THE Retirement Fund is exploring the possibility of floating a $200 million bond to ensure that all government retirees are paid their benefits despite the economic slump and the government’s declining revenue collections.
Fund Board Chairman Vicente Camacho said they have asked Merrill Lynch—the Fund’s major financial consultant—to study the profitability of the proposal.
This is the first time that the Fund would float a bond should the plan push through.
“The reason for this is we want to make sure that all government retirees would be paid their benefits up to the last day of their life,” Camacho said. Kathleen Troy-Rucker, legal counsel of the Retirement Fund, said they have met with a bond consultant “but no decisions have been made yet. It’s something that we’re exploring.”
In a separate interview, Fund Administrator Karl T. Reyes said the proceeds of the $200 million bond float would be placed in various types of investments.
Reyes said the gains made from reinvesting the bond proceeds would help the Fund meet its financial obligations to an undetermined number of government employees whose contributions were not paid by the government. These are estimated to total over $300 million.
“Some Fund members did not contribute. The government did not also contribute for them. Put together, it’s called the unfunded liability. It’s over $300 million,” Reyes told Variety.
“We’re going to work out things through a payment obligation bond—if we float a bond, the proceeds will come to us and then we will invest it over a period of 10 to 20 years,” Reyes added.
The $200 million bond float proposal was brought to the attention of Fund board members during their regular meeting on Friday.
Merrill Lynch is expected to send representatives to the island to make a presentation before the board members.
