Cut in retirement contribution for excepted service employees eyed • Rep. Oscar Babauta says move could be unconstitutional

Legislators have proposed eliminating retirement contribution of government employees under excepted service contract as part of the efforts to reduce obligation of the Commonwealth to the Retirement Fund amid the current financial crisis.

If the plan pushes through, it will remove the 24 percent share of the government for every six percent contribution of these contractual employees who get a refund of the entire amount upon reaching the 10th year of public service. The government portion, however, remains with the Retirement Fund.

But Rep. Oscar M. Babauta yesterday cautioned the Legislature against the move, saying they have to weigh constitutional provisions that ensure retirement benefits to civil service employees as well as those under special contracts.

“We have to be cognizant of the fact that we have to comply with the Constitution that investment of an individual to the Retirement Fund should not be diminished,” he said in an interview.

The proposal was broached after a meeting the other day between Gov. Pedro P. Tenorio, finance officials, key members of the Legislature and board members of the NMI Retirement Fund.

This is an attempt to overhaul the current retirement system of the CNMI government, which has provided generous benefits to its nearly 5,000 employees.

Local lawmakers have vowed to look into the retirement package currently being offered to government personnel, intending to pass measures that would abolish some retirement benefits for future service employees in a bid to reduce its monthly contributions.

Senate Floor Leader Pete P. Reyes has suggested review of the overtime pay cutting into the calculation of the retirement contribution which would eventually increase the share of the government and raising anticipated pension pay of the employee.

Although the Legislature has yet to initiate the move, Retirement Fund officials have thrown support behind the efforts in light of government’s difficulties to meet its obligations to the agency.

The Tenorio administration has been in default on its payment since last year due to the serious cash-flow problems besetting the CNMI, accumulating over $21 million in unpaid contributions.

“It’s a good legislation regardless of the amount the government will save,” said Fred Camacho, acting NMIRF administrator. “They should have been eliminated a long time ago.”

The government has to come up with approximately $850,000 in contribution money every month to pay the Retirement Fund against employees share of some $280,000.

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