Retirement Fund Administrator Mark Aguon reported to Gov. Benigno R. Fitial that the agency withdrew more than $10 million as of March 15 to meet pension obligation to retirees.
Aguon said the Retirement Fund’s investment portfolio has shrunk to $276.806 million.
“On the date of this letter, the Fund’s market value is approximately $276,806,153. Simple math yields that the Fund will cease to exist on or before 2015. To make these payments, the Fund has had to liquidate its invested funds, due to the central government’s failure to remit its owed amounts,” Aguon wrote to Fitial, a copy of which was also transmitted to the Legislature.
The Fund is supposed to be paid $500,000 per payroll under its memorandum of agreement with the central government signed in 2001.
But the Fund has not been paid regularly.
In 2006, a law was enacted allowing the central government to defer payments to the Fund for 12 months.
Aguon said the Fund’s board of trustees should have taken to court the government earlier to force it to pay its contributions for retired public servants and future retirees’ benefits.
“The government breaches the agreement and the board should not have waited more than three years to decide to sue the government. The long delay in seeking legal action against the government only compounded the problem,” he said.
“To use the invested funds under the guise that the Fund has no choice is irresponsible management and dereliction of duty to protect the Funds,” he added.
The Superior Court recently made a ruling in favor of the Fund.
Aguon told the governor his administration’s continued failure to remit contributions to the Fund will affect retirees and their families.
“The truly tragic consequence of your administration’s failure to remit its $500,000 biweekly and actuarially determined employer contributions is that over 2,000 registered retired voters who will have no visible means of support within the foreseeable future,” he said.
“With 2,000 virtually destitute consumers, having no funds for their daily subsistence, health care payments, car payments, nor for their children’s education, the commonwealth’s economy will collapse. Fortunately, the board will do all within its power to avoid this catastrophe,” he added.
