Over $35M allotted for FY07 pensions

Amid the central government’s failure to remit funds, the NMI Retirement Fund board of trustees has approved to take out over $35 million in investments money to pay off pensions for Fiscal Year 2007.

“The board already approved that amount. We are cashing out our investment. We have no option if the government does not pay us,”

Fund administrator Mark Aguon said in an interview yesterday.

He said that withdrawal of money takes place only when needed, which means twice a month for the 15th and 30th pension payment. Each withdrawal also requires concurrence from the board.

“Although they’ve approved the amount, it still requires their concurrence every time we take it for pension,” said Aguon.

This practice has been going on since April this year when the Executive Branch stopped remitting its employer contributions to the Fund, which is at 24 percent.

The Fund releases at least $5 million a month for pension obligations. The amount varies, depending on the number of beneficiaries and the obligations involved. For fiscal year 2005 alone, the pension payment reached $60 million.

Tthe Fund has so far used up some $25 million of its investments money for pension payments, including the $14.4 million reported reprogramming this year.

Aguon said the Fund initially “set aside” $12 million from investments in 2003, bringing the total figure to some $26 million. This money was placed in a special account for emergency purposes.

Aguon said “most” of this reserved money was spent in 2006. To date, only about $1.5 million is left in the special account.

For FY 2007, Aguon said the Fund would not place the over $35 million in the emergency account. He said the Fund would just take the needed money directly from any of its money managers when needed. This way, the money would still earn interests until it is taken out.

Aguon said the emergency account was also put in short-term investments.

“This time, we decided to go another route. We’ll continue to keep the money with the money managers. It’s up to us where and when to take it,” he said.

The non-remittance of the government’s employer contribution was made official through the enactment of Public Law 15-15 last June. The law suspends the central government’s employer contribution for 18 months or up to the end of fiscal year 2007.