As of March, the Retirement Fund’s investment portfolio was valued at just over $276 million due to the global recession.
The Fund’s board of trustees reported to the Legislature that it anticipates withdrawing over $55 million more in FY 2010 to cover the shortfall in pension funds because of the government’s failure to pay its contributions.
This will leave the Retirement Fund with just about $221 million.
“Any revenue sources not collected will automatically increase the risk of losing our ability to manage the investments in any prudent manner. Therefore, it is very important that both employer and employee contributions are remitted to the Fund to avoid the risk of depletion and eventual nonpayment of pension costs to current and future retirees,” wrote Juan T. Guerrero, the chairman of the Retirement Fund, in the cover letter for the agency’s $76 million draft operating budget submitted to the Legislature last week.
Of the figure, over $71 million are earmarked for pension and other retirement benefits of government employees and the rest goes to personnel and the operations expenses of the agency.
Guerrero said the government’s continued failure to pay its dues for the retirement benefits of its employees enrolled under the defined benefit program continues to affect their operations.
“[As of] Dec. 31, 2008, the combined total unpaid employer’s contributions from the CNMI government and autonomous agencies were approximately $209 million,” said Guerrero.
The CNMI government has not been regularly remitting its pension contributions since the late 1990s.
In FY 2006, the Fund didn’t receive any penny because of a law suspending the government’s contributions during the period.
For FY 2010, the projected direct CNMI employer contributions to the Retirement Fund will reach only $5.822 million; employee contributions, $4.102 million; autonomous employer contributions, $8.01 million; CNMI appropriations for cost of living allowance and special annuity, $800,814; and other revenue sources, $1.683 million.
The total pension of retirees for FY 2010 is projected to cost $54.651 million.
The Fund also has to pay $1.819 million in disability benefits; $5.79 million in survivors benefits; a $150,762 special annuity for retired governors and lt. governors; $55,770 in lump sum death benefits; $650,052 in COLA; $3.179 million for health insurance; and $5.618 million for refund of contributions.
More than 2,500 families rely on the CNMI pension program even as more public servants are anticipated to retire this year.
