Teno eliminates retirement bonus

Ending years of abuse on CNMI’s generous retirement benefits, Gov. Pedro P. Tenorio has signed a law to eliminate the 30 percent bonus given to early retirees in what he said is necessary to ease financial burden on the government.

Public Law 11-114 cuts the costly program under the Commonwealth Early Retirement Act passed by the Legislature in 1993, effectively denying government employees hired after Dec. 15, 1999 from receiving this benefit.

But the governor noted the new law will not provide an immediate resolution to the program’s financial situation sought by the NMI Retirement Fund which had been lobbying removal of such monetary reward in fear it could bankrupt the agency.

Citing earlier statements made by lawmakers and Retirement Fund Administrator Juan S. Torres on the legislation, Mr. Tenorio said that all current and contributing government employees will not be affected by its elimination.

Those “who may be eligible to retire after having met all the requirements, will still receive their retirement bonus,” he said in signing into law House Bill 11-359. “I have relied on this statement in approving this bill.”

Sponsored by Rep. Heinz S. Hofschneider, the proposal drew attention after the Senate passed it almost a year following approval by the House of Representatives and after its vague provisions prompted different interpretations.

Several calls to the Retirement Fund and to the governor’s legislative review office had questioned whether such measure would automatically repeal the bonus of all present government workers by its date of effectivity.

Both Mr. Torres and members of the Legislature clarified, however, that the intent of the bill was to deny the benefit to incoming employees despite claims by its proponents that such measure would comply with the ongoing austerity measures and stave off potential drain on resources of the Retirement Fund.

“[B]ecause there have been several varying interpretations to Section 3 of the bill, perhaps subsequent legislation should be enacted to clarify this situation in order to avoid any confusion that may arise in the future,” Mr. Tenorio told presiding officers of the 12th Legislature.

This section provides the repeal of the previous law mandating the government to dole out the bonus, while ensuring entitlements of current employees are not affected.

The Retirement Fund had opposed the early retirement program because of such entitlements which inflate pension pay even when the government has not contributed a single penny to the agency.

The program also failed to fulfill its mission by encouraging early retirement among those in the public sector and streamlining the government bureaucracy since many vacant posts had found replacements immediately.

Equivalent to 30 percent of annual salary upon retirement after 20 years in service, the bonus used to be paid off in lump sum but the financial difficulties confronting the government have delayed release of the money.

Two years ago, finance officials proposed repeal of the law in a bid to cut down on administration’s expenses and as part of slew of drastic measures aimed at lessening its financial obligations to nearly 5,000 government employees.

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