Aguon said certain government employees are seeking immediate refunds of their contributions.
He said the practice is not helping the overall financial condition of the pension agency.
“Certain individuals have been seeking the withdrawal of their employee contributions, only to almost immediately seek and receive reemployment with commonwealth government. Not only does this practice frustrates the investment purposes of the Retirement Fund Act…it violates the provisions of 1 CMC § 8356, as amended by Public Law 13-60,” he said in a memorandum circulated to different government agencies.
He said officials of the Retirement Fund agreed that a time-frame should be set to process claims for refunds to keep the fiscal stability of the agency.
“Accordingly, in order to aid in the fiscal stability of the investments of the Fund, facilitate an orderly administrative structure, and, research available agency records, all applications for refunds of employee’s contributions shall be processed no sooner than 90 days after receipt of the application for the refund,” he added.
According to Fund records, its withdrawals from its investments will reach over $45 million this fiscal year 2009, which ends in Sept.
As of this month, the Fund’s total investment assets totaled over $305 million.
“On the date of this letter, the Fund’s market value is approximately $305,707,864. Simple math yields that the Fund will cease to exist on or before 2016. To make these payments, the Fund has had to liquidate its invested funds, as the central government has failed to remit its amount owing,” Aguon told Gov. Benigno R. Fitial in a letter dated August 3.
The Fund won its damage and claims lawsuit against the CNMI government by default.
The court issued a ruling stating that the government owed the Fund more than $231 million.
In 2001, the Fund and the central government signed a memorandum of agreement to settle their dispute about the latter’s arrears.
The central government agreed to remit $500,000 per payroll to the Fund. However, the government failed to make timely payments.
“The truly tragic consequence of the administration’s failure to remit its $500,000 biweekly [obligation] and its failure to remit the actuarially determined employer contributions, is that nearly 3,000 registered retiree voters may very well have no visible means of support within the foreseeable future,” said Aguon.
“With virtually destitute consumers, having no funds for their daily subsistence, health care payments, car payments, nor for their children’s educations, the commonwealth’s economy may also collapse. It appears that the board of trustees will, nonetheless, do all within its power to avoid this catastrophe,” he added.
