One week left to bid for DC plan

Only few days are left before the RFP deadline for the government’s defined contribution plan but no company has submitted any proposal yet.

NMI Retirement Fund administrator Mark A. Aguon said the Request for Proposal for the plan’s third party administration will close on Nov. 29.

“It’s a big RFP so the companies take their time to prepare. I’m sure that whoever is serious will turn it over before the deadline,” said Aguon in an interview this week.

He said several companies have requested information from his office regarding the requirements.

“There’s a great interest,” he said.

Earlier this month, Aguon said that at least nine companies have inquired and picked up copies of the Request for Proposal for the plan’s TPA.

Aguon said all potential proposers have submitted questions to the Fund for clarification regarding the program, which takes effect on Jan. 1, 2007. He said the inquiries wanted to know how many people will transfer to the new program.

The administrator said there are less than 3,000 members of the existing defined benefit program who are eligible to transfer to the new plan. Even if they are eligible, though, there is no guarantee that they would all be shifting to the new program.

Eligible members are those who have less than 10 contributing years with the defined benefit plan.

The government currently is implementing a defined benefit program which entitles pension benefits to employees for life.

Defined contribution plan is cheaper for the government as it only gives away what the members have contributed.

The government aims to save millions from the implementation of the defined contribution plan, which would reduce its contribution rate to 4 percent from as high as 37 percent, and increase the employees’ contribution share to 10 percent from 6.5 percent.

Public Law 15-13, 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. The Fund’s RFP targets any “contract with a qualified private entity to provide record keeping, benefits payment, investment arrays, and other functions necessary for all aspects of a third party’s administration of the plan.”