The Fitial administration could find itself involved in a new legal battle following reports that the newly enacted pension reform act, or Public Law 17-82, is likely to be challenged in court.
Possible litigation against PL 17-82 received overwhelming support from retirees who attended Friday's meeting called by the Commonwealth Retirees Association.
NMI Retirement Fund counsel Carolyn Kern and one of the counsels for Betty Johnson, Stephen C. Woodruff, disclosed to Saipan Tribune, in separate interviews, that their clients are both evaluating the option, but no concrete decision has been made yet.
“The decision [to challenge the law] is still being considered. Although the counsel for [Betty] Johnson indicated to the court [this morning] that they would likely to challenge the law, we would have to see what they would file and let's see if we have same arguments. But definitely, we will consider if we will join them or if we will have a separate motion,” Kern told Saipan Tribune after almost an hourlong meeting Friday of nearly 50 retirees at the Pedro P. Tenorio Multi-Purpose Center.
Kern, during the meeting, described the new law as complex and indicated provisions and languages that may not be fully understood by the government. Among these is the law's mandate to provide the Fund $70 million yearly to pay for retirees' pension and the cost of the program operation. The law, which authorizes the withdrawal of members' contributions, was also described as disadvantageous to the program which would lose three main sources of funds: employee contribution, employer contribution, and the opportunity for investment returns. These, she said, are just the many disadvantageous, if not unclear provisions of the law.
When asked how soon decision to challenge the law should come in, Kern admitted that the challenge, if decided, must be best brought before the first refund checks are released which is within 30 days after the application, excluding the review period and approval which may be up to five days.
According to acting Fund administrator Lillian Pangelinan, there are a total of 1,229 members who filed refund applications in the first week they opened the application. From the figure, no application has been approved as the Fund is in still in the stage of accepting and reviewing applications.
It was revealed Friday that Fund assets is estimated at $223 million of which only $110 million can be used to pay for pension of retirees after the court set aside $113 million for active members. The refunds will be sourced from this court set-aside amount and cannot be used for any purposes such as retirees' pension. For active members, they said there's no need to rush because no deadline is set for refunds.
“With that amount of money for retirees, how long are we going to receive our pension? Should we prepare for six months or one year? Do we have data on this? Because I cannot afford another surprise!” stated retiree Maggie Sablan during the meeting.
Pangelinan, for her part, cited the actuarial data of the Fund that indicated that without infusing additional monies into the portfolio, “life of the Fund is only up to July 2014” and this may last sooner than expected depending on the investment earnings.
CRA board chair Larry Cabrera, for his part, said that this is where the floating of pension obligation bond can come in and rescue the retirement program. In November election, he encouraged members and their families to support the POB legislative initiative that will give way for the “first step” in floating the bond.
Cabrera admitted that many retirees are opposed to the POB, which makes the idea “hard to sell” among voters. Among these retirees is Sapuro Rayphand, who emphasized to members the need for “adequate” information on the issue.
Meantime, retiree Agnes McPhetres campaigned against lawmakers who have been continuously failing the retirees.
She described the retirees as victims who are being penalized, instead of the culprits.
For Woodruff, besides the issue of challenging the new law, retirees have other “hopes” which is on Fund trustee ad litem Joseph C. Razzano, who has the responsibility to make decision for the Fund with respect to any litigation affecting the agency. Woodruff said the Fund can join in his client's amended complaint in federal court. In the past three years, the counsel said the Fund showed no interest in moving the case forward, and hoping the ad litem will make a right direction for the sake of retirees.
Woodruff attended Friday's CRA meeting to “hear and observe” the retirees and their views.
In answering numerous queries from retirees on Friday, the Fund's in-house counsel clarified that the governor's executive order that declared emergency and transfer the Fund operation to the finance department is not in effect, but not completely dead at this time.
The court she explained has only temporary stopped its implementation but fate of the E.O. will be known after the injunction hearing on Oct. 2.
Kern also briefed the CRA members on the limited powers of the Fund trustee ad litem, the timeframe of his appointment, and the things he performed in the first week of his duty. Razzano was not able to attend the CRA meeting and is presently in Guam.
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