Protect the CNMI Retirement Fund

The CNMI Retirement has generally proven itself to be one of the better managed government entities. Former Fund Administrator Thomas Aldan, in particular, did an exceptional job while he was heading up the Fund.

Since Mr. Aldan’s able administration, however, the Retirement Fund has, arguably, been in somewhat of a decline. It has been threatened both from within and from without: from poor internal decision-making as well as from external political forces at work.

The 30 percent retirement bonus is but one prominent example of the Fund’s alarming erosion. In an effort to garner more votes in the 1993 general elections, our local politicians resorted to this fiscally irresponsible ploy, to the utter detriment of the government pension fund.

Then again, shortly after the bonus fiasco, the Retirement Fund was basically coerced into yet another imprudent move: the financing of the extravagant judicial complex in Susupe.

The Fund to this day continues to be a source of endless government ransacking, in one form or another, to the complete detriment of its contributing members.

Last week, to note still another example, we learned that the Retirement Fund infused CHC’s “Empress Fund” with as much as $2 million, so that the hospital can purchase pharmaceuticals. This is not–and clearly should never be–the responsibility of the CNMI Retirement Fund, whose sole mission should be the relentless pursuit of the maximum possible investment returns on member contributions.

And speaking of investment returns, many of us, I am sure, must have been deeply saddened to learn that the CNMI Retirement Fund posted a decline of 50 percent from 1997 earnings. This is inexcusable, considering that 1998 was one hell of a roaring bull market, perhaps even better than 1997. The S & P 500 stock index returned 28 percent last year. Yet the Retirement Fund had its earnings cut in half.

Why? Perhaps better portfolio managers ought to be hired.

To be sure, the Fund clearly has made some bad investment mistakes. The vacant $3.4 million Retirement Fund Building is another blatant example. That’s 3.4 million dollars–no small sum–that is not expected to be recouped until the year 2010–more than 10 years from now. Had that money been invested elsewhere, retirement members would have been far better served.

As it appears now, the CNMI Retirement Fund is about to be pressured into yet another foolhardy move: the granting of special personal loans to its members. Such a proposal should be categorically rejected, as exceeding the mandate of the Fund.

The CNMI Retirement Fund is not in the business of acting like a bank or consumer finance company. If government employees need loans, let them go to Bank of Guam, or Norwest, or Pacific Financial Corporation. If they cannot secure loans at those private financial institutions, the Fund has no business assuming greater (and needless) risks, particularly since politics (or political patronage) could very easily get in the way of foreclosures or collateral repossessions.

The Fund exists to make money for its members, not to play Santa Claus for every government-political wish. Keep the Fund intact. Maintain its fiscal integrity. Protect it against the politics of socialism. Otherwise, it may, like federal Social Security, eventually go bankrupt.