Legislators to cut retirement perks • Plan to reduce government’s liability to NMIRF will affect incoming employees, according to legislators

Posted on Apr 28 1999

In yet another casualty of the continuous financial difficulties besetting the Commonwealth, the Legislature is expected to pass measures that would eliminate some retirement benefits for future civil service employees in a bid to reduce the government’s monthly contributions to the Retirement Fund.

Lawmakers stressed, however, the removal of the benefits will only affect new employees who will join the government work force after the proposal becomes law.

The move comes on the heels of government’s failure since last year to remit its share of the retirement contributions for its nearly 5,000 employees due to the serious cash-flow problems facing the Tenorio administration.

The proposed legislation is an attempt to overhaul the current retirement system in the government, which has provided generous benefits to retirees, including lumpsum bonus equivalent to 30 percent of their salary.

While there is no specific detail yet on which benefit will be eliminated, Senate Floor Leader Pete P. Reyes said they will look into the overtime pay, which is factored in in the calculation of retirement contribution, both from the government and the employee.

“What is happening right now is that all overtime earned is considered to be extension of time service,” he explained, “It increases the obligation of the government to pay over to the Retirement Fund their employer contribution.”

Reyes, who also heads the Senate Fiscal Affairs Committee, said the obligation adds more into the liability of the government, while raising the anticipated pension pay of the employee.

Briefing on the retirement contributions: The senator, along with other members of the House of Representatives and the Senate, attended a meeting yesterday between administration officials and board directors of the NMI Retirement Fund.

He has proposed amendment to the existing laws on retirement benefits to help ease the obligations of the government in light of some $21 million owed by Gov. Pedro P. Tenorio’s administration to the NMIRF.

“We were there to hear what the problems are and assist if there is a need for legislation to push through (with their plan),” Reyes said after the meeting,.

He maintained a change in the retirement system may result to “substantial savings” for the cash-strapped government, which has been impacted by declining revenues due to the current economic crisis on the island.

“Laws may be necessary to remove these benefits, but it will not be removed from the present employees because we cannot reduce their benefits,” said House Speaker Diego T. Benavente in a separate interview.

He stressed the intent is to “try to reduce the expenditures of the retirement system because it is running into some financial problems right now.”

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.

But the administration has been in default in its payment to the agency since last year, accumulating more than $21 million in overdue contributions.

Senate President Paul A. Manglona assured retirees there will be no delay in the payment of their pension, noting finance officials and the Retirement Fund board are close to hammering out a payment scheme on their obligations.

“One thing is for sure — the retirees will get their pay check. There will never be a time when they will not get their paycheck,” he said after the two-hour meeting.

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