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Thursday, April 24, 2014

‘Fund’s transfer will likely mean it will be liquidated’

Among the options being considered by the Fitial administration for the beleaguered NMI Retirement Fund is its dissolution and transfer of functions to the Department of Finance, which, according to its administrator Richard Villagomez, means the pension program will be liquidated and benefits will end.

“Dissolving the board and transferring the functions of the Fund to the Department of Finance does not fix the under-funding problem nor will it protect the benefits of the members. The idea of changing an entity’s legal structure as being the solution to a problem is the same story over again, and it doesn’t work unless the problem itself is structural,” he told Saipan Tribune yesterday.

In reality, this might be little more than a distraction to take the focus off of the real problem, he added.

Villagomez also cited the operations of the Fund, where he is in charge of day-to-day operations. He described it as a complex system that requires full-time operation. Cutting checks, for example, is just a fraction of what they do, though it requires extreme attention to detail.

“When managing the payment of millions of dollars, you must have checks-and-balance systems in place to maximize accuracy and minimize risks,” he said.

Examples of checks-and-balance systems in place include document management, accounting systems, data processing and file maintenance, in-house legal counsels, outside counsels, investment consulting firm, actuarial firm, and administrative appeals process for members.

If the program’s dissolution or transfer pushes though, “who will maintain the accounting ledgers, process retirement applications, survivors’ benefits, refunds, audit the files to ensure beneficiaries are getting what they are entitled to? What will happen to the members’ rights to an administrative appeals process and who will hear these cases? Who will provide the legal advice and take legal action to protect the trust?”

Skeleton crew

According to Villagomez, the Fund is operating on a skeleton crew and has been doing so for several years now to minimize costs.

“We’ve managed to maintain personnel who are dedicated professionals committed to continue providing services that directly benefit our members. Very few people want to work at the Fund because the pressure is high and constant everyday,” he revealed.

He also pointed out the need for highly qualified investment consultants to provide advice on how and where it is most appropriate to invest tens of millions of dollars. The same goes in hiring an actuary who will audit and document the obligations to members and determine the amount of money needed to meet current and future obligations.

“My point is, it takes a whole team that is dedicated to manage the parts of the Fund and that team must be maintained for operations to function,” he added.

Dismissal disappointing

The court’s dismissal of the Fund’s bankruptcy petition was “very disappointing,” he said, but he praised Judge Robert Faris for candidly sharing his views on the Fund’s situation.

The judge, in his words, stated that “the dismissal was not a victory for anyone, but a disaster.” The judge’s description of the Commonwealth’s “shameful” treatment of the Fund and its members “cannot be overstated.”

When asked if they plan to appeal the court’s decision, Villagomez said the Fund is “weighing its options on how to best protect the Fund and its members.”

The administrator also expressed disappointment with some people whom he described as “giving false hopes” to Fund members. Many of the ideas being tossed around to help the pension program require a change in the law, he said, but most of all a change in attitude among those in positions of authority.

“Many of the ideas we’ve proposed have met resistance at every turn,” he disclosed.

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