Pension, refunds outpace NMRIF’s collection • Government’s unpaid contribution now stands at $34.1 million

The NMI Retirement Fund has collected $7.993 million in total contribution as of Dec. 31, 1999, according to NMIRF Administrator Juan S. Torres.

However, the Fund paid $9.404 million in pension and refunds and $534,000 in other general and administrative expenses. With the huge cash outflow versus revenue, the Fund’s cash flow is negative $1.945 million for the last three months.

Based on the financial report ending December 1999, NMIRF has total cash available amounting to $2.705 million, enough to cover pension cost for the entire month of January 2000.

The average monthly cash outflow on refunds for the last three months is $456,000.

Local investments earned $514,000 and the stock market portfolio appreciated $28.958 million in net realized and unrealized gains. The total invested asset is valued at $384.613 million, an increase of 9.14 percent from last year.

Due to the effects of Asia’s financial crisis, the Fund’s investment in the region’s stock market, which is the secondary source of its annuity payments, has been greatly affected.

This developed as receivable from the CNMI government reached $32.416 million comprising the employer’s contribution and the 30 percent bonus. Mr. Torres has asked Gov. Pedro P. Tenorio to sign the bill that will eliminate the 30 percent retirement bonus to save the financial integrity of the Fund. He said the government can no longer afford to continue granting the benefit amid the declining revenue.

But the governor is likely to veto the bill because observers said the bill will not be able to save the government’s declining revenue anyway. Finance officials have proposed to the Legislature last year the repeal of the law in a move to cut down on the government’s expenses.

The government has been remiss in its payment of the 30 percent bonus to civil service employees upon retirement after 20 years of service due to the economic difficulties confronting the administration.

Based on the Fund’s financial situation, it is still on target with what was budgeted for the fiscal year versus its target for fiscal year 2000.

The 30 percent bonus is a big burden to the Fund because it is factored in in the computation of the retirement benefits of a government employee. For example, a government worker who receives an annual salary of $50,000 will receive an additional $15,000 as a result of the 30 percent bonus upon retirement. Since the bonus is included by the Fund when it computes the annuity payment, the retiree’s yearly pension automatically becomes $65,000.

Complaints from retirees have mounted in recent years over the nonpayment of the bonus on time and denial of the retirement benefits as it is not computed as part of their monthly pension pay.