In Rep. Janet Maratita’s view, the tentatively approved NMI Retirement settlement agreement is “unconstitutional, illegal, and a breach of fiduciary duty” to the CNMI people and the Fund.
This came even as Gov. Eloy S. Inos pointed out anew that those who opt out of the settlement class won’t have the same guaranteed minimum payment of 75 percent of their pension.
Maratita (Ind-Saipan) wrote a two-page letter to the governor on Friday, opposing the settlement deal and offering recommendations that she thinks would be “fair” to affected Fund members.
“Your agreement to commit the Commonwealth to pay millions of dollars for an indefinite period of time without regard to ‘anticipated revenues’ is unconstitutional and illegal, at best,” Maratita said in her letter.
The governor said that without the settlement deal that guarantees minimum pension payment, the Fund would cease to exist much faster than earlier anticipated.
Restoration of the deferred 25-percent pension will depend on the availability of funds that the Legislature will appropriate based on new revenue-generating measures and an improved economy.
Maratita said the governor is constitutionally and statutorily mandated to submit to the Legislature a “proposed annual balanced budget” that describes the CNMI’s anticipated revenues and recommended expenditures.
Maratita also said it is a breach of the governor’s fiduciary duty to agree to cut retirees’ pension by 25 percent “without a corresponding cut from the CNMI budget.”
“It is quite disappointing that the defined benefit members have no option but to sign a waiver of their vested interest due them, in order that they get their contribution. I do not blame them for such action as I would do the same considering the financial hardship, desperation, and uncertainty of their contribution funds,” Maratita told Inos.
The governor continues to ramp up support for the settlement agreement, which he describes as the best that the CNMI government could enter into considering the government’s financial constraints.
Inos said the only thing certain at this point is the guaranteed minimum payment of at least 75 percent of class members’ benefits.
“The whole thing with the settlement is that it’s a class action and it’s supposed to benefit all members of that class so if a Retirement Fund member is not part of the class, they won’t be able to get the benefits of the settlement,” Inos said in an interview at a village sign unveiling ceremony on Friday.
Maratita is proposing to the governor at least eight recommendations, including not cutting the pensions of those receiving $15,000 and below.
It remains to be seen whether Maratita’s position on the settlement deal would gain traction.
The administration has been pointing out that if the people who opt out from the settlement class have benefits equal to or exceeding 10 percent of the full benefits payable in fiscal year 2014, the settlement deal will be void.
Moreover, if the U.S. District Court does not grant final approval or if the settlement deal fails, the parties will return to litigation and proceed as though there were never a settlement agreement.
Maratita begs to differ, asserting that the 25 percent cut should not be across the board. She said if parties agreed and the court approves, “then I believe it’s doable.”
She reiterated her earlier call for a 25-percent cut in the government “so that everyone shares the burden and enjoys the benefits alike.” Any realized savings from the corresponding cuts should be allocated to the Retirement Fund, she said.
“If there is any increase in anticipated revenues in subsequent fiscal years, a fixed percentage should be given to the Retirement Fund. Any increases in the CNMI budget should be proportionately allocated so that the Retirement fund contributions should also be increased,” she said.
Maratita said withdrawals by active and inactive members must be given interest.
She also called for the restoration of the Fund board of trustees to cut costs of the current trustee ad litem.
Maratita said the CNMI’s income from private entities in which the CNMI holds shares, including UMDA and Rota Cable TV, for example, should be allocated to pay the Fund.
In townhall meetings he has been holding and will hold on Rota and Tinian, Inos has been trying to get people to understand the nature and impact of the settlement agreement.
“Other things are happening with respect to the settlement. Beginning Aug. 20, a formal notice to the retirees who do not want to stay within the settlement fund may opt out. That’s the time in which they will be allowed to do the opt out. Of course everything must be done by Sept. 30 at which time the U.S. District Court judge is expected to [make] a final approval on the settlement and after which certain things will happen including the release and payment of the balance of the withdrawals for the [Public Law] 17-82 and then of course everything will kick in Oct. 1,” the governor said in an interview.
The outreach continues this week including a townhall meeting on Rota on Tuesday and on Tinian on Thursday. The governor may hold another townhall meeting on Saipan, specifically in Kagman where there is a large concentration of retirees and other Fund members.