A new proposal to reform the NMI Retirement Fund modifies or ends what lawmakers call certain “generous” benefits other than the regular retirement annuity, including those involving cost-of-living allowance, annuities of members’ children and spouses, and independent government contractors.
These are in addition to the proposed 25-percent deferment or temporary cut in retirees’ pension under the tentatively approved settlement agreement in the Betty Johnson lawsuit.
For example, COLA increases only if the Retirement Fund is “50 percent or more funded as actuarially determined by the board.”
The proposal also ends payments to certain former Fund board of trustees’ members who have not contributed to the Fund.
“It’s not yet too late to reform the Retirement Fund so that it would still be there for years to come, and while a settlement is still ongoing. The Fund exists for those who are contributing members. We should remove the excess fat from the system,” House Special Committee on Retirement Fund chair Rep. Mario Taitano (Ind-Saipan) told Saipan Tribune on Friday.
Retirement benefits of retirees retained as independent contractors for the government and are using government offices and other resources would be suspended during their contract term.
“Those retirees who are supposed to be independent contractors and are supposed to have their own offices or use their own resources but are instead using government offices from morning to afternoon and using government office supplies are circumventing the anti-double dipping law in my view,” Taitano added.
The proposal also redefines the term “child” for the purposes of receiving Fund benefits to mean “unmarried child who is recognized natural or biological child of the deceased member and must be living with and supported by the deceased member. Such child must be less than 18 years of age.”
Taitano’s House Bill 18-119, co-sponsored by four other lawmakers, also reinstates the Fund board of trustees.
Press secretary Angel Demapan, when asked for comment yesterday, said, “There are already enough members to constitute a quorum, but they have yet to be duly organized due to the court’s appointment of a trustee ad litem and the pending final approval of the settlement.”
Demapan also said the administration would like to see the bill first.
Taitano said the bill ensures that all governor’s appointees shall either be active or retired Fund members.
Effective Jan. 1, 2015, special retirement and annuity shall no longer be available to new governors and lieutenant governors, the bill states.
It says any former governor or former lieutenant governor who is entitled to receive a service retirement annuity shall elect to receive either the service retirement annuity or the special retirement annuity.
Taitano’s proposal also says any former governor who was also a former lieutenant governor or vice versa shall be entitled to receive the higher of the two special annuity amount, “but not both.”
It also says the service retirement or the special retirement annuity of any former governor or former lieutenant governor who is reelected to public office or reemployed by the government ceases during such term of office or reemployment.
No surviving spouse or children’s benefits are allowed under the special retirement annuity upon the death of the recipient, the bill says.
Demapan said as the administration understands it, “there is already no governor and lieutenant governor’s retirement annuity beyond those of former governor [Juan] Babauta and former lieutenant governor [Diego] Benavente.”
“This special annuity has always been administered by Finance,” he said.
The bill also stops the assessment of interest of penalty on the amount of judgment that the Superior Court has set on the delinquent or deficient employer’s contributions.
House Ways and Means Committee chair Rep. Tony Sablan (Ind-Saipan), floor leader Ralph Demapan (Cov-Saipan), and Reps. Ray Tebuteb (Ind-Saipan) and Christopher Leon Guerrero (Cov-Saipan) co-sponsored the bill, up for formal introduction this week.
“Let’s face it. The Retirement Fund is broke. Why do we need to continue giving out generous benefits? Why don’t we stop these other benefits so that there would still be enough for everyone for a longer period of time?” Taitano said, referring to benefits received by surviving spouses and children of Fund members long before the members’ death, among other things.
Lawmakers said the Fund is “so generous” in its payments of retirement benefits, ultimately leading to the pension agency’s demise.
“As the bill says, it is incumbent upon lawmakers to amend or repeal certain provisions of the Retirement Act to save or prolong the Fund. Certain provisions have also been wrongfully interpreted by the Fund and need clarification in their applications,” Taitano said.
The bill also redefines the term “member” to mean a class I member and class II member.
It says a member who retires or ends employment remains a member so long as he or she retains a right to any benefits from the Fund.
The bill also says effective Jan. 1, 2014, upon complete separation from service or while still in service, any active or inactive vested member—or those who have 10 or more years of membership service—shall no longer be allowed to refund his or her contributions from the Fund.
HB 18-119 is in addition to bills still pending at the Legislature that seek to generate new revenues to fund the pension agency such as legalizing casino gaming on Saipan and allowing electronic gaming at hotels.
One other recent bill, HB 18-118 by floor leader Ralph Demapan (Cov-Saipan), seeks to increase the cigarette tax from $2 to $4 a pack. The bill seeks to generate revenues to fund the CNMI government’s share of the Group Health and Life Insurance benefits, estimated at $7 million to $9 million, in fiscal year 2014.