filed the lawsuit after it was forced to dip into its investment portfolio to cover shortfalls in pension payments.
Remittances from the central government and its autonomous agencies are supposed to be rolled over to cover the monthly pension of retirees.
