Teno saves Fund from further financial woes

Citing possible aggravated cash flow position of the NMI Retirement Fund, Gov. Pedro P. Tenorio yesterday rejected a legislative measure aimed to alter retirement benefits of couples working for the government.

Mr. Tenorio explained that amendment on the disability benefits in the reenacted Retirement Fund law will only assist a few married couple to facilitate the retirement of one spouse but will trigger a domino effect on the NMIRF as well as the General Fund.

The bill also failed to address significant issues like variances on salary levels and the amount of contributions which will have a great impact on the retirement benefits being handled by the Fund, the governor explained.

Further, the differences in classes will also have significant effect on NMIRF since contributions of Class I and Class II government employees depend on the salaries received by the couple.

“The difference in salaries is significant as it affects the amount of contributions of both employees. If a highly paid spouse receives five years credit from a lesser paid spouse, the retirement of the higher paid spouse is facilitated without the concurrent higher level of contributions to the Fund,” the governor stressed in his letter to House Speaker Benigno R. Fitial and Senate President Paul A. Manglona.

Under the existing law, Class II members contribute nine percent while Class I members contribute only 6.5 percent of their salaries. If the governor approved the bill, NMIRF will be paying higher benefits of Class II members who retired without contributing the amount based on higher percentage.

In rejecting House Bill 12-109, the governor also reprimanded the Legislature for not addressing other technical problems that might arise if the legislative measure will be in effect. This is apart from the possible erosion of the financial cash flow of the Fund.

Earlier, Fund board chair Vicente Camacho said NMIRF will oppose legislative measures that will destabilize the financial stability of the agency.

“We should exert every effort to ensure that the investment returns of the Fund continue to beat the market’s bench mark and to explore alternative investment modes, we should commit ourselves to long term growth and survival of the Fund and dismiss short term misleading interpretation of where the Fund actually stands in terms of financial stability,” Camacho stressed. (EGA)