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Fund to pursue COLA payments vs govt
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Posted on Nov 23 2006
The Guam government was ordered this week to pay $123 million in cost of living allowance to its retirees and the NMI Retirement Fund is poised to pursue the same entitlements with the CNMI government.
“We will absolutely pursue this with the government. We have not taken this out from our books,” said Fund administrator Mark A. Aguon in an interview Wednesday.
He said that for 2006 alone, unpaid COLA amounts to over $1 million.
The CNMI government retirees have not received their COLA payments for 2006.
The COLA obligation was never paid by the central government for several years except in 2005 when the Department of Finance issued for the first time checks worth over $800,000 to pay COLA.
Before this, the Fund was using its own money to pay off the COLA on the belief that it would be reimbursed by the central government.
According to the Fund, the government has never reimbursed this funding.
This prompted the Fund board to decide in 2005 not to use any more of its own funds to meet the COLA obligations.
Meantime, the fiscal year 2007 budget provides for $808,000 funding to pay the COLA of eligible retirees.
This funding level, however, would be insufficient since the COLA rate rose to 4.1 percent this year from 2.7 percent the previous year. This increase would translate to about $1.3 million in COLA payment a year.
The 4.1 percent rate is based on the Social Security rate. The NMI government is required by law to follow the Social Security rate for COLA and not to go below 2 percent.
Retirees who are 55 years and older are eligible to receive COLA.
There are over 2,000 government retirees in the CNMI.
The Guam COLA payment was determined by the Guam Superior Court in a class suit decision this week.
Guam has some 4,000 government retirees.
