Fund expects to have DCP administrator by December

The government expects to hire a third party administrator for the defined contribution retirement plan by December this year.

The new mandatory government retirement program takes effect on Jan. 1, 2007.

“Hopefully, we’ll have one in December. We have to have somebody on board by Jan. 1,” said NMI Retirement Fund administrator Mark Aguon.

He said the Request for Proposal for a third party administrator or TPA will be issued later this month. It will be out for 30 days. Aguon said the RFP will be published in Pension and Investment magazine, which is read by industry leaders.

Public Law 15-13, also known as the Defined Contribution Plan Act of 2006, requires all new CNMI government employees hired on or after Jan. 1, 2007, to be enrolled in the defined contribution retirement plan.

It also gives some existing employees of the defined benefit plan the option to convert to the new system.

The government looks to save millions from the implementation of the defined contribution plan, which would reduce its contribution rate to 4 percent and increase the employees’ contribution share at 10 percent.

The government’s current share amounts to 24 percent. At present, Class I members pay 6.5 percent while Class II members pay 9 percent of their compensation.

Aguon said total funding for the defined contribution plan will be determined after the awarding of a contract to a TPA.

“Once we get the TPA, we can discuss how much it’s going to cost us. We aim to get the most cost-efficient one,” he said.

Former Fund officials earlier criticized the defined contribution law as lacking in funding.

Former Fund board chair Joseph Reyes said the law does not appropriate funds to implement the program. Reyes said that the new law could not be funded from the existing defined benefit plan’s money.

At it is, personnel employed at the Fund work for the defined benefit retirement program.

When asked, Aguon said that the TPA will be the “main administrator” of the new program. “As Fund administrator, I am merely a conduit,” he said.

He said it is the reason why the RFP would specifically ask interested companies if they would be willing to open an office in the CNMI.

“The TPA will have its own office, [its] own staff to handle the program. It’s the TPA that’s in-charge of the day-to-day operations,” said Aguon.