“The plan is working well, though the market downturn has reduced the holdings of most individual investors,” said Reyes in an e-mail.
Gov. Benigno R. Fitial signed Public Law 15-13 in 2006 to close membership to the Defined Benefit plan.
The law took effect in 2007 and since then, all new hires will automatically become DC plan members.
Although membership to the DC plan is increasing, the administration said it doesn’t mean they are new hires because DB plan holders have the option to transfer to the DC plan.
It was not immediately known how many DB plan holders have actually transferred to the DC plan.
The government employs about 4,000 people.
With the transfer of more DB members to the more self-sustaining DC plan, the administration said future liabilities of the Retirement Fund to retirees were reduced by over $120 million.
The Fund’s liabilities to current and future retirees stand at $879 million from $1 billion a few years ago.
The DC plan mainly generates resources from employees’ contributions which are then invested in the international stock market and other investment options.
The government’s share to sustain the DC plan is less than 5 percent of the members’ premium.
The DB plan, in contrast, requires the government to pay an employer contribution rate of 37.39 percent.
