Legislature warned vs Fund bills

NMI Retirement Fund board chair Joseph Reyes warned the Legislature against passing two retirement-related bills, saying it would incapacitate the retirement program.

“I caution the lawmakers against it. Make sure they are doing the right thing. It’s a scary move,” said Reyes.

The Fitial administration submitted twin bills to the Legislature last Friday, which aim to write off the $124 million unfunded liability of the Fund, and convert the existing defined benefit plan into a defined contribution plan, to do away with future government liabilities.

The proposal also asks the Fund to purchase $40 million government revenue bonds to fund the financially ailing Commonwealth Utilities Corp.

Part of the proposal is to suspend the government’s employer contribution to the Fund during the remainder of fiscal year 2006.

Likewise, the Fitial administration said in its fiscal year 2007 budget submission that it would no longer fund the group health insurance program, which is administered by the NMI Retirement Fund.

The administration proposes to spend only up to $193.5 million in FY 2007, which is $5 million less than its revised budget of $198.5 million, and $19.5 million less than the last enacted budget of $213 million.

“I appreciate the administration for its initiative to solve the problem. The intention is good, but I strongly suggest that these things not be rushed,” said Reyes.

He admitted, though, that the issue is beyond the agency’s control at this time.

“It’s in the hands now of our lawmakers. They will decide whether to reject it or not. I want to remind them that they, too, have a fiduciary responsibility over the government’s pension program,” he said.

$40 million

Reyes, who, together with other board members, met with Gov. Benigno R. Fitial Monday evening, said that there is a possibility for the proposed $40 million investment.

He said that based on the rules, the Fund can invest up to 15 percent of its investment assets in the local economy.

The Fund’s total assets in the stock market was pegged at $447 million as of March 31, 2006.

Right now, the Fund’s local investments totals about $13 million in housing and government building construction.

“Maybe there’s a possibility there. We have room for that [$40 million],” Reyes said.