Govt two months behind

The CNMI government is four pay periods behind in its payment of dues to the Retirement Fund, representing over $3 million in arrears, according to the agency yesterday.

Fund administrator Karl T. Reyes said that the agency has not received the government’s contribution of $850,000 per payday for two months now.

The government currently shoulders 24 percent of the retirement contributions for government employees.

The Retirement Fund has 7,803 members who are categorized as either Class 1 or Class 2. Class 1 are those who have been Fund members since 1989 and contribute about 6.5 percent of their salary to the Fund. Class 2 are the “old members” or those who became members in 1989 and below. They remit about 9 percent of their salary to the Fund.

Fund board chair Joseph Reyes indicated that, while he appreciates the government’s continued support to the Fund, the fact remains that it owes the Fund a lot of money.

“We’re unhappy. It hinders opportunities and is making our job very difficult,” said the chair.

NMI Association of Retirees president David Igitol said members are “very concerned” about the government’s failure to remit funds on time.

Igitol said the group had actually thought of suing the Executive Branch over the fund mess but reconsidered it in the hopes that the government would eventually make good on its promise to regularly remit a fixed amount bi-weekly.

“We are [hopeful]. But this concern continues to be our main focus. We’re very concerned about the government not meeting its financial obligations to the retirees. This is the retirees’ money,” he said.

Administrator Reyes said the actual amount that the Fund is supposed to collect each pay period from the government is $1.4 million. With the government promising to remit only $850,000 per pay period, this means there is a shortfall of $550,000 every pay period, or $1.2 million a month. Such a shortfall could easily jack up the government’s unfunded liability to the Fund, which has reportedly ballooned to $500 million.

As a result, Reyes said that the Fund is not able to infuse more money into its investments. Reyes said that since 1995, the Fund has not seen any new investments.

He said that since the Fund has not been getting the entire amount from the government, it uses current contributions to pay out its obligations to retirees.

“The problem is, by the time current employees retire, we may be too broke to pay them [their benefits],” said Reyes.

The Fund had signed a memorandum of understanding during the time of then Gov. Pedro P. Tenorio to allow for a $500,000-payment per pay period to cover employer contributions. The amount was raised to $850,000 by the Babauta administration.