NMIRF losing $1M each year

The NMI Retirement Fund is losing an estimated $1 million annually due to high operational costs and delayed payment of medical services, to the detriment of its medical referral program.

The money, which should have been used to replenish coffers for the medical referral program, is instead used to finance operation run the Retirement Fund.

But Board Chair Vicente Camacho assured the agency is exerting extra efforts to save the medical referral program from disintegration by looking into other sources of funding.

In an interview, Mr. Camacho said NMIRF officials are exploring alternatives to resolve problems faced by the medical referral program, as well as other ways to increase the agency’s revenues.

The board chair said the program is losing an estimated $1 million each year, which adversely affects its operations and premium payments.

He added that NMIRF is solely dependent on subscribers’ contributions to cover operational expenses that include rentals, wages, among other expenditures.

“We are operating on losses. That one million should be a savings for us but no, we are losing a lot of money but we are looking at other means to address the problem so that the program will not collapse,” said Mr. Camacho.

Early this year, the NMIRF reported that an estimated $25 million was withdrawn from its off-island investment holdings to pay government employees who refunded their contributions for the last five years.

In 1995, NMIRF paid $2.3 million to over a hundred government employees who withdrew their contributions from the Fund while in 1996, over $3.7 million were disbursed.

For 1997 through 1999, more than $13 million worth of investments abroad were affected when hundreds of clients decided to file a withdrawal of contribution to remedy cash deficiency problems.

This year, Fund Administrator Juan Torres disclosed that over 50 government employees again filed for their early retirement where an estimated $5 million had to be withdrawn from the Fund’s investments abroad to pay them off.

The continued withdrawal of contributions from the NMIRF coffers, he said, has significantly impacted the Fund’s cash flow, most of its investments abroad, and other operational expenses.

The problem is that the government through the Office of the Personnel Management keeps on rehiring these government employees to fill up significant posts in various government agencies.

Mostly, Mr. Torres explained OPM keeps on hiring teachers, nurses, and medical doctors, to fill vacancies in hospitals and public schools.

In a letter to former Special Advisor for Finance and Budget Mike Sablan, the NMIRF administrator said majority of government employees were allowed to resign only for the sole purpose of pulling out their contributions but were re-hired shortly afterwards.

He urged the government to take a bolder step to resolve this problem and keep a stern policy against re-hiring government employees who keep on filing for early retirement only to get their contributions from the Fund.

He said that while there may be a loophole in the law, the government should use its discretion and discourage this unhealthy practice of government workers, so as not to drain the Fund’s daily cash flow position.

NMIRF officials have already sought the assistance of Gov. Pedro P. Tenorio to immediately issue a directive to prevent the erosion of the Fund’s cash account.

The officials argued that if the practice continues, the NMIRF is looking at a very tight cash position that may possibly result in a shortfall in payment of annuities. (EGA)