Teno backs plans to remove retirement benefits

Describing the existing retirement benefits as luxurious, Gov. Pedro P. Tenorio yesterday threw his full support to plans by the Legislature to cut some of the perks that will be extended to future government employees in order to bring down the government’s liability to the Retirement Fund.

Key members of the Legislature are drafting a measure that will seek to eliminate retirement benefits, in swift reaction to help the financially-troubled administration reduce its growing unpaid contributions.

Because of serious cash flow, the government has accumulated $21 million in unpaid contribution, which represents the employer’s share for its close to 5,000 employees.

“The financial condition that we are facing shows that we can no longer continue to give all types of luxurious privilege to employees,” the governor told reporters.

One area that is facing elimination is a law that includes overtime pay in the computation of the regular salary, which is the basis for determining the base for the retirement pension. For example, an employee whose annual salary is between $20,000 to $25,000 will likely receive retirement benefits ranging from $50,000 to $60,000 if overtime pay is factored in.

Tenorio underscored the need to correct the situation to prevent the coffers from further bleeding, especially at this time when revenue collections continue to fall.

The proposed legislation is also part of the plan to overhaul the retirement system in the Commonwealth, which over the years has provided generous benefits to retirees, including a lumpsum bonus equivalent to 30 percent of their salary. There is also an impending plan to suspend the retirement bonus due to funding problem.

Officials of the Retirement Fund and the governor’s finance advisers are still finalizing details of a payment plan to settle the government’s back contributions.

The other day, the governor moved to ease worries of retirees over possible delay in the their monthly pension, turning over a check worth over $200,000 to the Retirement Fund as partial payment for back contribution. Another $1.5 million will be paid to the retirement office in May.

Every month the government has to come up with approximately $850,000 in contribution money against employees share of $280,000. But the Retirement Fund spends over $2 million monthly for the benefits of retirees, or close to $30 million annually.

There are about 5,000 government employees who are active members of the Retirement Fund and 1,200 retirees under pension.