According to the CRA, they will be holding an election of new officers.
Aside from the election, retirees will decide whether to support or not Sapuro Rayphand’s lawsuit in federal court.
Earlier Rayphand, who has standing, made the request for a removal of the case Retirement Fund versus the CNMI Government et. al from the Superior Court.
During last week’s meeting, CRA clarified its position that it did not authorize the removal of the lawsuit; however, it also made clear its support behind a federal lawsuit.
It also stated that Rayphand requested the removal of the lawsuit pro se or on his own and he personally requested Atty. Bruce Jorgensen to assist him in this endeavor.
The CRA board, through the general membership meeting, said it seeks the approval and endorsement of the general membership before it could cast its support behind the federal lawsuit.
As well, the board will seek to clarify with the retirees whether the group will get the services of an attorney. It, however, denied that Atty. Bruce Jorgensen represented them as a group.
The group is also going to present before the retirees options with regard to reduction of benefits.
CRA is going to obtain the consensus of the retirees the benefits cuts they will support or suggest to the Court.
Among the options floated were to cut survivor benefits and or disability pensions, to remove 3 percent bonus to legislators, and to remove cost of living allowance.
Another option suggested is to set the pension cap at $40,000.
Other options may include changing the law to allow all people to cash out their employee’s share, reducing pensions between $20,000 to $40,000 per year by 25 percent, switching the Retirement Fund to a guaranteed annuity company, maintaining no cuts on pensions on $20,000.
The CRA may also confer with the retirees whether to request Judge Govendo to reconsider his order creating a $100 million in reserve account for active employees in the event of the Fund’s demise rather than for the rehabilitation or conservation or collection on the judgment he ordered.
However, benefits cuts could be made under a receivership.
Receivership
Sources told Variety that a receivership will benefit the Fund because the receiver will be empowered to marshal and handle the assets and liabilities.
The sources said the problem is the payout of the pension funds.
“The receiver can recommend a plan to conserve the assets and reduce liabilities or stop the bleeding — for now — that may be a reduction in benefits across the board such as 50 percent,” sources said.
They also told Variety that the receiver can also recommend a plan to either liquidate the Fund or to conserve the Fund.
Asked who can initiate a receivership, sources said, “An interested party may be able to initiate a receivership.”
On Saipan, the most recent receivership action in the CNMI was the Bank of Saipan case in which Tony Muna was appointed receiver and he presented a plan to rehabilitate the Bank.
According to Variety sources, payouts or withdrawals including government depositors were limited to 10 percent per month and the loans were restructured or rehabilitated.
Under receivership, the receiver had complete control of the bank. Ultimately the bank was rescued and receivership lifted.
On the lawsuit of the Fund versus the CNMI government, the sources claim that the Superior Court has taken the view that the Court should be and must be able to enforce its judgments.
“The District Court has to have jurisdiction either under a federal statute or diversity of citizenship,” sources said.
However, they pointed out that it is not clear and remains under dispute whether the district court under a federal statute has jurisdiction since the CNMI Retirement Fund is under a local law.
Further, they offered their opinion that the Superior Court will not order the dissolution of the Fund; however, they believe it can transfer the over $300 million liability from the Fund to the central government and direct the Secretary of Finance to make the allocation to satisfy judgment.
They told Variety that the Secretary of Finance will be dragged into court and will be under great pressure to move that taxes imposed to raise revenue to pay a judgment.
“The liability is that of the central government and it is a property right of the retirees,” sources told Variety.
They added that politicians can claim they can’t settle the judgment; however, the only way to generate revenues to make the payment is to raise taxes. This has never been done ever.
